United States District Court, D. Arizona
MURRAY SNOW, UNITED STATES DISTRICT JUDGE
before the Court is the Motion for Summary Judgment of
Defendant Madison National Life Insurance Company
(“Madison National”). (Doc. 45). For the
following reasons, the Court denies the Motion.
2007, Plaintiff Martha Nielsen worked as an elementary school
principal for Millard Public Schools in Omaha, Nebraska.
Defendant Madison National provided a long-term disability
insurance policy to Plaintiff and other district employees.
The insurance policy, in relevant part, states that Madison
National will provide benefits in the event an insured is
determined to be totally disabled. (Doc. 46, Ex. 2, p. 20).
The policy defines “total disability” as (1) when
the insured “cannot perform each of the substantial and
material duties of [her] regular occupation” and (2)
when, after 24 months of the payment of benefits, “[the
insured] cannot perform each of the substantial and material
duties of any gainful occupation for which [the insured is]
reasonably fitted by training, education[, ] or
experience.” Id. at p. 19. Upon request, the
insured must provide Madison National with “proof of
continued total disability.” Id. at p. 20.
Nielsen fell and broke her leg on May 24, 2007. Id.
at Ex. 3. She filed a claim for disability benefits with
Madison National on July 30, 2007. Id. Madison
National approved her claim on September 24, 2007.
Id. at Ex. 6. Although Ms. Nielsen's doctor,
Samuel Phillips, had initially predicted a fast recovery, Ms.
Nielsen did not improve as expected. Id. at Exs. 4,
7-10. In August 2008, Dr. Phillips opined that Ms. Nielsen
would likely qualify for permanent disability. Id.
at Ex. 11. As provided for in the insurance policy, after 24
months of benefits, the inquiry switches from whether the
insured can perform the duties of her regular occupation to
whether the insured can perform the duties of any gainful
occupation. Thus, Madison National commissioned an
independent medical examinations (“IME”) to
assess Ms. Nielsen's capacities. In June 2009, Dr. Joseph
Bocklage submitted a report opining that Ms. Nielsen likely
could not work in even a sedentary occupation and that she
had reached maximum medical improvement. Id. at Ex.
14. In November 2009, Dr. Anil Agarwal examined Ms. Nielsen
and stated that she had functional limitations, but would be
able to work in a sedentary or light duty capacity.
Id. at Ex. 16. The reports of Dr. Bocklage and Dr.
Agarwal were sent to a Vocational Expert (“VE”)
to determine whether Ms. Nielsen could be employed in any
gainful occupation with her medical restrictions. The VE
identified a number of alternative positions in which Ms.
Nielsen could work. Id. at Ex. 18. But, Madison
National determined that none of those jobs had a rate of pay
high enough to be considered “gainful employment,
” and thus continued to pay benefits. Id. at
March 2016, Madison National received reports from Ms.
Nielsen's doctors that a new treatment had significantly
reduced her pain. Id. at Ex. 30. Ms. Nielsen had
moved to Arizona and begun seeing new doctors at Arizona Pain
Specialists, PLLC. Id. at Ex. 27. Dr. Tory McJunkin
and Dr. Jacob Amrani implanted a spinal cord stimulator in
Ms. Nielson. Id. A trial implant was placed on
December 30, 2015, and a permanent implant was placed on
January 4, 2016. Id. Over a dozen appointments after
the trial implant was placed, Ms. Nielsen reported that her
pain was relieved by 40 to 60 percent. Id. After
receiving the doctor's records reporting a significant
pain reduction, Madison National scheduled for Ms. Nielsen to
undergo a new IME. Madison National hired a vendor to locate
a physician, and the vendor identified Dr. Scott Krasner. Ms.
Nielsen and Dr. Krasner met for the IME. Dr. Krasner's
report states that Ms. Nielsen has some functional
limitations but that he believes she would be able to perform
some work. Id. at Ex. 29. Dr. Krasner's report
also stated that he had witnessed Ms. Nielsen driving herself
to the appointment and moving around outside her car with no
abnormal gait or use of a cane. Id. Ms. Nielsen
disagrees with Dr. Krasner's representations and also
states that his examination of her was significantly shorter
than he reported. (Doc. 52, Ex. 1). Once Madison National
received Dr. Krasner's report, it was forwarded to a VE.
The VE identified multiple jobs which an individual with Ms.
Nielsen's training and functional limitations could
perform. (Doc. 46, Ex. 34). This time, Madison National
concluded that the rate of pay was high enough that Ms.
Nielsen's work at such an employer would constitute
gainful employment. Madison National terminated Ms.
Nielsen's disability benefits on May 10, 2016.
Id. at Ex. 36. In subsequent appointments with her
physicians, beginning on May 16, 2016, Ms. Nielsen reported
that her statements of 50 percent pain relief were inaccurate
and that the minimal improvement of her pain did not improve
her activities of daily living. Id. at Ex. 27. She
believes that her initial reports of pain relief were due to
a honeymoon period that later waned. (Doc. 52, Ex. 1).
Nielsen sued, alleging breach of contract and breach of the
duty of good faith and fair dealing. Madison National moves
for summary judgment on both grounds.
judgment is appropriate if the evidence, viewed in the light
most favorable to the nonmoving party, demonstrates
“that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of
law.” Fed.R.Civ.P. 56(a). Substantive law determines
which facts are material and “[o]nly disputes over
facts that might affect the outcome of the suit under the
governing law will properly preclude the entry of summary
judgment.” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986). “A fact issue is genuine
‘if the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.'”
Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054,
1061 (9th Cir. 2002) (quoting Anderson, 477 U.S. at
248). When the nonmoving party “bear[s] the burden of
proof at trial as to an element essential to its case, and
that party fails to make a showing sufficient to establish a
genuine dispute of fact with respect to the existence of that
element, then summary judgment is appropriate.”
Cal. Architectural Bldg. Prods., Inc. v. Franciscan
Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir. 1987)
(citing Celotex Corp. v. Catrett, 477 U.S. 317,
Breach of Contract
plaintiff must show that an enforceable contract exists, that
it was breached, and that the plaintiff suffered damages to
sustain a breach of contract claim. Graham v.
Asbury, 540 P.2d 656, 657 (Ariz. 1975). Plaintiff's
contract for insurance provides that Defendant must pay her
disability benefits as long as “[she] cannot perform
each of the substantial and material duties of any gainful
occupation for which [she is] reasonably fitted by training,
education[, ] or experience.” (Doc. 46, Ex. 2, p. 19).
Defendant argues that Plaintiff has failed to meet her burden
under Celotex to produce evidence sufficient to
establish a genuine dispute of material fact. Defendant
asserts that Plaintiff must put forward expert evidence of
her functional capacity and expert evidence of her vocational
options given her functional capacity.
Plaintiff has made a showing sufficient to establish a
genuine dispute of material fact. Although Plaintiff was
initially disabled due to breaking her leg, she also has
diagnoses relating to chronic pain syndromes. Plaintiff
provided notice to Defendant that three of her treating
physicians--Dr. Phillips, Dr. McJunkin, and Dr. Amrani--would