Suryadevara v. Unum Group, No. 1:2012cv03651 - Document 21 (E.D.N.Y. 2013)
Court Description: ORDER denying 8 Motion to Dismiss. Ordered by Judge I. Leo Glasser on 4/19/2013. (Levy, Joshua)
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Suryadevara v. Unum Group Doc. 21 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ------------------------------------------------------x RAO SURYADEVARA, MEMORANDUM AND ORDER Plaintiff, 12 Civ. 3651 (ILG) (RER) - against UNUM GROUP, Defendants. ------------------------------------------------------x GLASSER, Sen ior United States District J udge: Plaintiff Rao Suryadevara (“Suryadevara” or “plaintiff”) brings this action again st Unum Group (“Unum ” or “defendant”) for breach of contract and unjust enrichm ent of a disability in surance policy, seeking m oney dam ages and a declaratory judgm ent. Suryadevara claim s that he suffered from two separate disabilities and, therefore, is entitled to greater ben efits than he is currently receiving under the policy. Unum raises affirm ative defenses of equitable estoppel and fraud, arguing that Suryadevara is bound by his prior representations that he suffered from one, continuous disability. Currently before the Court is Unum ’s m otion to dism iss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons set forth below, defendant’s m otion is hereby DENIED. BACKGROU N D The following facts are taken from plaintiff’s Com plaint and docum ents attached to the Com plaint or incorporated by reference; they are accepted as true for purposes of this m otion. Plaintiff is a native of India who trained and worked as a physician outside the United States. Declaration of Patrick W. Begos in Support of Defendant’s Motion to 1 Dockets.Justia.com Dism iss dated Dec. 10 , 20 12 (“Begos Decl.”), Ex. C at 49-50 (Dkt. No. 8 -1). 1 He cam e to the United States in the 1980 s where he first received training in internal m edicin e an d then in cardiology. Id. In 1992, while a resident in internal m edicine at Detroit Medical Center, plaintiff applied for and received disability insurance from Provident Life and Accident Insurance Com pany, which is now owned by Unum . 2 Verified Com plaint (“Com pl.”) ¶ 7, Ex. A at 1, 17 (Dkt. No. 1). I. D is ability In s u ran ce Po licy The insurance policy provides that in return for quarterly prem ium s that increase annually for five years, plaintiff will receive m onthly benefits if he becom es either totally or residually disabled. Com pl., Ex. A at 3-4. Plaintiff fully paid the required prem ium s under the policy. Com pl. ¶ 11. A. To tal an d Re s id u al D is ability Under the policy, “totally disabled m eans that due to Injuries or Sickness: 1. you are not able to perform the substantial and m aterial duties of your occupation; an d 2. you are receiving care by a Physician which is appropriate for the condition causing the disability.” 1 This exhibit contains corresponden ce between the parties and attached m edical docum entation. Begos Decl. ¶ 4. The Court m ay consider these m aterials because plaintiff relied upon them in drafting the Com plaint. Cham bers v. Tim e Warner, In c., 282 F.3d 147, 152-53 (2d Cir. 20 0 2). All page num bers for this exhibit refer to ECF pages. 2 The parties disagree over whether Unum or its subsidiary Provident Life an d Accident Insurance Com pany is the proper defendant in this action. Without expressing any opin ion on this issue, the Court will refer to Unum as the defendant since the Court accepts all facts alleged in the Com plaint as true for purposes of this m otion. 2 Com pl., Ex. A at 4. “Sickness m eans sickness or disease which is first m anifested while your policy is in force.” Id. If plaintiff becom es totally disabled before his 65th birthday, then he will receive a fixed m onthly benefit for the rest of his life and will no longer have to pay prem ium s. Id. at 3, 6. The am ount of the benefit depends on when the disability begins, and does not increase over tim e. The ben efit starts at $ 4,50 0 per m onth an d increases as follows: Update Increase Date 7/ 0 1/ 93 7/ 0 1/ 94 7/ 0 1/ 95 7/ 0 1/ 96 7/ 0 1/ 97 New Monthly Benefit for Total Disability $ 4,820 .0 0 $ 5,160 .0 0 $ 5,530 .0 0 $ 5,920 .0 0 $ 6,340 .0 0 Id. at 3. The policy defines “residually disabled” to m ean that “due to Injuries or Sickness: 1. you are not able to do one or m ore of your substantial and m aterial daily business duties or you are not able to do your usually daily business duties for as m uch tim e as it would norm ally take you to do them ; 2. you have a Loss of Monthly Incom e in your occupation of at least 20 %; and 3. you are receiving care by a Physician which is appropriate for the condition causing disability.” Id. at 8 . If plaintiff becom es residually disabled while the policy is in effect, then he will receive a m onthly ben efit based on several com plex form ulas and will no longer have to pay prem ium s. Id. at 8-11. B. Elim in atio n Pe rio d All disability claim s under the policy are subject to a 90 day “Elim in ation Period,” during which tim e plaintiff will not receive benefits. Id. at 3-4. “These days need not be consecutive; they can be accum ulated during a period of disability to satisfy an 3 Elim ination Period.” Id. at 4. A subsequent period of disability will not be subject to an additional Elim ination Period “unless the later period: 1. is due to a different or unrelated cause, or 2. starts m ore than twelve m onths after the end of the period.” Id. After 90 days, plaintiff is entitled to a refund of any prem ium s paid while totally or residually disabled. Id. at 6, 11. C. N o tice o f Claim s The policy requires plaintiff to provide written notice of disability claim s within 20 days “or as soon as reasonably possible.” Id. at 15. Plaintiff m ust also provide written proof of loss “within 90 days after such loss.” Id. If plaintiff cannot reasonably provide written notice in tim e, then “the proof required m ust be furnished no later than one year after the 90 days unless you are legally unable to do so.” Id. II. Pla in tiff’s Me n tal H e alth Pro ble m s From 1992 through 1998, plaintiff pursued specialized training in cardiology. In 1995, plaintiff obtained a cardiology fellowship at Harlem Hospital, where he received high perform ance evaluations and a large salary. Begos Decl., Ex. C at 110 , 124-25. In 1996, plaintiff began behaving erratically. 3 He continued conversations after they ended and followed Dr. Eric Vanderbush, his supervisor and Chief of Cardiology at Harlem Hospital, outside the hospital. Id. at 10 9. Dr. Vanderbush characterized plaintiff as “delusional,” and three doctors at Harlem Hospital, including Dr. Vanderbush, called plaintiff’s behavior “bizarre.” Id. Plaintiff’s perform ance reviews and in com e began to drop accordingly. Id. at 110 , 127-30 . 3 The record m akes passing referen ce to a “psychotic episode” in 1993, but neither party argues that plaintiff’s disability began prior to 1996. Id. at 40 , 133. 4 Plaintiff claim s that at som e point during his cardiac fellowship, he narrated to Dr. Vanderbush the plots of what becam e the m ovies Titanic, Mission Im possible, and Gone in Sixty Seconds, and that various Hollywood producers and m ovie studios stole his ideas. Id. at 71-72. In May 20 0 0 , two years after com pleting his fellowship, plaintiff accused Dr. Vanderbush of recording these conversations and sued several film directors and studio production com panies, even flying to California to personally serve director/ producer J am es Cam eron. Id. at 74-75, 10 9-110 . All the lawsuits were dism issed. Id. In May 20 0 2, plaintiff m oved to Danville, Illinois to work as a cardiologist in the Veterans Adm inistration (“VA”) Hospital, while his fam ily rem ained in New York. Id. at 38 , 70 -71. In J uly 20 0 2, while working at the hospital, plaintiff heard voices inside his head that he thought were real and harassing him . Id. at 71, 75, 90 . After hearing the voices for between one and two weeks, plaintiff contacted the police, who took him to the em ergen cy room . Id. at 55-56, 71, 75. The em ergen cy room psychiatrist evaluated plaintiff as m entally ill and started him on antipsychotic m edication. Id. From J uly 20 0 2 through Novem ber 20 0 2, plaintiff was under the care of a psychiatrist who diagnosed him with an “Adjustm ent Disorder with Mixed Em otions” and continued him on antipsychotic m edication, although it is unclear if he actually took it. Id. at 63, 71, 75, 10 5. From Novem ber 20 0 2 through J uly 20 0 3, plaintiff’s perform ance at the VA hospital declined, and doctors and nurses were deeply concerned about his behavior. Id. at 10 5-0 7. On August 8 , 20 0 3, plaintiff resigned from the VA hospital due to m ental illness and has not worked since. Id. at 38. In October 20 0 3, the Office of Professional Medical Conduct of the State of New York requested that plaintiff undergo psychiatric evaluation. Id. at 69. The evaluation 5 diagnosed plaintiff with “Paranoid Schizophrenia,” and concluded that plaintiff presented “prodrom al sym ptom s which precede overt psychotic behavior” during his fellowship at Harlem Hospital, “becam e overtly psychotic” two years after com pleting the fellowship, and “is currently psychotic.” Id. at 74-75. The evaluation also noted that plaintiff was “quite resistant to the notion that he is m entally ill,” and recom m ended that plaintiff not be perm itted to practice m edicine until he has received proper treatm ent. Id. at 76. Based on the evaluation and additional expert testim ony, the New York Board for Professional Medical Conduct revoked plaintiff’s license to practice m edicine on J une 25, 20 0 4, which was upheld on adm inistrative review. Id. at 8 9-94. Since 20 0 3 or 20 0 4, plaintiff has been treated by psychiatrist Dr. Carol W. Berm an, who has diagnosed him with borderline personality disorder and obsessive com pulsive disorder. Id. at 140 ; Affirm ation in Opposition dated J an. 31, 20 13 (“Millm an Aff.”), Ex. C (Dkt. No. 15-3). III. In s u ran ce Co ve rage D is p u te s In Decem ber 20 0 4, plaintiff filed a total disability claim stating that he had been unable to work as a cardiologist since August 20 0 3 due to m ental illness. Begos Decl., Ex. C at 42-47. Defendant approved the claim and began paying plaintiff $ 6,340 per m onth from October 15, 20 0 3 onward, including an upfront paym ent of $ 73,755.33. Id. at 10 0 ; Com pl. ¶ 13. From 20 0 5 through 20 10 , the parties corresponded at length as plaintiff sought to enlarge his claim ed period of disability. Com pl. ¶¶ 14-24. Plaintiff essentially argued that being unaware of m ental illness is a sym ptom of m ental illness, so he was either residually or totally disabled from J anuary 1996 through October 20 0 3 onward, except for (1) March 20 0 2, (2) May 20 0 2 through J une 20 0 2, and (3) October 20 0 2 through 6 J uly 20 0 3 when he earned too m uch m oney to qualify for benefits under the policy. Id.; Begos Decl., Ex. C at 37-41, 10 1-14, 118-36. By claim ing a single, continuous disability with brief interludes of ineligibility, plaintiff sought to obtain m ore benefits, a refund of prem ium s, and an explanation for his lack of tim ely notice of claim s, while avoiding a second elim in ation period because there was no twelve m onth period when he was not disabled. Id. Defendant accepted m ost of plaintiff’s claim s and agreed to waive the notice requirem ents under the policy, but was initially resistant to the idea that plaintiff suffered from one, continuous disability. Com pl. ¶¶ 14, 16, 18 -20 , 22; Begos Decl., Ex. C. at 115-17. Instead, on three separate occasions, defendant m aintained that plaintiff suffered from two, separate disabilities with a gap of m ore than twelve m onths and, therefore, was subject to a second elim ination period. Id. Then, in J une 20 10 , based on new evidence provided, defendant concluded that plaintiff suffered from the sam e disability since J anuary 1996, and was not subject to a second elim ination period because “there has never been a period of 12 continuous m onths during which Dr. Suryadevara was not either Residually or Totally Disabled.” Begos Decl., Ex. C at 13738 ; Com pl. ¶ 24. However, since the disability began in J anuary 1996, plaintiff was only entitled to receive $ 5,530 per m onth under the policy, instead of $ 6,340 per m onth. Id. Defendant then paid plaintiff $ 169,0 46.85 to com pensate for both the elim in ation period and unnecessary prem ium s, offset by the lower m onthly benefit. Begos Decl., Ex. C at 147. When plaintiff realized that his single disability theory resulted in lower m onthly benefits, he prom ptly reversed course and claim ed that “upon further and closer review of the diagnoses,” he suffered from a new, separate disability in 20 0 3. Begos Decl., Ex. 7 C at 139-41. Specifically, plaintiff alleges that he was diagnosed with an adjustm ent disorder in 20 0 2 and paranoid schizophrenia in 20 0 3, which “are com pletely separate categories of disorders.” Id.; Com pl. ¶¶ 25-27. In correspondence from 20 10 through 20 12, defendant did not accept plaintiff’s position. Com pl. ¶¶ 28-30 . IV. Pro ce d u ral H is to ry Plaintiff filed this action in the Suprem e Court of the State of New York, County of Queens on J une 25, 20 12, and defendant rem oved the case to federal court on J uly 23, 20 12. Notice of Rem oval (Dkt. No. 1). On Decem ber 10 , 20 12, defendant m oved to dism iss the Com plaint, arguing that plaintiff is estopped from pursuing this action by his prior representations, and that success in this action would render plaintiff’s prior representations fraudulent. Defendant’s Brief in Support of Motion to Dism iss (“Def.’s Mem .”) (Dkt. No. 9). Plaintiff filed his opposition to defendant’s m otion on J anuary 31, 20 13, and, on February 13, 20 13, defendant filed its reply. Mem orandum of Law in Opposition to Defendant’s Motion to Dism iss (“Pl.’s Opp’n”) (Dkt. No. 15); Defendant’s Reply Brief in Further Support of Motion to Dism iss (“Def.’s Reply”) (Dkt. No. 17). D ISCU SSION I. Le ga l Stan d ard Rule 8 (a)(2) of the Federal Rules of Civil Procedure requires a com plaint to include “a short and plain statem ent of the claim showing that the pleader is entitled to relief.” To survive a m otion to dism iss pursuant to Rule 12(b)(6), the plaintiff’s pleading m ust contain “sufficient factual m atter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (20 0 9) (quoting Bell Atl. Corp. v. Twom bly, 550 U.S. 544, 570 (20 0 7)). A claim has facial plausibility “when the 8 plaintiff pleads factual content that allows the Court to draw the reasonable inference that the defendant is liable for the m isconduct alleged.” Iqbal, 556 U.S. at 678. Although detailed factual allegations are not necessary, the pleading m ust include m ore than an “unadorned, the-defendant-unlawfully-harm ed-m e accusation;” m ere legal conclusions, “a form ulaic recitation of the elem ents of a cause of action,” or “naked assertions” by the plaintiff will not suffice. Id. (internal quotations and citations om itted). This plausibility standard “is not akin to a ‘probability requirem ent,’ but it asks for m ore than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twom bly, 550 U.S. at 556). Determining whether a com plaint states a plausible claim for relief is “a context-specific task that requires the reviewing court to draw on its judicial experience and com m on sense. But where the well-pleaded facts do not perm it the court to infer m ore than the m ere possibility of m isconduct, the com plaint has alleged—but it has not ‘show[n]’—‘that the pleader is entitled to relief.’” Iqbal, 556 U.S. at 679 (quoting Fed. R. Civ. P. 8(a)(2)). In adjudicating a Rule 12(b)(6) m otion, a district court m ay consider exhibits an d docum ents attached to the Com plaint, incorporated into the Com plaint by reference, and “integral” to the Com plaint. Cham bers, 282 F.3d at 152-53. II. Bre a ch o f Co n tract Claim Plaintiff alleges that defendant breached the insurance contract by paying benefits of $ 5,530 per m onth from Novem ber 20 0 3 onward instead of $ 6,340 per m onth. Com pl. ¶¶ 42, 46-48. Plaintiff claim s that m edical evidence dem onstrates that he suffered from one m ental illness from 1996 through 20 0 2, was not disabled from August 20 0 2 through August 20 0 3, and suffered from a different m ental illness from August 20 0 3 onward. Id. ¶¶ 33-34, 37, 43. Since the second period of disability began 9 m ore than twelve m onths after the end of the first disability period, it should be a treated as a new, separate disability under the term s of the contract. Id. ¶¶ 39-40 . Because the second period of disability began after J uly 1997, plaintiff is entitled to benefits of $ 6,340 per m onth for this disability. Id. ¶¶ 38, 41, 44. The parties do not dispute the insurance coverage in the contract; rather, they dispute whether plaintiff was disabled from August 20 0 2 through August 20 0 3, and whether he suffered from one or two m ental illnesses. Def.’s Mem . at 3-13; Pl.’s Opp’n at 3-4. The Court cannot m ake that determ in ation at this stage of the litigation, particularly without the aid of expert discovery. Since plaintiff has offered a plausible basis for finding that he suffered from two, separately diagnosed m ental illnesses, he has pleaded facts sufficient to survive a m otion to dism iss. 4 III. Affirm ative D e fe n s e s Defendant raises affirm ative defenses of equitable estoppel and fraud, arguing that “if Suryadevara proves the truth of his allegations in the com plaint, he will be proving the falsity of his prior representations.” Def.’s Mem . at 17. Therefore, defendant wants plaintiff “estopped from changing the facts on which his claim was based,” otherwise his prior representations will constitute “fraudulent insurance acts” under New York law. Id. at 2, 14-17. “Equitable estoppel is an ‘extraordinary rem edy.’” Nasso v. Bio Reference Labs., Inc., 8 92 F. Supp. 2d 439, 449 (E.D.N.Y. 20 12) (quoting Garcia v. Peterson, 8 20 N.Y.S.2d 90 1, 90 1 (200 6)). It should only be im posed “to protect the party seeking the 4 Because it is undisputed that the parties entered into a valid contract, the Court dism isses plaintiff’s unjust enrichm ent claim . Beth Israel Med. Ctr. v. Horizon Blue Cross & Blue Shield of New J ersey, Inc., 448 F.3d 573, 586-87 (2d Cir. 20 0 6). 10 estoppel from a fraud or injustice perpetrated by the party being estopped.” River Seafoods, Inc. v. J PMorgan Chase Bank, 796 N.Y.S.2d 71, 76 (1st Dep’t 20 0 5). Under New York law, the party seeking the estoppel m ust show: (1) an act constituting a concealm ent of facts or a false m isrepresentation; (2) an intention or expectation that such acts will be relied upon; (3) actual or constructive knowledge of the true facts by the wrongdoers; (4) reliance upon the m isrepresentations which causes the innocent party to change its position to its substantial detrim ent. Nasso, 8 92 F. Supp. 2d at 449 (quoting Gen. Elec. Capital Corp. v. Eva Arm adora, S.A., 37 F.3d 41, 45 (2d Cir. 1994)). New York defines “insurance fraud in the second degree” as com m itting a “fraudulent insurance act” to “wrongfully take, obtain or withhold property with a value in excess of fifty thousand dollars.” N.Y. Penal Law § 176.25 (McKinney 20 12). A fraudulent insurance act is: com m itted by any person who, knowingly and with intent to defraud presents . . . any written statem ent as part of, or in support of . . . a claim for paym ent or other benefit pursuant to an insurance policy . . . that he or she knows to: (a) contain m aterially false inform ation concerning any fact m aterial thereto; or (b) conceal, for the purpose of m isleading, inform ation concerning any fact m aterial thereto. Id. at § 176.0 5. Courts interpreting these provisions hold that a fraudulent insurance act, m uch like equitable estoppel, requires a knowing m isrepresentation or om ission. Sterling Ins. Co. v. Chase, 731 N.Y.S.2d 778, 780 (1st Dep’t 20 0 1). “The m isrepresentation m ust be one of fact, and an opinion or m isrepresentation of law will not suffice.” In re Zarro, 268 B.R. 715, 722 (Bankr. S.D.N.Y. 20 0 1) (citing Lignos v. United States, 439 F.2d 1365, 1368 (2d Cir. 1971)). Defendant’s affirm ative defenses are unpersuasive because plaintiff has not m ade any m isrepresentations of fact. Every alleged m isrepresentation claim ed by defendant is 11 either plaintiff’s reliance on psychiatric diagnoses, or his interpretation of the insurance policy, Def.’s Reply at 2-3, neither of which constitutes a m isrepresentation of fact. MBIA Ins. Corp. v. Patriarch Partners VIII, LLC, 8 42 F. Supp. 2d 682, 714 (S.D.N.Y. 20 12). Moreover, when plaintiff asserted his disputed claim , he did so based on the sam e m edical diagnoses that defendant had been aware of for m onths, if not years. Begos Decl., Ex. C at 139-41; Millm an Aff., Ex. A. Plaintiff’s claim for benefits for the disparate periods was based upon the m edical characterization of his disability during each period, which would be known to and accepted by defendant. What is before the Court is, in essence, a determ ination of whether plaintiff’s psychiatric condition from 1996 through 20 0 2 continued thereafter, or whether plaintiff was afflicted with a separate psychiatric condition in 20 0 3. The Court can m ake no such determ ination without expert testim ony and, therefore, denies defen dant’s m otion to dism iss. CON CLU SION For all of the foregoing reasons, defendant’s m otion is hereby DENIED. SO ORDERED. Dated: Brooklyn, New York April 19, 20 13 / s/ I. Leo Glasser Senior United States District J udge 12
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