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Rich v. Principal Life Insurance Co.

September 20, 2007


The opinion of the court was delivered by: Justice Freeman

Published opinion

Chief Justice Thomas and Justices Fitzgerald, Kilbride, Garman, Karmeier, and Burke concurred in the judgment and opinion.


Plaintiff, David Rich, brought an action in the circuit court of Winnebago County against defendant, Principal Life Insurance Company, for breach of an insurance contract. Defendant filed a counterclaim against plaintiff seeking a declaratory judgment. Plaintiff and defendant filed cross-motions for summary judgment in the declaratory judgment action. The circuit court entered summary judgment in favor of plaintiff. The appellate court reversed and entered summary judgment in favor of defendant. No. 2--05--1197 (unpublished order under Supreme Court Rule 23). We allowed plaintiff's petition for leave to appeal (210 Ill. 2d R. 315(a)), and now affirm the judgment of the appellate court.


The pertinent and undisputed facts are as follows. On March 20, 1980, Bankers Life Company, now known as defendant, Principal Life Insurance Company, issued a disability insurance policy to plaintiff. The policy provides that defendant will pay monthly benefits "if Total Disability (as that term is defined in this policy) of the Insured commences while the Policy is in force." The policy defines "total disability" as "the complete inability of the Insured due to Injury or Sickness to perform any and every duty pertaining to an occupation (as defined herein) for remuneration or profit." The policy defines the terms "Sickness" and "Injury" as follows:

"INJURY means accidental bodily injury sustained by the Insured while this Policy is in force. Injury which is a direct or indirect result of physical or mental infirmity, illness or disease of any kind, or medical or surgical treatment therefor or Injury which results in Total Disability which commences more than 90 days after the date the Injury is sustained will be deemed to be Sickness."*fn1

In the benefit and premium schedule, the policy prescribes lifetime benefits if the disability resulted from an "injury," but limits the benefit period to five years if the disability resulted from a "sickness."

On January 19, 1999, plaintiff was loading 50-pound tires onto a truck at work. A tire bounced back and struck his right wrist. Plaintiff continued working despite pain and swelling in the wrist. The next day, a medical examination with X-rays revealed only a contusion and strain. However, plaintiff continued to experience pain and swelling in his right wrist. On March 3, 1999, plaintiff received an MRI. On March 3 and 18, based on the MRI, various physicians diagnosed plaintiff as having a tear of the right scapholunate ligament with segmental instability. Dr. Robert Schenck confirmed this diagnosis and recommended surgery. Plaintiff was fully employed from January 19, 1999, through May 17, 1999.

On May 18, 1999, Dr. Schenck performed surgery on plaintiff's right wrist. Exploration of the wrist revealed a complete, irreparable rupture of the scapholunate ligament. Consequently, Dr. Schenck performed a scapholunate fusion, inserting pins to attach a bone graft from the distal radius. On August 23, 1999, Dr. Schenck removed the cast from plaintiff's right hand and wrist. Dr. Schenck observed swelling on the dorsal aspect of plaintiff's hand and drainage at the fusion site. Dr. Schenck removed the pins and prescribed oral antibiotics to prevent infection from spreading to the bone. On August 25, 1999, plaintiff returned to Dr. Schenk with complaints of abnormal redness and swelling near the site where the pins had been removed. Cultures from the pin-removal site revealed a "rare growth of staphylococcus species." As a result, Dr. Schenck directed plaintiff to continue taking his antibiotics.

On August 25, 1999, plaintiff applied for benefits under his disability insurance policy by submitting to defendant a verified disability claim notice. Plaintiff identified his injury as the torn ligament in his right wrist, which he incurred while loading tires at work on January 19, 1999. Plaintiff stated that his total disability commenced on May 18, 1999, the date of his wrist surgery. Plaintiff explained: "I was put on disability because of an infection in my wrist that was operated on."

In a letter dated September 8, 1999, defendant acknowledged receipt of plaintiff's disability claim notice. Defendant advised plaintiff: "The Maximum Benefit Period is five years. For disabilities as a direct result within 90 days of an accident/injury, your benefit is extended to your lifetime." Also, defendant requested an attending physician's statement to further process plaintiff's claim. Plaintiff thereafter submitted the statement, prepared by Dr. Schenck, who verified that he "told the patient [plaintiff] to restrict employment activities," and that the restrictions began on May 18, 1999. In a letter dated October 1, 1999, relying on the verified information that plaintiff provided, defendant determined that plaintiff was totally disabled as of May 18, 1999, and awarded him benefits under the policy beginning on June 17, 1999, after the policy's 30-day elimination period.

Dr. Schenck continued to treat plaintiff on a monthly basis for hand and wrist pain. On January 31, 2000, plaintiff complained again of swelling and redness. X-rays revealed that plaintiff suffered from osteomyelitis in the proximal scaphoid and adjacent lunate bones. A biopsy of plaintiff's wrist revealed a rare growth of staphylococcus species and mold. As a result, Dr. Schenck referred plaintiff to Dr. David Simon, an infectious disease specialist, who ordered a six-week course of intravenous antibiotics. On March 30, 2000, Dr. Schenck operated a second time on plaintiff's right wrist and discovered that the lunate and adjacent portions of his scaphoid bones were necrotic. Dr. Schenck excised most of the necrotic bone and advised plaintiff that if the scaphoid failed to fuse, he would eventually need a total wrist fusion. On October 22, 2001, plaintiff underwent wrist fusion surgery and an ulnar head replacement on his right wrist.

The record shows that defendant administered plaintiff's claim as having a five-year benefit period. In a July 12, 2001, letter to plaintiff, in which defendant approved plaintiff's continued benefits, defendant noted: "Benefits will continue until June 16, 2004, which is when your benefits will exhaust, as long as you continue to be Disabled per the provisions of your policy and provide Proof of Loss that you are satisfying this policy requirement."

On August 28, 2002, plaintiff requested that defendant reconsider its determination that he was ineligible for lifetime benefits. Defendant responded in a letter dated August 30, 2002. Defendant explained that it was correctly administering plaintiff's claim as a "sickness" under the policy, based on the verified facts that plaintiff gave in his claim forms. Citing the policy provision defining "sickness," defendant noted the policy's 90-day injury limitation. Defendant informed plaintiff that, according to the information in his claim file, plaintiff did not become disabled from the January 19, 1999, injury until May 18, 1999, or 120 days after he sustained the injury. Defendant further explained that because plaintiff's total disability began more than 90 days after the date the injury was sustained, the claim was administered as a sickness and that plaintiff was not eligible for lifetime benefits. Defendant advised plaintiff that if he wished to be further considered for lifetime benefits under the policy, he would need to provide defendant with medical and employment documentation that would support that he became totally disabled within the 90 days that followed the January 19, 1999, work-related injury.

In a letter dated January 24, 2003, plaintiff, through counsel, disagreed with defendant's position, contending: "The injury for which [plaintiff] is disabled occurred on May 18, 1999, the date that he was exposed to a contaminated operation field. This field caused him to suffer a severe staph infection which resulted in substantial deterioration of his bones. It is for this reason that he is disabled." Therefore, according to plaintiff, "his disability occurred as the direct result of his injury within 90 days of his onset of disability. Therefore, he should be entitled to the benefit extended into his lifetime."

Defendant advised plaintiff's counsel that it would again review its administration of plaintiff's claim. In a letter dated April 1, 2003, defendant denied plaintiff's second request for lifetime benefits. Defendant again cited the policy's definition of "injury" and explained that, because the verified information that plaintiff submitted with his claim showed that plaintiff's disability began on May 18, 1999, more than 90 days after his January 1999 accident, plaintiff's injury was properly deemed a "sickness" under the policy. Defendant also advised plaintiff's counsel that if plaintiff had additional information to support his request for lifetime benefits, he should forward the information to defendant for consideration.

At plaintiff's request, Dr. Jeffrey Coe examined plaintiff and reviewed plaintiff's medical records. In a detailed explanation of plaintiff's medical history and his own findings on examination, Dr. Coe reported as follows. On January 19, 1999, plaintiff suffered a contusion and strain to his right wrist in an accident at work, which caused an internal derangement with scapholunate dissociation. Initial treatment for the January 1999 injury led to only limited improvement, and plaintiff's physicians eventually recommended surgery. Plaintiff underwent surgery on May 18, 1999, and appeared to be recovering through late July 1999. However, recovery became complicated by the development of an internal infection. Based on his findings, Dr. Coe opined that: (1) there was a causal relationship between the injury suffered by plaintiff at work on January 19, 1999, and his current symptoms and state of impairment; and (2) plaintiff's injury has caused permanent partial disability to his right arm.

Plaintiff submitted Dr. Coe's report to defendant in support of his third request for lifetime benefits. In a November 21, 2003, letter, defendant confirmed its denial, explaining that Dr. Coe did not provide any new or different information that would change its position. According to defendant's records, plaintiff's injury occurred on January 19, 1999, but his disability did not begin until May 18, 1999, and, under the terms of the policy, plaintiff's claim could ...

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