831 F.3d 426
7th Cir.2016Background
- Eric Berg purchased two New York Life disability-income policies and worked as a pit broker until a tremor forced him to stop in Sept. 2007.
- A neurologist diagnosed Berg with an essential tremor on Feb. 3, 2010; Berg then applied for total disability benefits.
- New York Life/Unum initially approved benefits but designated Feb. 3, 2010 as the disability onset date; later Unum stopped total-disability payments and asserted Berg was only residually disabled because he was unemployed when he first sought physician care.
- Berg sued for total-disability benefits dating from Sept. 2007. The district court granted summary judgment for the insurers; Berg appealed.
- Insurers had pleaded notice defenses (late claims) but failed to press them at summary judgment; the Seventh Circuit found those defenses waived.
Issues
| Issue | Plaintiff's Argument (Berg) | Defendant's Argument (New York Life/Unum) | Held |
|---|---|---|---|
| Does the phrase “requires and receives regular care by a Physician” impose a temporal prerequisite that an injury/sickness must have been treated by a physician at the time the condition first arose? | The phrase lacks any temporal language and should be read to describe the kind of conditions covered; disability can begin when the malady prevented work (Sept. 2007) even if physician care occurred later. | The physician-care clause requires that the injury/sickness have required and received physician care before it qualifies as an ‘‘injury or sickness’’ for onset; thus disability began only when Berg saw a doctor on Feb. 3, 2010. | The clause contains no temporal element; reasonable ambiguity exists; construed against insurer. If Berg proves disability began Sept. 2007, benefits may date from then. |
| How should ambiguous policy terms be construed under Illinois law? | Ambiguities should be read in insured’s favor and interpreted per insured’s reasonable expectations. | Insurers argued their literal reading controlled. | Court reiterated Illinois rules: ambiguous limits construed narrowly against insurers; insured's expectations matter. |
| Were the insurers’ notice defenses preserved? | Berg argued insurers waived them by not raising them in summary judgment. | Insurers initially pleaded notice defenses. | Insurers waived notice defenses by failing to press them in summary judgment briefing. |
| Is Unum properly joined as a defendant? | Berg treated both as defendants; argued Unum is liable as administrator. | Unum argued improper joinder but did not raise it at summary judgment. | Joinder objection waived for failure to raise in summary judgment; remand proceeds with existing parties. |
Key Cases Cited
- Jaburek v. Foxx, 813 F.3d 626 (7th Cir. 2016) (standard of review on summary judgment)
- D.S. v. E. Porter Cnty. Sch. Corp., 799 F.3d 793 (7th Cir. 2015) (failure to raise argument in summary judgment motion results in waiver)
- DeSaga v. W. Bend Mut. Ins. Co., 391 Ill.App.3d 1062 (Ill. App. 2009) (insurer-ambiguous terms construed to give effect to parties’ intent; limits against insurer)
- Gillen v. State Farm Mut. Auto. Ins. Co., 215 Ill.2d 381 (Ill. 2005) (ambiguity exists if language is susceptible to more than one reasonable meaning; construe against insurer)
- Founders Ins. Co. v. Munoz, 237 Ill.2d 424 (Ill. 2010) (courts should not strain to find ambiguity nor adopt distinctions average insureds would not understand)