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McGregor v. Paul Revere Life Insurance
Citation: 92 F. App'x 412Docket: No. 02-16817, 02-17115; D.C. No. CV 97-2938 PJH
Court: Court of Appeals for the Ninth Circuit; January 14, 2004; Federal Appellate Court
Paul Revere Life Insurance Company appeals the denial of its motions for judgment as a matter of law (JMOL) and for a new trial after a jury verdict in favor of Susan McGregor, along with the denial of its summary judgment motion. The appellate court affirms the lower court's decisions under 28 U.S.C. 1291. The review of the JMOL denial is conducted de novo, reversing the jury's verdict only if unsupported by substantial evidence. Under McGregor's occupational disability policy, she qualifies for 'Total Disability' benefits if she is unable to perform the essential duties of her regular occupation, not engaged in any other gainful occupation, and under a physician's care. The determination of McGregor's total disability is factual. The policy's first requirement necessitates that McGregor cannot perform all important occupational duties to receive benefits. Though 'important duties' are not explicitly defined in the policy, California law guides the understanding. The parties dispute whether McGregor's inability to stenotype disqualifies her from performing as a court reporter. The court concludes it does; stenography is essential for court reporting, defined under California law as creating a verbatim record of court proceedings. McGregor's characterization of her duties and her assertion that 'scoping' is distinct from court reporting align with legal definitions. Testimony from various witnesses supports the conclusion that McGregor was physically incapable of stenotyping as required, reinforcing her claim for 'Total Disability' benefits. Additionally, Paul Revere's prior payment of benefits for 16 months while McGregor was not working bolsters the evidence of her eligibility for said benefits. Thus, substantial evidence allowed the jury to find that McGregor's inability to stenotype precluded her from fulfilling the critical duties of a court reporter. The policy lacks a definition of "under the regular and personal care of a Physician," yet it is acknowledged that McGregor was not denied benefits for failing to maintain such care. Testimony from Demers indicated that McGregor's infrequent doctor visits were not significant, supporting the jury's conclusion that McGregor met the policy's requirements or that the lack of regular care was not material to her coverage. In assessing a bad faith claim, the key question is whether the insurer's denial of coverage was reasonable. A claim may be deemed reasonable if a "genuine dispute" regarding coverage exists. McGregor provided substantial evidence indicating that there was no genuine dispute over coverage and that Paul Revere's denial of benefits was unreasonable. The jury could have found that Paul Revere's interpretation of the total disability provision was unreasonable and that McGregor had previously received benefits for 16 months while not working. Furthermore, the decision to terminate benefits occurred despite ongoing questions about McGregor's total versus partial disability status, suggesting that Paul Revere's rationale for denying benefits may have been developed solely for litigation purposes. Thus, the jury had sufficient grounds to determine that a legitimate dispute did not exist, making the genuine dispute doctrine inapplicable. In terms of damages, an insured who proves a breach of good faith can recover both accrued and future policy benefits. The jury awarded McGregor $336,874 in future benefits, affirming that she presented substantial evidence of her continued entitlement to disability benefits had Paul Revere honored the contract. McGregor demonstrated that she would be unable to perform the significant duties of a court reporter and would continue receiving regular physician care. Doctor Markison characterized her total disability as permanent, while McGregor testified about her ongoing physician care and past compliance with the policy's requirements. McGregor testified that she intends to cease working due to her inability to continue her career as a court reporter, her desire to care for her ill husband, and her wish to avoid future interactions with Paul Revere, the insurance company. This testimony was deemed credible, as the terms of Paul Revere’s policy incentivized her retirement. The district court found some of her testimony irrelevant, particularly regarding her poor relationship with the insurer, suggesting that the jury should assume the insurer had fulfilled its contractual obligations. However, it was concluded that McGregor's desire to avoid contact with Paul Revere stemmed from the insurer's overall conduct rather than a specific breach. The jury's award of future benefits was upheld based on substantial evidence of McGregor's permanent disability and her compliance with policy requirements. Regarding emotional distress damages, the trial court's determination of the jury’s award being not excessive was reviewed for abuse of discretion. While Paul Revere contested the $616,000 award as excessive, California law discourages comparative analysis of emotional distress awards. The trial judge, having observed the trial firsthand, was afforded deference in her ruling. McGregor described feelings of betrayal, fear, and anxiety, alongside physical symptoms related to emotional distress. The trial judge's ruling on the award was upheld as not excessive. Lastly, the district court's denial of a motion for a new trial, based on the assertion that the jury's verdict was against the weight of the evidence, was also reviewed for abuse of discretion. The conclusion that McGregor was disabled from court reporting due to her inability to stenotype supported the jury's verdict, leading to a determination that the district court did not abuse its discretion. To reverse a jury verdict due to evidentiary error, Paul Revere must demonstrate an abuse of discretion by the trial judge and that the error was prejudicial, meaning it likely influenced the verdict. The trial court did not abuse its discretion in denying a new trial based on evidence related to McGregor’s husband’s leukemia and granddaughter’s death, as the defense opened the door for such testimony and similar information was already part of the claim file. Paul Revere argued that the trial judge improperly allowed a claim for future benefits to proceed without permitting the calling of a live rebuttal witness. However, the judge had to provide McGregor an opportunity to address evidentiary deficiencies, and Paul Revere chose to read a declaration rather than prolong the trial. The district court determined that Paul Revere declined the opportunity to request additional time and had presented their evidence to the jury, thus the judge did not abuse her discretion. Regarding punitive damages, the jury could reasonably find that Paul Revere acted with oppression, fraud, or malice, as there was sufficient evidence to suggest that Paul Revere’s rationale for terminating benefits was false. The option to award punitive damages was appropriate, and the trial judge did not err in allowing the jury to decide on this matter. In terms of McGregor’s closing argument, Paul Revere failed to object during the trial, and a new trial can only be granted for plain error that undermines the fairness of the trial. Paul Revere did not sufficiently challenge the closing argument on appeal, and the trial court found the argument harmless and not egregious enough to invalidate the verdict. Lastly, expert testimony is admissible if deemed reliable and relevant, requiring the trial judge to make a reliability determination on the record to fulfill her gatekeeping role. Expert testimony, even if admitted in error, does not warrant a jury verdict reversal unless Paul Revere can prove the error was not harmless. The trial judge's brief findings indicated she maintained her gatekeeping role regarding expert testimony, and any potential error in admitting Dr. Markison’s opinion was deemed harmless, as he could provide much of his testimony as McGregor's treating physician. Paul Revere challenged the district court's denial of its summary judgment motion on breach of contract, bad faith claims, and punitive damages, but the court consistently refrains from reviewing such denials following an adverse jury verdict. The judgment of the district court was affirmed, with Judge Tashima concurring in part and dissenting in part. Notably, McGregor was not required to prove she could not engage in any occupation, only that she would not. Judge Tashima highlighted a potential mischaracterization of McGregor's testimony regarding her past and future employment intentions. Despite some confusion over her attorney's questioning, it was interpreted that McGregor conveyed she would not seek future employment, a point understood by the jury and Paul Revere's counsel. Although McGregor had worked after her benefits were terminated, there was no evidence of employment after December 1996, supporting the jury's conclusion that she had effectively chosen to retire and was thus entitled to future benefits under the Policy's 'Total Disability' provision. The trial court's decision to allow cross-examination instead of limiting it was upheld, affirming that vigorous cross-examination is a necessary component of addressing credibility issues. McGregor may file a separate motion to recover attorney's fees incurred during the appeal for the Policy benefits.