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Brawley v. Northwestern Mutual Life Insurance Co.

United States District Court, N.D. Alabama, Southern Division

December 21, 2017

GLEN L. BRAWLEY, DMD, Plaintiff,
v.
NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, JACK WRIGHT, and ROBERT F. KERR, Defendants.

          MEMORANDUM OPINION AND ORDER

          VIRGINIA EMERSON HOPKINS UNITED STATES DISTRICT JUDGE.

         I. Introduction

         Plaintiff Glen L. Brawley (“Dr. Brawley”) originally filed this insurance action in the Circuit Court of Jefferson County, Alabama, on August 1, 2017. (Doc. 1-1 at 8).[1] Dr. Brawley claims that he is disabled and can no longer work as an orthodontist. His case against Northwestern Mutual Life Insurance Company (“Northwestern”) and two resident insurance agents-Jack Wright (“Dr. Wright”) and Robert F. Kerr (“Dr. Kerr”)-stems from a denial of long-term disability benefits sought by Dr. Brawley under several different disability policies.

         Dr. Brawley's lawsuit contains 6 separate counts. Count One is for breach of contract against Northwestern only. Count Two is for fraud in the inducement against all three Defendants. Count Three is for negligent and/or wanton training and supervision against Dr. Wright and Northwestern. Count Four is for suppression against all three Defendants. Count Five is for bad faith against Northwestern. Finally, Count Six is for negligent procurement and failure to notify against Messrs. Kerr and Wright.

         Northwestern removed this litigation to this Court on September 6, 2017, asserting diversity under 28 U.S.C. § 1332 as the basis for federal jurisdiction. (Doc. 1 at 1). Critical to its Notice of Removal on diversity grounds, Northwestern contends that Messrs. Kerr and Wright have been fraudulently joined by Dr. Brawley and, as a result, their presence in the lawsuit cannot defeat jurisdiction under § 1332. (Doc. 1 at 4 ¶ 11). Consistent with Northwestern's fraudulent joinder allegations, Messrs. Kerr and Wright have filed a Motion To Dismiss (doc. 8) (the “Dismissal Motion”). Dr. Brawley opposed the Dismissal Motion on October 6, 2017. (Doc. 12).

         The Court also has before it Dr. Brawley's Motion To Remand (doc. 11) (the “Remand Motion”) filed on October 6, 2017. Northwestern filed its opposition (doc. 17) to Dr. Brawley's Remand Motion on October 27, 2017, and Dr. Brawley followed with his reply (doc. 18) on November 10, 2017. Because the Court concludes that Messrs. Kerr and Wright have been fraudulently joined, complete diversity does exist in this case. Consequently, the Remand Motion is DENIED, and the Dismissal Motion is GRANTED.

         II. Dr. Brawley's Allegations Against Messrs. Kerr and Wright A.Dr. Brawley's Purchase of Five Northwestern Disability Policies

         Dr. Brawley asserts that Mr. Kerr “was a special agent of Northwestern, and subject to the control of both Northwestern and [Mr.] Wright.” (Doc. 1-1 at 9 ¶ 4). Mr. Wright “was the Northwestern general agent responsible for training, supervision and conduct of Special Agent [Mr.] Kerr.” (Id. ¶ 3).

         Dr. Brawley purchased his first disability policy from Northwestern through an agent other than Mr. Kerr or Mr. Wright. (Doc. 1-1 at 9 ¶ 7). That first policy, number D-216-477, was issued on April 10, 1981 (the “1981 Policy”).[2] Id. Prior to purchasing the 1981 Policy, Dr. Brawley explained to the agent that he “wanted what is referred to as an ‘own occupation' policy that would pay benefits if he became disabled and unable to perform as a specialist in orthodontics.” (Doc. 1-1 at 9-10 ¶ 7). The 1981 Policy “remained in full force and effect until April 10, 2017, long after [Dr. Brawley] became disabled.” (Id. at 10 ¶ 7).

         After the purchase of the 1981 Policy, Dr. Brawley “began developing a business rapport in 1987” with Mr. Kerr when he “became [Dr. Brawley]'s Northwestern agent for disability insurance.” (Doc. 1-1 at 10 ¶ 8). Dr. Brawley and Mr. Kerr met in October of 1987 to discuss Dr. Brawley's disability insurance needs. (Id. ¶ 9).

         Dr. Brawley claims that Mr. Kerr “represented to [him] that Northwestern's policies were the top of the line and true ‘own occupation' policies in the sense that [Dr. Brawley] would receive disability benefits if he could not perform, on a full time basis, the primary activities of his specific specialty (orthodontics) - that is, the physical activities performed by orthodontists on a routine and daily basis (i.e., bending wire)[.]” (Doc. 1-1 at 10 ¶ 10). This assurance was vital to [Dr. Brawley] because he was developing a very demanding and successful specialty practice ….” (Id. at 10-11 ¶ 10).

         Mr. Kerr recommended that Dr. Brawley purchase a second Northwestern disability policy. (Doc. 1-1 at 11 ¶ 11). Dr. Brawley agreed and the second policy, number D-560360, was issued on November 10, 1987 (the “1987 Policy”). Id. The 1987 Policy “remained in full force and effect until April 10, 2017, long after [Dr. Brawley] became disabled.” Id.

         In December of 1989, Mr. Kerr and Dr. Brawley met again to discuss Dr. Brawley's disability insurance needs. (Doc. 1-1 at 11 ¶ 12). Because Dr. Brawley's “practice-based income had increased, ” Mr. Kerr recommended a corresponding adjustment to Dr. Brawley's monthly benefit. Id. Mr. Kerr further indicated that the proposed policy was “virtually identical to his previous Northwestern policies in terms of its definition of ‘total disability.'” Id. Dr. Brawley accepted Mr. Kerr's recommendation and the third policy, number D-727-724, was issued on January 10, 1990 (the “1990 Policy”). Id. The 1990 Policy “remained in full force and effect until April 10, 2017, long after [Dr. Brawley] became disabled.” (Id. at 12 ¶ 12).

         In March of 2002, Mr. Kerr and Dr. Brawley met again to discuss Dr. Brawley's disability insurance needs. (Doc. 1-1 at 12 ¶ 13). Because of the continued growth of Dr. Brawley's practice, Mr. Kerr again recommended a corresponding adjustment of Dr. Brawley's monthly benefit, but this time he proposed that Mr. Kerr purchase two policies. Id. Mr. Kerr “confirmed that the policies he was recommending were essentially the same as the prior policies.” Id. “Again, [Dr. Brawley] accepted [Dr.] Kerr's recommendation and “the fourth and fifth policies, numbers D1-451-476 and D1-451-480, were issued on March 10, 2002 (the ‘476 Policy' and ‘480 Policy' respectively, and collectively, the ‘2002 Policies').” (Id. at 12 ¶ 14). The 2002 Policies “remained in full force and effect until April 10, 2017, long after [Dr. Brawley] became disabled.” Id.

         “Based on [Mr.] Kerr's representation that the two new policies were essentially the same as the three previous policies, and the relationship of trust [that] had developed between [Dr. Brawley] and [Mr.] Kerr over the years, [Dr. Brawley] did not compare the exact language of the two new policies with that of the three previous policies. (Doc. 1-1 at 12 ¶ 15 (emphasis added)). “Unbeknownst to [Dr. Brawley], the definition of total disability in the two new policies added a provision to the definition that [did not appear] in the three previous policies.” (Id. at 12-13 ¶ 15).

         The new provision stated that:

If the Insured can perform one or more of the principal duties of the regular occupation, the Insured is not totally disabled; however, the Insured may qualify as partially disabled.

(Id. at 13 ¶ 15).

         Concerning Dr. Brawley's purchase of the multiple Northwestern policies, Dr. Brawley further asserts:

17. At no time did [Mr.] Kerr, or any other Northwestern agent, including [Mr.] Wright, ever disclose the following facts to [Dr. Brawley]:
a. That Northwestern would not pay any disability benefits so long as [Dr. Brawley] could perform incidental and insignificant duties of his specialty, even if he could not perform the most significant activity or activities of his specialty;
b. That Northwestern would deny an insured orthodontist's disability claim even if said specialist could not perform the work within his specialty;
c. That Northwestern would deny an insured orthodontist's disability claim even if said specialist could only work 18 hours per week in his specialty;
d. That Northwestern would deny an insured orthodontist's disability claim even if said specialist could only perform a few of the procedures within his specialty, so long as he could still supervise technicians, prepare treatment plans and/or perform administrative work.
e. That, after 1989, Northwestern incurred excessive losses in claims on policies like [Dr. Brawley]'s first three policies, and subsequently changed its policies to where it would deny disability claims as long as an orthodontist could teach, prepare treatment plans, supervise technicians or perform administrative work, even though said specialist was unable to regularly perform the significant procedures within his specialty;
f. That once a disability claim was filed, Northwestern would ignore statements from its insured orthodontist about the level of pain he experienced while performing repeated orthodontic procedures;
g. That Northwestern would not pay partial disability benefits if an insured orthodontist could only perform orthodontist procedures for 18 hours per week;
h. That, during the claims process, Northwestern would “cherry-pick” certain information (or select bits and pieces of information) from the insured orthodontist's medical record and/or the reports of its paid experts that might support a claim denial, and then rely on that information to deny a claim while refusing the insured access to the potentially negative information so that he could respond to []it;
i. That, during the claims process, Northwestern would “cherry-pick” certain information (or select bits and pieces of information) from the insured orthodontist's medical record and/or the reports of its paid experts that might support a claim denial, and then refuse the insured access to parts of the paid expert reports supporting a disability claim;
j. That, during the claims process, Northwestern would rely on a 3-4 hour Functional Capacity Evaluation (“FCE”) to deny claims submitted by an insured orthodontist, despite the fact that the insured's disability was based, in large part, not only on increased paid and fatigue as a single work day progressed, but also chronic pain and fatigue as consecutive days of work accumulated[;]
k. That, during the claims process, Northwestern would ignore evidence from its own independent medical examiners supporting disability if it could find an internal “specialist” who would support a claim denial;
i. That because Northwestern chose not to define the phrase “principal duties” in its disability policies, and because it ignored the insured's own statement of his principal duties in his application, Northwestern considered itself free to deny claims so long as the insured was still capable of performing some duty of his pre-disability occupation.

(Doc. 1-1 at 12-15 ¶¶ 13-17).

         B. Dr. Brawley's Injury and Processing of His Disability Benefits Claim

         “On February 5, 2013, [Dr. Brawley] was involved in a brush saw accident” and suffered a severe injury of his right hand that required surgery. (Doc. 1-1 at 15 ¶ 19). Due to the work-related impact of this injury, Dr. Brawley filed a disability claim with Northwestern on February 21, 2013, under all of five policies. (Id. at 20 ¶ 34).

         As for the claims process, Dr. Brawley alleges that Northwestern first denied his claim for disability benefits on February 25, 2015 (doc. 1-1 at 21 ¶ 40), but that he appealed that denial on March 20, 2015. (Id. ¶ 41). The record confirms that Northwestern's February 25, 2015, correspondence advised Dr. Brawley that he had a 30-day window to file an appeal:

If you disagree with this decision and want to appeal it, please submit within 30 days any information or documentation that you would like for us to consider and that you believe supports your decision.

(Doc. 1-2 at 126).[3]

         In Dr. Brawley's appeal letter,

[Dr. Brawley] also requested that Northwestern provide him with copies of the documentation that it relied on in denying his claim, so that he could respond fully to the allegations and comments allegedly contained therein. On or about March 24, 2015, Northwestern wrote [Dr. Brawley] a letter in which it refused to produce the requested documentation. Following the letter, [Dr. Brawley] made numerous phone calls to Northwestern, to learn what action it was taking, but heard nothing. Finally, on or about April 28, 2015, [Dr. Brawley] was told that he needed to file a written request “to move forward with the appeal, ” which he did on April 29, 2015.

(Doc. 1-1 at 21 ¶ 41 (footnote omitted)).

         After sending Northwestern confirmation “to move forward” on April 29, 2015, Dr. Brawley allegedly made “numerous phone calls seeking information about the status of his appeal[.]” (Doc. 1-1 at 21 ¶ 42). “Northwestern did not respond to [Dr. Brawley] until December 23, 2015, approximately eight months after his appeal was filed” and “reiterated Northwestern's claim denial . . . .” (Id. at 21-22 ¶ 42).

         Subsequent to receiving the December notice denying his appeal, Dr. Brawley “submitted a 3-page letter to Northwestern, along with a new Request for Disability Benefits under all five of his Northwestern disability policies” on March 27, 2016. (Doc. 1-1 at 22 ¶ 43). Northwestern followed with a letter on June 15, 2016, “den[ying] any disability benefits to [Dr. Brawley].” (Id. ¶ 44 (emphasis omitted)).

         Dr. Brawley “continued pursuing his appeals and making numerous phone calls to Northwestern to determine its final decision.” (Id. ¶ 45). At some point after a telephone conversation with Northwestern that occurred on October 7, 2016, Dr. Brawley “received notice that Northwestern would not pay him any benefits beyond which it had already paid.” (Doc. 1-1 at 23 ¶ 45).

         III. ...


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