McDonald v. American Family Life Assurance Co. of Columbus
70 So. 3d 1086
La. Ct. App.2011Background
- Mr. McDonald sustained injuries in an auto accident on April 22, 2008 and alleged total and permanent disability resulting in off-the-job incapacity.
- At issue was Aflac’s short-term disability policy with a maximum benefit period of twelve months, payable for sickness or off-the-job injury.
- Aflac initially paid 63 days of disability benefits, then refused further payments due to questions about the accident occurring on the job.
- McDonald sought a twelve-month retroactive benefit and penalties; the trial court granted summary judgment that McDonald was entitled to successive twelve-month periods after a 180-day gap.
- Aflac appealed, arguing there is only a single continuous period of disability and no entitlement to successive periods.
- The First Circuit reversed, ruling that McDonald was not entitled to successive periods and granting Aflac’s writ to dismiss that claim, while also denying penalties and fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether McDonald’s disability constitutes multiple periods. | McDonald: successive periods allowed after 180 days between claims. | Aflac: only one continuous period exists, no successive periods. | Not entitled to successive periods; only a single period. |
| How the policy's 'Successive Periods of Disability' and related definitions should be interpreted. | McDonald relies on 180-day separation for successive claims. | Aflac: policy requires separate periods separated by 180 days and other conditions; McDonald’s scenario does not meet them. | Policy does not provide for multiple periods here; interpretation rejects McDonald. |
| Whether McDonald is entitled to penalties and attorney fees under LSA-R.S. 22:1821(A). | McDonald contends penalties for arbitrary/capricious denial. | Aflac acted with a reasonable basis and no frivolous denial; penalties not warranted. | Penalties and attorney fees denied; no arbitrary or capricious conduct shown. |
Key Cases Cited
- Cadwallader v. Allstate Ins. Co., 848 So.2d 577 (La. 2003) (contract interpretation governing insurance policies)
- Ledbetter v. Concord Gen. Corp., 665 So.2d 1166 (La. 1996) (interpretation of contract terms in insurance context)
- Reynolds v. Select Properties, Ltd., 634 So.2d 1180 (La. 1994) (avoid absurd results in contract interpretation)
- Perry v. City of Bogalusa, 804 So.2d 895 (La. App. 1st Cir. 2001) (summary judgment standard in Louisiana)
- Jones v. Estate of Santiago, 870 So.2d 1002 (La. 2004) (summary judgment and interpretation of policy terms)
- Ho v. State Farm Mut. Auto Ins. Co., 862 So.2d 1278 (La. App. 3rd Cir. 2003) (burden on plaintiff to show policy coverage)