Jacobs v. Northwestern Mutual Life Insurance
103 A.D.3d 78
N.Y. App. Div.2012Background
- Jacobs, a plastic surgeon, had his medical license suspended by NY in June 2007 for being an imminent danger to the public.
- He filed disability insurance claims shortly after, arguing pre-suspension bipolar disorder and drug addiction rendered him unable to perform duties safely.
- Northwestern Mutual denied benefits, claiming disability arose from license suspension, not from illness.
- Jacobs had used crystal meth since 2001; by 2007 he treated patients while abusing drugs and lacked malpractice insurance.
- Board proceedings in 2007 led to license surrender the day after hearings concluded; he entered treatment later in 2007.
- Dispute centers on whether disability benefits cover a factual disability (illness) or a legal disability (loss of license).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether coverage turns on sickness or loss of license | Jacobs contends illness caused disability, not license loss | Northwestern argues disability stemmed from license suspension (legal disability) | Issue resolved in Jacobs favor: factual disability can be primary, triggering coverage. |
| Whether Jacobs proved a medically bona fide disability before license suspension | Affidavits and testimony show bipolar II disorder and substance abuse caused inability to practice | Insurer contests onset timing and causation | Triable issue existed; cross motion granted on breach of contract due to prima facie factual disability evidence. |
| Whether insurer met its prima facie burden to deny benefits | Policy requires total disability from sickness/accident and ongoing medical care | Policy required showing disability not due to preexisting legal disability | Insurer failed to negate prerequisites; summary judgment for plaintiff on first breach of contract claim. |
Key Cases Cited
- Gassler v. Monarch Life Ins. Co., 276 A.D.2d 585 (N.Y. App. Div. 2000) (distinguishes factual vs. legal disability in coverage)
- Massachusetts Mut. Life Ins. Co. v. Jefferson, 104 S.W.3d 13 (Tenn. Ct. App. 2002) (mental illness may render licensure a legal disability when it precludes core duties)
- Massachusetts Mut. Life Ins. Co. v. Millstein, 129 F.3d 688 (2d Cir. 1997) (supports distinction of factual vs. legal disability in disability coverage)
- Solomon v. Royal Maccabees Life Ins. Co., 243 Mich. App. 375 (Mich. App. 2000) (discusses interplay of mental illness and license loss in coverage)
- Goomar By & Through Goomar v. Centennial Life Ins. Co., 76 F.3d 1059 (9th Cir. 1996) (addresses concurrent factual and legal disabilities)