Total Disability Benefits Allowed to Insured Who Was Still Able to Perform Some of the Important Duties of his Occupation

In Leonor v. Provident Life and Accident Co., at al, the Sixth Circuit Court of Appeals ruled that an insured was entitled to total disability benefits even though he was still able to perform some of the important duties of his occupation. The insured in the case, Leonor, filed suit in the U.S. District Court for the Eastern District of Michigan against Provident Life and Accident Co. and Paul Revere Life Insurance Co. after a dispute arose over Leonor’s disability benefits.

Leonor, a dentist, obtained the disability policies in 1990 to provide disability income in the event he became disabled. The policy allowed disability benefits to Leonor in the event that he was unable “to perform the important duties of his occupation.” (emphasis added)

After Leonor suffered an injury that prevented him from performing dental procedures, Leonor filed a claim for total disability benefits. At the time of his injury, Leonor spent approximately two-thirds of his time performing dental procedures and approximately one-third managing his dental practices and other businesses he owned.

Although the insurer initially granted coverage to Leonor, the coverage was later revoked because Leonor was able to perform some of the important duties of his occupation. The insurer argued that, because Leonor was still able to manage his dental practices and other businesses, he was not entitled to total disability benefits. In doing so, the insurer argued that a claim for total disability under the policy required that Leonor was unable to perform all the important duties of his occupation.

Leonor disagreed and stated that the policy of insurance does not require a showing that he is unable to perform all of the important duties of his occupation, but only that he is unable to perform some or a majority of the important duties. Since he was unable to perform dental procedures, which took up a majority of his time, he argued that he was entitled to total disability benefits under the policy.

The Court sided with Leonor, stating that the provision in the policy of insurance was ambiguous. In one reading of the provision, “the important duties” could be interpreted to mean all the important duties, while in another reading of the provision, “the important duties” could be interpreted to mean some or a majority of the important duties.  Since Michigan law requires ambiguous provisions in insurance policies to be interpreted in favor of the insured, the Court found that the insurance policy did not require Leonor to show that he was unable to perform all of the important duties of his occupation.

In doing so, the Court used the argument of the insurers’ counsel against them. The insurers’ counsel had admitted at oral argument that his grammatical argument (i.e. that “the important duties” is equivalent to “all the important duties”) is “supported by the rules of grammar.” In response, the Court stated that “his argument can hardly be said to be supported by all the rules of grammar.” Similarly, the provision in the insurance policy requiring the insured to show that he is unable to perform “the important duties of his occupation,” does not require a showing that he is unable to perform “all the important duties of his occupation.”

The Court’s ruling is even more interesting because the insurance policy also included a residual disability provision.  Residual disability benefits allow benefits in the event of a partial disability or reduced income caused by a disability.  Despite the existence of this provision for benefits in the event of loss of income, but not total disability, the Court found that Leonor’s was entitled to benefits under the total disability provision.