Case Study: Factual Disability v. Legal Disability – Part 2
In the last post, we discussed the distinction between “factual” and “legal” disability and why that distinction matters. In this post, we will begin looking at a court case involving “factual” and “legal” disability. Specifically, in this post we will begin looking at the facts of the case and the test that the court applied. In Part 3, we will see how the court ultimately ruled.
In the case of Massachusetts Mutual Life Insurance Company v. Jefferson, the court assessed whether Dr. Jefferson—a clinical psychologist—was entitled to disability benefits. Here are the key facts of the case:
- From October 1987 to February 1989, Dr. Jefferson had an affair with a former patient.
- When Dr. Jefferson’s wife found out about the affair, she filed a complaint with Dr. Jefferson’s licensing board.
- During the hearings in front of the licensing board, Dr. Jefferson argued that he was a competent psychologist, and that he should be permitted to continue to see patients.
- On April 27, 1990, the licensing board permanently revoked Dr. Jefferson’s license to practice psychology, effective as of May 15, 1990. On appeal, a chancery court reduced the permanent revocation to an eight year suspension ending on May 15, 1998.
- Up until the day his license was revoked, Dr. Jefferson continued to see patients and schedule future patients.
- On October 1, 1990, Dr. Jefferson filed a claim under his disability policy, claiming that he was disabled due to “major depression.”
- On his claim form, Dr. Jefferson listed the beginning date of his disability as April 29, 1990. Later on, Dr. Jefferson attempted to submit evidence that he had been depressed as early as May 1989.
The Court’s Test
As a threshold matter, the Court determined that the suspension of Dr. Jefferson’s license was a “legal disability” and assumed for the sake of argument that Dr. Jefferson’s “major depression” was a “factual disability.” As explained in Part 1 of this post, courts generally hold that disability policies only cover factual disabilities, not legal disabilities. However, the court’s decision becomes more difficult when a claimant like Dr. Jefferson has both a legal disability and a factual disability.
Although different courts approach this situation in different ways, here is the test that the court came up with in Dr. Jefferson’s case:
- Step 1: Determine which disability occurred first.
- Step 2: Apply the following rules:
- Rule # 1: If the legal disability occurred first, the claimant is not entitled to benefits.
- Rule # 2: If the factual disability occurred first, the claimant is entitled to benefits, if the claimant can prove the following three things:
- The factual disability has medical support.
- The onset of the factual disability occurred before the legal disability.
- The factual disability actually prevented or hindered the claimant from engaging in his or her profession or occupation.
In the next post, we will discuss how the court decided this case. In the meantime, now that you have the key facts and the court’s test, see if you can guess how the court ultimately ruled.
 104 S.W.3d 13, 18 (Tenn. Ct. App. 2002).