Surgeon Sues Over California Denied Disability

Walnut Creek, CAA recent court decision under California insurance law demonstrates just how complex lawsuits alleging denied disability insurance can become. There is also no guarantee that a rider purchased on an insurance policy will automatically provide the benefits associated with that rider, without the courts becoming involved.

That’s what happened to Dr. Agustin Argenal, a cardiologist who worked as the director of the cardiac catheterization laboratory at the John Muir Medical Center and was a partner at the Contra Costa Cardiology Medical Group, in California. Dr. Argenal had carried long-term disability (LTD) benefits in a policy issued by a number of insurers, and had done so since 1988.

He also had purchased a rider or an amendment that guaranteed full disability benefits if he was no longer in a position to perform his regular work, even if he were not viewed as totally disabled and capable of doing other work. This intent with the “regular occupation amendment” was, if Dr. Argenal, due to health reasons, was no longer able to perform his regular job, the rider entitled him to full LTD benefits for life, regardless as to whether he was qualified or capable to work at something else.

And so it was that in July 2010, Argenal himself underwent a coronary bypass procedure and, following a period of convalescence, returned to work in early October of that year. However, Argenal’s attending physician had placed a number of restrictions on his activities. He was no longer allowed to perform any procedures in the cath lab, he was not to wear lead aprons, and he could not stand for long periods of time, amongst other restrictions his doctor had termed as “indefinite.”

The restrictions necessitated his exit as director of the cardiac cath lab, and he subsequently resigned from his position at John Muir.

According to the coverage in his policy, Argenal applied for LTD benefits and his claim was granted in late January 2011 and made retroactive to July 28 of the previous year. But there was a problem: Argenal was provided LTD benefits under the residual disability provision of his policy, rather than full benefits under the regular occupation amendment. Argenal appealed his claim, which was subsequently stamped long-term disability denied by his insurer.

Argenal sued. Defendants included Reassure America Life Insurance Co., Maccabees Mutual Life Insurance Co., Royal Maccabees Life Insurance Co. and Swiss Reinsurance America Corp., alleging breach of contract, misrepresentation and bad faith. Argenal, amongst his allegations, alleged that the residual disability provision in his policy was invalid under California Insurance law.

In the end, the district court found that Argenal had failed to adequately show that Reassure et al had acted in bad faith. The Court also denied the defendants motion of summary judgment in the case. At the same time, however, the district Court also held that inherent with the plaintiff’s California ERISA-denied disability claim, there was a genuine issue of material fact as to whether Argenal was totally disabled under the policy.

It was not articulated whether or not Argenal planned to appeal the denied ERISA disability ruling. The case is Argenal v. Reassure American Life Insurance Co., No. 13-1947, US District Court for the Northern District of California.