Case Study: Interpreting Policy Language – Part 1

Can the presence or absence of a single word in your disability policy determine whether you receive your disability benefits?

In the recent case Leonor v. Provident Life and Accident Company[1], the key issue was whether the policy language “the important duties” meant “all the important duties.”  In Part 1 of this post, we will look at each party’s position in the case and examine why this policy language was so important.  In Part 2 of this post, we will look at how the court addressed the parties’ arguments and see how the court ultimately resolved the dispute.

The Facts

In the Leonor case, the claimant, Leonor, was a dentist who could no longer perform dental procedures due to an injury and subsequent cervical spine surgery.  Prior to the injury, Leonor spent approximately two-thirds of his time performing dental procedures, and spent the rest of his time managing his dental practice and other businesses he owned.  After the injury, he no longer performed dental procedures; instead, he sought out other investment opportunities and devoted his time to managing his investments.  Interestingly, Leonor’s income actually increased after he stopped performing dental procedures because his investments turned out to be very successful.

The Policy

Leonor’s disability policy provided for benefits if he became “totally disabled,” and defined “totally disabled” as follows:

“Total Disability” means that because of Injury or Sickness:

You are unable to perform the important duties of Your Occupation; and

You are under the regular and personal care of a physician.

Leonor’s policy also provided for benefits if he became “residually disabled,” and defined “residually disabled” as follows:

“Residual Disability,” prior to the Commencement Date, means that due to Injury or Sickness:

(1) You are unable to perform one or more of the important duties of Your Occupation; or

(2) You are unable to perform the important duties of Your Occupation for more than 80% of the time normally required to perform them; and

Your loss of Earning is equal to at least 20% of your prior earnings while You are engaged in Your Occupation or another occupation; and

You are under the regular and personal care of a Physician.

The Arguments

The insurer, Provident Life, argued that Leonor’s managerial duties were “important duties” of his occupation prior to his injury, and therefore Leonor was not “totally disabled” because he could still perform managerial duties in spite of his injury.

Leonor responded that the policy language only required him to be unable to perform “the important duties” of his occupation.  He pointed out that Provident Life could have required him to be unable to perform “all the important duties” of his occupation.  Since Provident Life did not include the word “all,” Leonor argued that it did not matter whether he could still perform managerial duties because he could no longer perform other “important duties” of his occupation—namely, performing dental procedures.

In response, Provident Life argued that, when read in context, “total disability” plainly meant the inability to perform “all the important duties” because the policy separately defined “residual disability” as being unable to perform “one or more of the important duties.”  Thus, according to Provident Life there was already a category under the policy that covered individuals like Leonor who could not perform “some” of the important duties of their occupation.  Provident Life also argued that Leonor should not receive total disability benefits because Leonor’s income after the injury was higher than it was prior to the injury.

Stay tuned for Part 2, to find out how the court addressed Principal Life’s arguments and resolved the dispute.

[1] 790 F.3d 682 (6th Cir. 2015).