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Fiorentini v. Paul Revere Life Insurance Co.

United States District Court, N.D. Illinois, Eastern Division

September 14, 2017

PAUL REVERE LIFE INSURANCE COMPANY, a Massachusetts Corporation, Defendant.


          CHARLES RONALD NORGLE, United States District Court Judge

         Plaintiff Henry G. Fiorentini ("Plaintiff) sues Defendant Paul Revere Life Insurance Company ("Defendant'') for terminating Plaintiffs Total Disability benefits. Plaintiff brings claims for breach of contract, unreasonable and vexatious conduct under 215 III. Comp. Stat. § 5/155, and an action for declaratory relief. Before the Court are the Parties' cross-motions for summary judgment. For the reasons set forth below, Plaintiffs motion is denied and Defendant's motion is granted.

         I. BACKGROUND

         Plaintiff founded Panatech Computer Management, Inc. ("Panatech") in 1982 after graduating with a joint bachelor's and master's degree in Electrical Engineering and Computer Science from M.I.T. and an MBA from the University of Chicago. Panatech provides customized accounting software to small businesses and bundles hardware maintenance contracts with the software. Plaintiff has been the president and owner of Panatech since its inception in 1982.

         In September 1988, Plaintiff submitted an application for disability insurance to Defendant and listed his occupation as president and owner of Panatech. In October 1988, Defendant issued Plaintiff Disability Policy Number: 0102363772 (the "Policy"). The Policy provided total disability and residual disability benefits. Under the Policy, Total Disability "means that because of Injury or Sickness: You are unable to perform the important duties of Your Occupation; and You are under the regular and personal care of a Physician." Plaintiffs Response to Defendants LR 56.1 Statement of Material Facts (hereinafter, "PRDSF") ¶ 3. Under the Policy, Residual Disability means "You are unable to perform one or more of the important duties of Your Occupation; or You are unable to perform the important duties of Your Occupation for more than 80% of the time normally required to perform them; and Your loss of Earnings is equal to at least 20% of Your Prior Earnings while You are engaged in Your Occupation or another occupation; and You are under the regular and personal care of a Physician." Id. at ¶ 4. The Policy further provides that '"Your Occupation7 means the occupation in which You are regularly engaged at the time You become Disabled." Id. at ¶ 5.

         In 1998. Plaintiff was diagnosed with an invasive basal cell carcinoma of the right ear, which is a common form of skin cancer. Plaintiff subsequently underwent a number of minor outpatient surgeries, which failed to completely remove the cancer. On July 9, 2008, Plaintiff underwent major surgery (the "Surgery") resulting in the removal of his entire right ear and a portion of the right side of his head. Over the course of the following twelve months, Plaintiff underwent radiation treatment and had several more surgeries. During these additional surgeries, Plaintiff had three metal posts installed in the right side of his head for the purpose of mounting a prosthetic ear. By the end of his radiation treatment in 2009, there was "no evidence" that the cancer had returned. PRDSF at ¶ 23. Plaintiff also began wearing a prosthetic ear, which he admits is "virtually indistinguishable" from his left ear, leaving him "free of significant disfiguration." Id. at ¶¶ 23-24. However, following Plaintiffs surgeries and treatment he has been affected by various ailments, including complete hearing loss in the right ear, difficulty in localizing sounds, tinnitus, fatigue, dry mouth, and migraines.

         On November 6, 2008, Plaintiff submitted a claim to Defendant for payment of disability benefits under the Policy (the "Claim"). The Claim included a written job description, which identified Plaintiff s job title as "President, Panatech Computers Management, Inc., " and listed four duties of his occupation, in order of importance: "Sales, 6-8 hours per week; Consulting/meetings, 7- 10 hours per week; Programming, 15-25 hours per week; and Administrative, 2-3 hours per week." PRDSF ¶ 15. Plaintiffs Claim stated that he did not work at all for "2-3 [weeks] after each surgery" and that he began working part time in late July 2008 for approximately 5-10 hours per week, including •"approving payroll, payables, bills" for 1-2 hours per week; "customer contact [with] existing customers" for 1-2 hours per week; and fixing minor bugs in existing programs" for 2-3 hours per week. Id. at ¶ 16.

         In February 2009, Defendant began paying Plaintiff Total Disability benefits and continued monitoring his condition though annual medical updates and claim statements. From 2010 to 2013, Plaintiff reported to Defendant that his condition was "unchanged" or "worse, " and he was "not sure how long he will continue to work." Id. at ¶¶ 18-22. In February 2013, Plaintiff reported to Defendant that he was working 10-20 hours per week and that he was "working to keep migraines under control." kk at ¶ 22. In December, 2013, Plaintiff reported to Defendant that he was continuing to work 10-20 hours per week and that he spends his day performing work "which involves calling clients, programming, and work related paperwork." Id. at ¶ 25. In 2013-2014, Plaintiff billed clients an average of 15.35 hours per week for programming work, as compared to 15.63 hours per week prior to the Surgery.

         Following Plaintiffs Surgery and treatment, he has been able to communicate with clients via text, email, phone, and face to face meetings. Plaintiff has also been able to visit client job sites on a weekly basis to discuss and resolve computer problems. Id. at ¶ 29. Panatech, however, has not acquired any new clients since 2008, and has billed significantly fewer clients since that time. Panatech's 2013-2014 Federal Income Tax Returns show an average gross profit of $256, 094. down approximately 20 percent from its 2006-2007 average gross profit of $322, 202.

         While Plaintiff continued to report to Defendant that he was totally disabled, he was able to partake in a number of extracurricular activities. In 2013, Plaintiff renewed his pilot's license, originally obtained in the mid-1980s, and purchased an airplane. Plaintiff spends between 75-80 hours per year flying his plane to different locations in the Midwest, mostly to have breakfast with other flying enthusiasts. In May 2013, Plaintiff presented a 90 minute speaking seminar on ForeFlight, an iPad application used by pilots. In June 2013, Plaintiff published a book about the Foreflight application. In December 2013, Plaintiff reported to Defendant that he was playing in an adult ice hockey league once per week.

         In 2013, a new claims representative, Mary Kate Thorpe ("Thorpe"), reviewed Plaintiffs file. Thorpe ordered surveillance, spoke with Plaintiff on the telephone, and sent a representative to conduct an on-site meeting with Plaintiff in December 2013. Thereafter, Defendant decided to cease payment of Plaintiff s Total Disability benefits. In a letter from Defendant to Plaintiff, dated March 4, 2014, Defendant stated: "Based on the information in your claim file you are able to perform important duties of your occupation as President of Panatech Computer Management, Inc. Accordingly, we find you do not satisfy the policy definition for Total Disability. We recognize, due to your Sickness you may experience a loss of earnings. If you are experiencing a loss of 20% or more of your prior earnings you may qualify for Residual Disability benefits." PRDSF ¶ 50. The letter also requested financial documents to calculate whether Plaintiff was entitled to Residual Disability benefits. Plaintiff never submitted the requested documents, but rather insisted on payment of Total Disability benefits.

         After receiving Defendant's letter, Plaintiff wrote at least 14 letters to Defendant, the Illinois Department of Insurance, and the Illinois House of Representatives, stating that he disagreed with Defendant's determination that he did not satisfy the Policy's definition of Total Disability. In these letters, Plaintiff disputed Defendant's position, argued the facts of his case, and made legal arguments in support of his position. Plaintiff stopped paying premiums and the Policy lapsed on December 1, 2014. On July 26, 2016, the parties filed a written and signed Stipulation in which Plaintiff waived "any claim to payment of benefits for Residual Disability under the Policy." Stipulation Regarding Residual Disability Benefits, Dkt. No. 33.


         A. ...

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