In Part 1 of this post, we started to look at the recent case Leonor v. Provident Life and Accident Company. The key issue in this case was whether the policy language “the important duties” meant “all the important duties.” 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.
Under Michigan law, ambiguous words in a disability policy are construed in favor of the insured. A word or phrase is ambiguous if the word or phrase may “reasonably be understood in different ways.” Because of these rules, in order to win his case, the claimant, Leonor, did not have to come up with an interpretation that was superior to the interpretation offered by the insurer, Provident Life. Instead, Leonor merely had to establish that the policy language was ambiguous and then come up with a reasonable interpretation of the policy language that supported his claim for benefits.
The court began its analysis by recognizing that context is important when interpreting a contract. The court acknowledged that the definition of “residual disability” was obviously intended to be a less severe category of disability, and even acknowledged that the terms “total disability” and “residual disability” had to be mutually exclusive for the rest of the policy to make sense. Nonetheless, the court determined that the phrase “the important duties” was ambiguous.
By way of illustration, consider the following continuum, beginning with no limitations and ending at the inability to perform all of the important duties of an occupation.
No Limitations Unable to Perform Unable to Perform Unable to Perform Some Duties Most Duties All Duties
Essentially, the court determined that the “residual disability” definition was broad enough to encompass individuals who could not perform “some” of the duties of their occupation, but was not broad enough to encompass individuals who could not perform “most” or “all” of the duties of their occupation. Thus, the policy language remained ambiguous because the “total disability” definition could still mean either the inability to perform “most” duties or the inability to perform “all” duties.
Next, the court determined that Leonor’s interpretation of the policy language was reasonable. The court explained that, under the rules of grammar, the definite plural does not necessarily apply to each thing in the group referred to. To support its position, the court noted that Provident Life’s own counsel argued at oral argument that its position was supported by “the rules of grammar” even though Provident Life’s counsel obviously did not mean to suggest that its position was supported by “all the rules of grammar.”
Finally, the court held that a claimant’s income is “far from dispositive” in disability cases. Specifically, the court determined that Leonor should not be penalized for earning more income after his injury than he did before the injury. The court noted that because investing in businesses is inherently risky, it was entirely appropriate for Leonor to insure himself against the loss of the guaranteed, steady income provided by the dental procedures.
In the end, the court determined that Leonor was “totally disabled” under the policies because the phrase “the important duties” was ambiguous and Leonor had offered a reasonable application of the phrase that supported an award of benefits. The court ordered Provident Life to pay Leonor his benefits under the policy, plus 12% interest as a penalty for failing to pay the claim in a timely fashion.
This case demonstrates how the presence or absence of a single word in a policy can dramatically affect your ability to recover benefits. Even language that is not necessarily unfavorable, but merely ambiguous, can delay your recovery of benefits if you have to go to court to resolve a dispute with the insurer. For example, in the Leonor case, Leonor made his initial disability claim in July 2009, but the court did not conclusively establish he was entitled to benefits until June 2015—nearly six years later.
If possible, you should avoid ambiguous and unfavorable language when purchasing a policy. If you already have a policy, an experienced disability insurance attorney can review your policy and identify words or phrases that could impact your ability to recover benefits in a timely fashion.
 790 F.3d 682 (6th Cir. 2015).
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, 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.
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.
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 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.
 790 F.3d 682 (6th Cir. 2015).