Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_14-cv-02387/USCOURTS-azd-4_14-cv-02387-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Breach of Contract

---

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Randall Knuth, 

Plaintiff, 

v. 

Paul Revere Life Insurance Company, et 

al., 

Defendants. 

No. CV-14-02387-TUC-RCC (DTF)

REPORT AND 

RECOMMENDATION 

 Before the Court are: (1) Plaintiff’s Motion for Partial Summary Judgment Re: 

Current Disability Status (Doc. 421) and (2) Defendants’ Motion for Partial Summary 

Judgment (Doc. 4611

). The motions are fully briefed and the Court heard oral argument 

on January 10, 2017. As more fully set forth below, it is recommended that the District 

Court, after its review of the record, deny both motions. 

Background 

 This case concerns a claim for disability insurance benefits made by Plaintiff 

Randall Knuth (Knuth) under two (2) separate own-occupation disability policies. The 

policies were issued by Defendants Paul Revere Life Insurance Company and Provident 

Life and Accident Company which later became subsidiaries of what is known as Unum 

(hereinafter, Unum). At the time of the onset of Knuth’s alleged disability in January 

2013 he was a practicing general dentist. The policies in issue are part of a group of ownoccupation policies known as the “Closed Block.” Once marketed to doctors, lawyers, 

 

1

 (under seal) 

Case 4:14-cv-02387-RCC Document 561 Filed 02/06/17 Page 1 of 17
- 2 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

and other professionals as the “Cadillac” of disability policies in the 1980s and 1990s, 

these policies turned out to be financially disastrous for insurers, such as Unum. 

The Motions 

 Knuth moves for entry of partial summary judgment determining that he is totally 

disabled from his occupation of dentistry from August 31, 2015, forward. Unum moves 

for entry of partial summary judgment determining that it is not liable as a matter of law 

for either bad faith or punitive damages for its conduct with respect to Knuth’s claim. 

The Facts 

 The record before the Court is extensive. The parties’ various objections to each 

other’s evidence are overruled to the extent that the Court relies on the objected-to 

evidence. With the exception of Plaintiff’s motion to strike Defendants’ exhibit 12 (Doc. 

495), to the extent that the Court does not rely on the object-to evidence the objections 

are moot. The following material facts are taken from the parties’ Local Rule 56.1 

statements. 

 Knuth alleges that on January 10, 2013, he fell backwards from his truck and 

landed on his back on his cement driveway. Doc. 422 at ¶ 13, 14. Immediately following 

the fall Knuth reported experiencing more back pain than he had experienced before the 

fall. Id. at ¶ 15. The day of his fall, Knuth’s wife helped his ice his back and he took a 

prescription painkiller (OxyContin) that he had from an old prescription. Doc. 508 at ¶¶ 

88, 89, Ex. 3a at 396. On January 11th, Knuth called his doctor, Dr. Alan K. Rogers 

(Rogers), and received a prescription for Flexeril. Id.; Doc. 469 at ¶ 13. Knuth returned to 

his dental practice four days after the fall, but he reported that he was unable to hold a 

bending, twisting position because the position caused him too much pain. Doc. 422 at ¶ 

16. On January 17, 2013, Knuth drove to Scottsdale, Arizona, to attend a car show with 

some friends. Doc. 469 at ¶ 112. 

 On January 23, 2013, Knuth saw Rogers for treatment. Doc. 469 at ¶ 23. Although 

Rogers’ clinical notes were not provided to the Court, notes in the claim file authored by 

Deborah Donohue (“Donohue”), a registered nurse employed by Unum, were provided. 

Case 4:14-cv-02387-RCC Document 561 Filed 02/06/17 Page 2 of 17
- 3 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

These notes interpret Rogers’ clinical note of this visit as follows: 

1-23-2013 – Dr. Rogers – back pain – progressively worsening low back 

pain and does not feel he can continue working as a dentist. “No fall or 

injury.” He feels he is limited due to back pain and will need retirement. 

He was referred to Dr. Goldfarb for a second opinion. 

Doc. 469 at ¶ 13, 14, 23. Based, in part, on this “no fall or injury” note, Unum now 

disputes that a fall occurred. See Doc. 466 at p. 4, ll. 5-20. 

 On February 27, 2013, Plaintiff underwent a functional capacity exam (FCE) 

performed by Dr. Richard Randall (Randall). Again, the Court relies upon Donohue’s 

notes in the claim file, which described the results in relevant part, as follows: 

He is unable to perform any categorical work at this time, even sedentary. 

He showed an inability to maintain any sustained functional work position 

in order to function at a rate conducive to gainful employment... He 

reported a slip and fall on 1/10/2013 and reported he treated himself. He 

reported he last worked on 1/16/2013. He reported his sitting tolerance to 

be 10 minutes of 1-5% of an 8 hour day, but reported he drove 2 1⁄2 hours to 

get here with 2 breaks which would not be consistent with the other 

statement 

Doc. 422, Ex. 4 at 1000. 

 On March 8, 2013, Unum received Knuth’s claim for disability benefits along with 

a statement from Dr. Rogers. Doc. 422 at ¶¶ 22, 31-32. Disability benefits specialist 

Robin Rose (Rose) began to investigate the claim by gathering medical records and 

American Dental Association codes for the types of dental procedures performed by 

Knuth. Id. at ¶ 24, 25. Knuth was interviewed by a field investigator early in the 

investigation. The field investigator noted that while Knuth sat for 45 minutes during the 

interview he often shifted in his seat and rested his arms on the table in front of him. Id. 

at ¶¶ 26, 27. Also, Knuth executed two releases, a general release and a financial release. 

Doc. 508 at ¶ 121. 

 At some point in the claims process, Unum sent Dr. McFarland (McFarland) a 

request to answer their questions about the physical demands on Knuth in his dentistry 

practice. Id. at ¶ 124. Knuth had sold his practice to McFarland, but at the time of 

Case 4:14-cv-02387-RCC Document 561 Filed 02/06/17 Page 3 of 17
- 4 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

Unum’s inquire he had been practicing with McFarland as an associate and received a 

portion of the business profits pursuant to the sales agreement. Doc. 508 at ¶ 128. On 

March 27, 2013, Knuth spoke with Rose after he discovered Rose was attempting to 

contact McFarland. He explained to Rose that McFarland was unhappy with the sale of 

the dental practice and that they (Knuth and McFarland) have a contentious relationship. 

Id. at ¶ 122. Therefore, Knuth told Rose that if she needed anything from McFarland that 

he would try to get it from McFarland. Id. at ¶ 123. 

 On or about April 10, 2013, Dr. A.J. Philbin (Philbin), an orthopedic surgeon and 

Unum’s on-site physician (OSP), conducted a review of Knuth’s medical records. From 

this review Philbin opined that it would be reasonable for Plaintiff to have restrictions 

and limitations (R&Ls) for a three month period. Doc. 422 at ¶ 28. On May 1, 2013, Sara 

McKinnon (McKinnon), Unum’s Quality Compliance Consultant (QCC), conducted a 

management review and noted that a field interview was pending with Knuth’s employer 

“which may provide additional information relating to what’s happening with the insured 

and former partner.” Doc. 508 at ¶ 127. On May 10, 2013, a Friday, Knuth sent a 

facsimile letter to Rose stating, 

It has come to my attention that you have attempted to arrange a meeting 

with Dr. Mc[F]arland to discuss my disability. I have not signed an 

authorization for you to talk with anyone other than treating physicians and 

three family members. I have provided you with all financial information, 

work hour information, type of dentistry information, location of dentistry 

information, tax returns for money received from [Dr.] Mc[F]arland 

information, and I cannot conceive of any other information that would 

cause you to need to speak with Dr. Mc[F]arland or his agents. I have 

provided all medical information from my treating doctors you requested as 

well as all financial information you have requested. I can not (sic) 

envision any information you can glean from a discussion with him that 

you cannot get from the myriad of sources I have already provided. If there 

are specific questions that you need answered that can only come from 

Mc[F]arland, they will need to go through me, and I would be happy to 

review and act on them immediately in an effort to help you complete your 

investigation in a timely fashion. I hope this offer is helpful. Should you 

have any concerns or questions please don’t hesitate to contact me [...]. 

Id. at ¶ 130. On May 14, 2013, Rose wrote to Knuth stating, in part, “We are in receipt of 

Case 4:14-cv-02387-RCC Document 561 Filed 02/06/17 Page 4 of 17
- 5 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

your letter dated May 10, 2013, and are in the process of reviewing it.” Doc. 508 at ¶ 132. 

On the same day, Unum interviewed McFarland. Id. at ¶ 135. Unum’s claims manual 

instructs employees to stop if an authorization is revoked. Id. at ¶ 131. 

 On May 24, 2013, in-house lawyer Nancy Smith (Smith) documented the claim 

file as follows, 

With respect to the authorization, I concur with your [Rose’s] plan to 

advise the insured what we had an authorization permitting us to speak with 

Dr. Farland (sic) and that we spoke with him before he contacted us and 

that no private information was conveyed to Dr. Farland (sic). 

Id. at ¶ 139. Rose testified that the reason the interview with McFarland took place is that 

she was out of the office on Friday (the day Knuth’s letter/facsimile was received) and 

her supervisor, McKinnon, was out on Monday when Rose returned to the office. 

Consequently, the interview took place before she and McKinnon could discuss Knuth’s 

letter. Id. at ¶ 143. McKinnon testified she did not believe Knuth’s letter prevented Unum 

from speaking with McFarland. Id. at ¶ 142. 

 On May 17, 2013, Unum accepted Knuth’s claim under a reservation of rights on 

the basis that his fall in January 2013 exacerbated his preexisting degenerative disc 

disease. Doc. 422 at ¶¶ 29, 30. On June 13, 2013, Unum lifted the reservation of rights. 

Id. On June 15, 24 and 25, 2013, Unum conducted surveillance on Knuth. Id. at ¶ 53. 

The notable portions of the surveillance video show Knuth (1) getting into his car by 

lowering himself backwards into the driver’s seat while bracing himself on the door and 

side of the car and (2) sitting on a backless bar stool eating lunch alone. Id. at ¶¶ 53, 54. 

 On August 1, 2013, Knuth’s claim was subjected to either a “roundtable” or a 

“TBA roundtable” Doc. 508 at ¶ 145; Doc. 514 at ¶ 145. “TBA” is an abbreviation for 

“team based assessment.” Doc. 514 at ¶ 145; see p.15, infra. Present at this TBA 

roundtable were Philbin, Rose, McKinnon, Andrea Coraccio, and nurse Donohue. Doc. 

508 at ¶ 148. A note in the claim file reflects that the file was going to be sent to OSP 

Philbin for an etiology determination, i.e., accident versus sickness. Id. at ¶ 149. 

 On August 7, 2013, Philbin concluded that the R&Ls proposed by Rogers were 

Case 4:14-cv-02387-RCC Document 561 Filed 02/06/17 Page 5 of 17
- 6 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

not supported. Doc. 508 at ¶ 186. Philbin documented the claim file stating: 

There was no reported witness to the truck falling event and circumstances 

remain vague as to how he turned over his left ankle and landed flat on his 

back. There was no trip to the ER, not seen by his doctor. There have been 

no changes clinically since that falling event other than complaints of pain, 

no dramatic or significant examination or acute imaging changes on MRI 2-

27-13 when compared to 2012 study. 

Id. Philbin documented that Knuth “appeared tolerant of medications, walks briskly in 

video with no pain inhibition evident, without ambulatory aids in a community setting to 

include operation of a vehicle.” Id. 

 Three weeks later, on August 28, 2013, Philbin wrote to Rogers asking him 

whether he agreed that “the etiology of Dr. Knuth’s reported condition is a progressive 

degenerative facet involvement of the lumbar spine at L4-5 with minimal stenosis 

considering the insured’s age, and is not related to a reported truck fall event.” Id. at ¶ 

150. On September 10, 2013, Rogers responded that the etiology of Knuth’s reported 

condition is not totally related to a reported truck fall event. Id. at ¶ 151. On this same 

day, after reviewing Rogers’ response to Philbin, Rose asked Philbin, “Is it possible to 

determine the etiology of his condition?” Philbin responded “Further clarification needed 

on this salient issue, will send letter to confirm agreement.” Id. at ¶ 153. In this same 

document, Philbin noted that Rogers “agrees Knuth’s back condition is primarily 

progressive degenerative condition and not related except to a minor degree to falling 

from truck event.” Id. On September 23, 2013, Philbin wrote a second letter to Rogers 

asking him to agree that: 

Etiology is progressive degenerative medical condition of facet 

involvement of the lumbar spine at L4-5 with minimal stenosis also 

considering Insured’s age, as being the PRIMARY AND PRINCIPAL

explanation as to etiology of Insured’s reported back condition, but also 

stating falling event contributed to a minor degree. 

Id. at ¶ 155. On September 30, 2013, Rogers responded “NO” and said that Knuth “has 

typical degenerative changes of the spine but would continue to be working had he not 

had his accident (falling from truck).” Id. at ¶ 156. Ultimately, Philbin rejected Rogers’ 

Case 4:14-cv-02387-RCC Document 561 Filed 02/06/17 Page 6 of 17
- 7 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

opinion on etiology stating that “[Rogers] does not provide any support for his opinion, 

‘would continue to be working’ in his reply, also note that AP eschews peer calls.” Doc. 

508 at ¶ 157. 

 In October 2013, Andrea Coraccio (Coraccio), Unum’s vocational expert, was 

charged with conducting a vocational review of Knuth’s claim. Doc. 422 at ¶ 33. 

Coraccio agreed that the physical demands of being a dentist include sitting, bending at 

the neck and waist, twisting, and reaching. However, she did not determine the average 

amount of time a dentist must bend and twist while performing dental procedures. Id. at ¶ 

34, 35. Using Philbin’s and Benson’s restrictions and limitations, Coraccio determined 

that the demands of Knuth’s occupation did not exceed the supported restrictions and 

limitations. Doc. 508 at ¶ 240. 

 On November 13, 2013, Knuth advised Rose he had recently received a 

neurotomy and an epidural steroid injection. Id. at ¶ 251. Additional medical records 

received by Unum from Dr. Jacobs on November 20, 2013, indicate, in part, “not better 

maybe worse[.]” Id. at ¶ 252. On November 23, 2013, Unum received new pain 

management records from Dr. Matthew Holland (Holland) which evidenced that Knuth 

received an epidural injection in the L4-5 level on October 3, 2013, and that a three level 

bilateral radio frequency neurotomy was performed on November 5, 2013. Id. at ¶ 253. 

On November 26, 2013, Rose requested that Philbin review these newly received records. 

Id. at ¶ 255. Philbin completed his review of these records on December 6, 2013 and 

concluded “R&Ls are unsupported, OSP opinion unchanged.” Doc. 422 at ¶ 49; Doc. 

508 at ¶ 256. 

 Because Plaintiff’s treating physician and Unum’s OSP disagreed, Unum referred 

the matter to their designated medical officer (DMO) who acts as a “tie-breaker” where a 

treating physician and OSP disagree. On December 10, 2013, DMO Dr. Susan Benson 

(Benson), concurred with Philbin’s opinion and rejected Rogers’ opinion. Doc. 422 at ¶¶ 

44, 49. According to records produced in this litigation, Benson has never found Unum’s 

OSP incorrect. In other words, Benson has agreed with the OSP 100% of the time. Doc. 

Case 4:14-cv-02387-RCC Document 561 Filed 02/06/17 Page 7 of 17
- 8 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

544-22 at ¶ 213. Immediately after Benson’s decision, on December 11, 2013, Unum 

terminated Knuth’s claim. Doc. 422 at ¶ 52; Doc. 466 at ¶ 52. 

 Post-termination Knuth engaged a physical therapist, Karen Lunda (Lunda), to 

conduct a second FCE. Doc. 508 at ¶ 288. On February 26 and 27, 2014, Lunda 

examined Knuth. During her examination, Lunda had Knuth duplicate the posture 

required to perform dentistry (leaning forward and twisting) and observed how long he 

was able to maintain that position. Id. at ¶ 289. Lunda determined that after one minute 

and 2 seconds, she was able to palpate a muscle spasm in Knuth’s back. Id. at ¶ 290. 

Lunda’s records indicated that the spasm released, but a second spasm occurred less than 

one minute after resuming this position. Id. at ¶ 291. Lunda reported she stopped this test 

after observing Knuth was in pain. Id. at ¶ 292. 

 On April 22, 2014, Unum received the results of Lunda’s FCE. Id. at ¶ 294. At or 

about this same time, Unum also received a letter from Holland which explained that the 

June 2013 surveillance video demonstrated a gait disturbance and the way that Knuth was 

shown backing into his car “suggests that he requires assistance with unloading the 

lumbar spine to perform simple motions such as assumption of the seated position and 

supports the allegation that he is unable to work at this time.” Id. at ¶ 295. 

 Unum sent this new information to Philbin for review. Id. at ¶ 298. Philbin’s 

review failed to address Holland’s and Rogers’ mention of his (Philbin’s) interpretation 

of the surveillance video and his review summarily disregarded Lunda’s FCE results. Id. 

at ¶ 300. Philbin did not change his decision that Knuth’s R&L’s were unsupported. Id. 

at ¶ 299. On May 15, 2014, Unum upheld the decision to terminate benefits over Knuth’s 

objection. Id. at ¶ 319. Knuth filed suit on September 30, 2014. Doc. 1. 

Standard of Review

 Summary judgment is appropriate where there is no genuine dispute as to any 

material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 

56(c). Also, a court may grant partial summary judgment where there is no genuine issue 

 

2

 (under seal) 

Case 4:14-cv-02387-RCC Document 561 Filed 02/06/17 Page 8 of 17
- 9 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

of material fact as to a particular claim or portion of that claim. Id. A party seeking 

summary judgment bears the “initial responsibility” of demonstrating the absence of a 

genuine issue of material fact. Aguilar v. Pacific Orthopedic Medical Group, 2013 WL 

5424896, at *2 (N.D. Cal. 2013) (quoting Celotex Corp v. Catrett, 477 U.S. 317, 322, 

106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). An issue of fact is genuine only if there is 

sufficient evidence for a reasonable fact finder to find for the non-moving party, while a 

fact is material if it “might affect the outcome of the suit under the governing law.” Id. 

(quoting Anderson v. Liberty Lobby, Inc., 477 U.S 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 

202 (1986)). (Additional citations omitted.) The judge’s sole function is to determine 

whether there is a genuine issue for trial ... credibility determinations, the weighing of 

evidence, and the drawing of legitimate inference from the facts, are jury functions. 

Anderson, 477 U.S. at 249, 255, 106 S.Ct. at 2511-13. 

Analysis 

Plaintiff’s Motion – Knuth’s Current Disability Status 

 The Social Security Administration found Knuth disabled on May 18, 2015. See

Doc. 422 at ¶ 63. Thereafter, Unum conducted an IME on Knuth. Id. at ¶ 78. Knuth 

contends there is no genuine issue of material fact that as of the date of the IME he was 

unable to maintain a “dental posture” so he could perform the material duties of dentistry 

in the usual and customary way. Therefore, as a matter of law, Knuth was disabled and 

entitled to coverage. 

 The insurance contracts at issue are own occupation disability policies. Under 

Arizona law, a holder of an own occupation disability policy is disabled if she cannot 

perform the important duties of her own occupation in the usual and customary way. 

Radkowsky v. Provident Life & Acc. Ins. Co., 993 P.2d 1074, 1076 & n.1 (Ariz. App. 

1999); see also, Nystrom v. Massachusetts Cas. Ins. Co., 713 P.2d 1266, 1270 (Ariz. 

App. 1986). At the time he reportedly suffered his fall, Knuth had been practicing 

dentistry for over 30 years. The usual and customary practice of dentistry requires a 

dentist to sit while bending forward and twisting. In other words, a dentist must have the 

Case 4:14-cv-02387-RCC Document 561 Filed 02/06/17 Page 9 of 17
- 10 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

ability to maintain a “dental posture.” 

 As mentioned above, in February of 2014 Lunda performed a second FCE and 

determined that about a minute after Knuth assumed the dental posture she could feel a 

muscle spasm in his back. Lunda’s FCE was provided to Unum in March 2014. Unum 

did not reverse its December 2013 decision terminating Knuth’s benefits. 

 On May 18, 2015, the Social Security Administration (SSA) determined that 

Knuth had been disabled since January 16, 2013. The SSA found Knuth was unable to 

engage in any substantial gainful activity by reason of a medically determinable physical 

or mental impairment. See Doc. 422 at Ex. 14. After Unum received the SSA disability 

determination from Knuth on June 3, 2015, it did not reinstate Knuth’s benefits but 

requested that he undergo an independent medical examination (IME). On Defendants’ 

motion, the Court ordered Knuth to submit to an IME to determine his condition at the 

time of the examination, but not retrospectively. See Doc. 138. On August 31, 2015, Dr. 

Berghausen (Berghausen) conducted the IME on Knuth and determined that he could still 

practice dentistry and was not disabled. 

 Unum now argues that Berghausen’s opinion alone is sufficient to create a jury 

question on the issue of Knuth’s disability on August 31, 2015. Doc. 463 at pp. 6-8. 

Knuth argues that Berghausen’s opinion that his pain was not disabling is unsupported in 

light of Berghausen’s reliance on Lunda’s FCE. Therefore, Knuth reasons that 

Berghausen’s opinion does not create a genuine dispute for trial. Doc. 492 at pp. 6-7, ll. 

10-20. As a general rule, the factual basis of an expert opinion goes to the credibility of 

the testimony and it is up to the opposing party to examine the factual basis of the 

opinion in cross-examination. Children’s Broadcasting Corp v. Walt Disney Co., 357 

F.3d 860, 865 (8th Cir. 2004) (cited with approval in Hangarter v. Provident Life and 

Acc. Ins. Co., 373 F.3d 998, 1017 n.14 (9th Cir. 2004)). The Ninth Circuit has explained 

that “in the context of a motion for summary judgment, an expert must back up his 

opinion with specific facts.” Aguilar, 2013 WL 5424896 at *5, quoting United States v. 

Various Slot Machines, 658 F.2d 697, 700 (9th Cir. 1981). “Put another way, an expert 

Case 4:14-cv-02387-RCC Document 561 Filed 02/06/17 Page 10 of 17
- 11 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

should ‘include how and why the expert reached a particular result, not merely the 

expert’s conclusory opinions ... [because] an expert who supplies only an ultimate 

conclusion with no analysis supplies nothing of value to the judicial process.’ ” Id., 

quoting Finwall v. City of Chicago, 239 F.RD. 494, 501 (N.D. Ill. 2006). 

 After a thorough review of Berghausen’s IME report and deposition testimony, the 

Court determines that his opinion has a sufficient foundation. According to Berghausen, 

after he examined Knuth and reviewed Lunda’s FCE, he concluded that Knuth’s pain was 

not disabling and did not prevent him from practicing of dentistry. Berghausen testified 

the level of pain which allegedly occurs to Knuth shortly after he assumes a dental 

posture is subjective. Berghausen’s opinion was based upon his personal observations of 

Knuth during the IME and his 30 years practice as an orthopedic surgeon. See e.g., Doc. 

466-25, Ex. 15 at p. 81, ll. 3-7; p. 91, ll. 15-23. See also, Doc. 466-2 at Ex. 18 at pp. 18-

20. 

 The Court determines that there is a genuine dispute of material fact regarding 

Knuth’s disability status and will recommend that the District Court deny Plaintiff’s 

motion for partial summary judgment. 

Defendants’ Motion - Bad Faith and Punitive Damages 

 Unum asks the Court to hold that it cannot be liable for bad faith and punitive 

damages for its termination of Knuth’s claim. Unum points out there were discrepancies 

in Knuth’s reporting the fall, Rogers was unwilling to communicate by phone with 

insurance representatives, and there was conflicting information regarding why Knuth 

stopped working. Unum argues Knuth’s claim was subjected to its thorough claims 

review process and that process resulted in a decision to terminate benefits. At oral 

argument, Unum’s counsel detailed the claims process, describing the levels of review 

applied to a claim. The thrust of Unum’s argument was to rhetorically ask why would 

Unum go through their comprehensive process if its intent was to deny Knuth’s claim at 

the outset. See Doc. 550 at pp. 69-71, ll. 18-14. 

 Knuth argued at the evidentiary hearing on the motion, that Unum’s procedure 

Case 4:14-cv-02387-RCC Document 561 Filed 02/06/17 Page 11 of 17
- 12 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

used to deny the claim missed the point of plaintiff’s assertion of bad faith. Knuth asserts 

the bad faith claim arises from Unum’s decision to terminate his claim in the face of 

evidence of disability contained in the claim file, not the procedure used to accomplish 

the wrongful termination. Doc. 550 at pp. 80-81, ll. 20-6. Knuth asserts his claim is 

valued at about $2 million dollars and it is within the “Closed Block” claims, which 

Unum has targeted for closure. Knuth argues there is evidence that Unum improperly 

conducted an interview of McFarland, lied about the circumstances surrounding the 

interview, and that Unum ignored evidence of pain, including the behavior depicted on 

the surveillance video, to support a wrongful denial of his claim. Knuth also points to 

evidence that his claim was subjected to “roundtables,” a procedure, questioned by other 

courts, to limit the amount Unum would have to pay on his claim. Knuth points to further 

evidence that Unum attempted to influence Rogers’ medical opinion in an effort to limit 

its financial exposure on the claim. When Unum failed to influence Rogers, it rejected 

his opinion, an act that was contrary to its claims manual. Knuth points to other evidence 

that Unum’s vocational reviewer failed to consider Rogers’ opinion and that it terminated 

his claim before it reviewed current medical records. Knuth asserts that this and other 

evidence demonstrates a pattern of conduct by Unum to disregard their duty of good faith 

to the insured. 

 Insurance Bad Faith Standard 

 “An insurance contract is not an ordinary commercial bargain; implicit in the 

contract and the relationship is the insurer’s obligation to play fairly with its insured.” 

Temple v. Hartford Ins. Co. of Midwest, 40 F.Supp.3d 1156, 1165 (D. Ariz. 2014) 

(quoting Zilisch v. State Farm Mut. Auto. Ins., 995 P.2d 276, 279 (2000)). Although 

insurers do not owe fiduciary duties to their insured, they owe duties of a fiduciary 

nature, which includes equal consideration, fairness and honesty. Id. (citing Zilisch, 995 

P.2d at 279). An insurer has an obligation to conduct a prompt and adequate 

investigation, to act reasonably in evaluating its insured’s claim, and to promptly pay a 

legitimate claim. Id. (citing Zilisch, 995 P.2d at 280). 

Case 4:14-cv-02387-RCC Document 561 Filed 02/06/17 Page 12 of 17
- 13 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 “An insurer acts in bad faith when it unreasonably investigates, evaluates, or 

processes a claim (an ‘objective’ test), and either knows it is acting unreasonably or acts 

with such reckless disregard that such knowledge may be imputed to it (a ‘subjective’ 

test).” Id. (quoting Nardelli v. Metro. Group Prop & Cas. Ins. Co., 227 P.3d 789, 794-95 

(App. 2012) (citing Zilisch, 995 P.2d at 280). If an insurer acted objectively 

unreasonable, then the court moves to the subjective inquiry and determines if the insurer 

knew or was conscious that its conduct was unreasonable or acted with such reckless 

disregard that such knowledge may be imputed to it. Id. at 1165-66. (Citation omitted.) If 

an insured offers no significantly probative evidence that calls into question the insurer’s 

subjective belief in fair debatability, the court may rule on the issue as a matter of law. 

Id. (citing Knoell v. Metropolitan Life Ins. Co., 163 F.Supp.2d 1072, 1076 (D. Ariz. 

2001). (Additional citations omitted.) 

 Discussion 

 Unum argues that it did nothing improper when it interviewed McFarland, 

reasoning that it has a responsibility to interview key witnesses. Doc. 513 at pp. 1-3. The 

Court agrees that Unum has a responsibility to interview witnesses, but here there are 

credibility issues surrounding Unum’s receipt of Knuth’s letter telling it to not interview 

McFarland, whether Unum knowingly failed to comply with a revoked authorization, and 

what was discussed with McFarland in the interview. Doc. 507 at pp. 6-7. Under Arizona 

law, an insured cannot reveal confidential information to a third party when an insured 

revokes his authorization. See ARIZ.REV.STAT. § 20-2113. Whether Knuth revoked his 

authorization and, if he did, whether Unum complied with Knuth’s revoked authorization 

and Arizona law when it interviewed McFarland are for the jury to decide. 

 Unum argues that “surveillance is a valuable, widely accepted and necessary 

investigative tool, particularly when an insured’s claim turns on his subjective report.” 

Doc. 513 at p. 3, ll. 20-23. Knuth does not dispute this position but points out that the 

issue is Unum’s interpretation of the surveillance footage and whether its contents were 

given fair consideration. Philbin testified that Knuth’s sitting leaning forward with his 

Case 4:14-cv-02387-RCC Document 561 Filed 02/06/17 Page 13 of 17
- 14 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

weight on his arms is how people with facet pain (such as Knuth) sit to relieve pain. 

Despite this testimony, this interpretation of Knuth’s behavior is not referenced by either 

Benson or Philbin in their written reports. In fact, Rose testified that Philbin’s summary 

of what he had seen on the surveillance video was inaccurate because there was evidence 

of pain behavior on the video. It is a jury question whether this pain evidence was 

willfully ignored or suppressed by Unum. 

 Next, Knuth points out that there is evidence that Philbin tried to influence Rogers 

with respect to the etiology of his condition and that Unum improperly disregarded 

Rogers’ opinion. As laid out above, Philbin twice wrote to Rogers on the issue of 

etiology asking him to agree that Knuth’s condition resulted from an illness (a 

degenerative back condition) and not an accident (the January 10th fall). Unum expects 

 Doc. 544-2 

at ¶ 160. Etiology is important to Unum because under the terms of one of Knuth’s 

policies benefits cease when he reaches 65 if his condition is as a result of illness. Doc. 

508 at ¶ 147. While Philbin has denied knowing what effect that a determination of 

etiology would have on a claim, Doc. 508 at ¶ 158, 

 Doc. 544-2 at ¶ 

159. Philbin’s credibility is for the jury to weigh and whether this is evidence of bad faith 

is also for the jury. 

 Unum is required to give significant weight to an attending physician’s opinion if 

the physician is properly licensed and the claimed medical condition falls within the 

physician’s customary area of practice and before Unum may reject an attending 

physician’s opinion, there must be specific reasons why the opinion is (1) not wellsupported by medically acceptable clinical or diagnostic standards and (2) inconsistent 

with other substantial evidence in the record. Doc. 422 at ¶ 60. All agree that Rogers was 

qualified to render his opinion, that he was properly licensed, that he was Knuth’s 

primary care physician and at all relevant times he concluded that Knuth was unable to 

Case 4:14-cv-02387-RCC Document 561 Filed 02/06/17 Page 14 of 17
- 15 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

perform his occupation of dentistry. Id. at ¶ 55, 61. Despite this, Unum rejected Rogers’ 

opinion based upon Philbin’s review of Knuth’s medical records and the June 2013 

surveillance video. Whether Philbin’s review provides an adequate basis to terminate the 

claim or that it is evidence of a pattern of conduct designed to conceal a wrongful 

termination is for the jury to decide. 

 Unum denied Knuth’s claim on December 11, 2013. On November 23, 2015, 

Unum received additional relevant medical records. Doc. 508 at ¶ 253. One day earlier, 

Knuth’s claim is identified as a “Resolution” in Unum’s claims management system. Id. 

at ¶ 254. On November 26, 2015, Rose requested that Philbin review the new medical 

records and Philbin responded on December 6, 2015. However, on December 2nd, 

McKinnon sent an email to QCC Cahill telling her that Knuth’s file will be coming back 

to her at some point for sign off. Id. at ¶ 257. Knuth argues this December 2nd email 

evidences that Unum’s denial of Knuth’s claim was a fait accompli as evidence provided 

to the Court is that ninety-nine percent of the files that are sent to Cahill are targeted for 

termination. Id. at ¶ 260. Unum argues the email was sent to manage workload. See Doc. 

513 at p. 10, ll. 8-13. Again, whether these facts support or refute Knuth’s claim, is a jury 

decision. 

 Unum has been criticized for conducting roundtables on claims. See, e.g., 

Hangarter v. Provident Life and Acc. Ins. Co., 373 F.2d 998, 1011 (9th Cir. 2004) (bad 

faith found where insurer roundtabled claims). Knuth argues his claim was roundtabled 

twice. After the first roundtable Philbin twice tried to influence Rogers on the etiology of 

Knuth’s condition. At the second roundtable, some 15 months after Knuth’s claim was 

initially made, the topic of having Knuth’s claim reviewed by Unum’s in-house 

behavioral health specialist was discussed. Doc. 508 at ¶¶ 301-304. Knuth argues this 

second roundtable was part of a continued effort to come up with a way to terminate his 

claim. Unum argues that these roundtables were actually team based assessments 

performed as a part of Unum’s duty to its insured during the claims handling process. 

Whether these so-called roundtables were designed by Unum’s to insure proper claims 

Case 4:14-cv-02387-RCC Document 561 Filed 02/06/17 Page 15 of 17
- 16 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

handling or a subterfuge designed to cover wrongful terminations is a jury question.

 Knuth argues Unum’s vocational reviewer, Coraccio, failed to consider failed to 

consider the opinion of Knuth’s primary care physician (Rogers). Instead, Knuth claims 

that Coraccio only considered Unum’s the in-house physicians’ opinions (here, Philbin) 

regarding an insured’s restrictions and limitation. Doc. 508 at ¶¶ 235-237. Unum argues 

that there is nothing wrong with this procedure because once medical personnel 

determine what restrictions and limitations are supported then Coraccio must analyze 

how those restrictions and limitations impact an insured’s ability to perform his 

occupational duties. Doc. 513 at p. 8, ll. 24-26. The body of information that Unum made 

available to its vocational reviewer is relevant to a jury’s consideration of whether Unum 

willfully ignored evidence of its insured’s disability in order to wrongfully terminate 

coverage. 

 Punitive Damages Standard 

 “In a bad faith tort case against an insurance company, punitive damages may only 

be awarded if the evidence reflects ‘something more’ than the conduct necessary to 

establish the tort.” Id. (quoting Rawlings v. Apodaca, 726 P.2d 565, 576 (1986). Rawlings

held: 

We restrict [the availability of punitive damages] to those cases in which 

the defendants’ wrongful conduct was guided by evil motives. Thus to 

obtain punitive damages, [the] plaintiff must prove that [the] defendant’s 

evil hand was guided by an evil mind...[P]unitive damages will be awarded 

on proof from which the jury may find that the defendant was ‘aware of and 

consciously disregard[ed] a substantial and unjustifiable risk that’ 

significant harm would occur. 

Id. (quoting Rawlings, 726 P.2d at 578. See also Linthicum v. Nationwide Life Ins. Co., 

723 P.2d 675, 681 (App. 1986) (“Punitive damages are recoverable in a bad faith action 

by a showing that the defendant was consciously aware of the needs and rights of the 

insured yet ignored its obligations to its insured.”) Summary judgment for the defendant 

on the issue of punitive damages must be denied if a reasonable jury could find the 

requisite evil mind by clear and convincing evidence. Id. (citing Thompson v. Better-Built 

Aluminum Prod. Co., 832 P.2d 203, 211 (1992)). 

Case 4:14-cv-02387-RCC Document 561 Filed 02/06/17 Page 16 of 17
- 17 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 Discussion 

 Taking all the evidence into consideration and viewing it in the light most 

favorable to Knuth, there is evidence from which a reasonable jury could conclude that 

Unum knowingly ignored evidence favorable to its insured and attempted to create 

evidence unfavorable to its insured with the intent to not pay benefits under two 

insurance policies. Such conduct is contrary to the fiduciary-like obligations that an 

insurer owes to its insured and evidences an evil hand guided by an evil mind. The Court 

will recommend that Defendants’ motion be denied. 

Conclusion 

 In light of the foregoing, it is RECOMMENDED that the District Court, after it 

independent review of the record, DENY Plaintiff’s Motion for Partial Summary 

Judgment re: Disability (Doc. 421) and DENY Defendants’ Motion for Partial Summary 

Judgment (Doc. 461). 

 Pursuant to Federal Rule of Civil Procedure 72(b)(2), any party may serve and file 

written objections within 14 days of being served with a copy of the Report and 

Recommendation. A party may respond to the other party’s objections within fourteen 

days. No reply brief shall be filed on objections unless leave is granted by the District 

Court. If objections are not timely filed, they may be deemed waived. If objections are 

filed, the parties should use the following case number: 4:14-cv-02387-RCC. 

 Dated this 6th day of February, 2017. 

 

Case 4:14-cv-02387-RCC Document 561 Filed 02/06/17 Page 17 of 17