NO T R EC OM M EN DE D F OR F UL L- TEX T P UB LIC AT ION F ile Nam e: 09a0629n.06 Nos. 07-2009, 07-2055 UN ITED STA TES C OU RT OF AP P EA LS F OR THE SI XT H C IR CU IT
N IR A N J A N LA L, Plaintiff-Appellee Cross-Appellant
v. UNI TED STATES L I FE I NSURANCE COMPANY Def endant- Appellant Cross-Appe llee ) ) ) ) ) ) ) ) ) ) ) ON AP PE A L FROM THE UN I TE D ST AT ES D I STR I CT CO UR T F OR

TH E WE STE RN DI STRI CT OF MI CHI GAN

BEF ORE: M ERRI TT, RO G ER S, A ND WHI TE, Ci r c uitJudg e s. ROGERS, Circ uit Jud ge. Ni ra nja n L a l ob ta ine d a

jud g me nt t

hat U .S. L if

e wr on g fu lly ref used to pay

him disabili ty

benef its under an insura

nce c ontrac t. U.S. L ife appeals, claiming that
cover ag e under

the contra ct terminate d when Michig an briefly suspended L al’s license to prac tice medicine se vera l y ear s befor e the onse t of L al’s disability
. Be cause that conclusion is r equire d by the most natural re adingof the c ontrac t, judgment f or L al was not wa

rra nted. I. L al, a ne p h ro l o gi s t (ki dney doctor), is a

citizen of Michiga

n. U.S. L ife is a Ne w York
c or po ratio n w ith pr inc ipa l pla c e of bu sin e ss in Ne w Yo rk
. L a l’ s me mbe rs hip in t he AM A m a de him
e lig ibl e fo r a dis a

bil ity ins ur anc e po lic y

un de rwri tte n b y

U. S. L if e , und e r whic h c ov e ra g e be g an inNos. 07-2009, 07-2055

Lal v. U.S. Life Insurance Co.

- 2 - 19 83 . T he ins ur anc e po lic y re qu ir e d U .S. L if

e to p a y inc ome re pla c e me nt b e ne fi ts i f L a l be c ame disabled while the policy

was in for ce. Th e po lic y

pr ov ide d that cov e ra g e wo uld e nd “ up on the su sp e ns ion or re vo c a tio n in

any state of [L a l’ s] li cens e to p ra c tic e me dic ine a s a re su lt o f a

c ri min a l a c t, e thi c a l vi olatio n, or g ro ss malprac tice . . . .” T he insuranc e contr act a lso stated that it was g overne d by I llinois law. I n Apr i l 1 996, Michig an police r ece ived a tip that L al might be wrong fully presc ribing painkillers. Throug hout the rema inder of 1996 a n underc over of

fice r pos ed as a

patient and
re pe a te dly

re qu e ste d th a t L a l g ive him pr e sc ri pti on s f

or Vi c od in. B y the tim e L a l fi na lly re fu se d to continue presc ribing Vicodin for the unde rcove r off icer in Dece mber, L al had wr itten prescr iptions for a total of 500 Vicodin pills, notwit hstanding statements from the unde rcove r off icer such as that the offic er “

just wanted t o g et some more V icodin,” that his pain wa s g one but he “ just li ked having [the Vi c od in] a

ro un d, ” and

e ve n th a t th e of

fi c e r w a s se lli ngthe dr

ugfo r $ 5 p e r p ill
. On Marc h 27, 1997, Michig an’s De partment of Consumer & I ndustry Services , Bo ard of Medicine a

nd Di s c ip li n a

r y Su b c o mm it te e order ed that L al’s license to prac tice medicine in Michiga n be summarily

suspended. The order

was to take eff

ect “ commencingthe date [it was] served upon” L al. Shortly

afte r ser vice of the orde r on Marc h 31, L al petitioned for and re ceive d an orde r fr om the county

circ uit court that stay ed the suspension orde r subject to limits on L al’s ability to prescr ibe
na rc oti c s.Nos. 07-2009, 07-2055

Lal v. U.S. Life Insurance Co.

- 3 - Michig an pursue d criminal cha rg es, and e ventually

obtained a j u ry

verdic t ag ainst L al for “thre e counts of de livery

of a pr escr iption f

o rm ” and a sentenc e of e ighte en months of probation. The c onviction occur

red in Mar ch 199 9 ; t

h e M ic h iga

n Court of Appea ls affirme d in November 2000. After L al’s convic tio n , t h e Michig an medica l regulatory establishment conducte d various administrative proc eedings. E ventually , on J anuar y 17, 2003, the Michig an B oard of Medicine Di sc ipl ina

ry Sub committ e e iss ue d a

n o rd e r t hat f ine d L a l $5 00 0 a

nd su sp e nd e d h is l ic e ns e to pr a c tic e me dic ine fo r s ix mon ths and on e da y , e ff e c tiv e 30 da

y s a ft e r t he or de r w a s si g ne d. Th is suspension took effe ct on Februa ry 16, 2003. The medical licensing board r estored L al’s license on October 9, 2003. Meanwhile, L al’s chr onic panc reatitis worsene d. S er i ous attacks se nt him to hos pital
emer g ency

rooms in 1999, 2000, and 2001. L al t estified that his pancr eatitis was under control fr om 2001 until early

2003. But in January

2003 his condition took a turn for the worse, a nd at the beg inning of Fe bruar

y his condition beca

me so bad that he cea sed working . L al’s phy sician found that L al was disable d from pra cticingmedicine a s of Fe bruar y 4, 2003. L al filed for

disability

benef its under his insurance contra ct with U. S
. L ife. U.S. L ife
co n cl u d edt h at co v er age h adt erm i n at edb ec au s e o f t h e 1 9 9 7 s u s p en s i o nan d re fu s edt o p ay , t h o u gh it did refund the pr emiums L al had pa id for cove rag e since 1997. L a l fi le d a tw o- c ount c omp la int a g a ins t U. S. L if e in Mic hig an c ourt
. L a l c la ime d th a t U .S. L ife bre ache d the insuranc e contr act by withholding pay

ment for his valid claim of disability and that its failure to pay

violated Michig an’s Unif orm Tra de Practice s Act. U.S. L ife re moved in Dec emberNos. 07-2009, 07-2055

Lal v. U.S. Life Insurance Co.

- 4 - 2005. I n Dec ember 2006, the district c ourt denied U.S. L ife’s motion for summar y judgme nt and fo un d that as a matte r o f l aw L a l’ s li c e ns e to p ra c tic e me dic ine wa s f ir st s us pe nd e d s o a s to te rm inate the insuranc e contr act on F ebrua ry 16, 2003, rathe r than in 1997. Th e dis tr ic t c ourt

c on du c te d a

be nc h tr ia l in

June 20 07
. Th e c ourt c on c lud e d th a t L a l be c ame unable to wor

k as a phy sician as of

Fe bruar y 4, 2003. The c ourt furthe r found that U.S. L ife brea ched its contra ct bec ause L al met all nece ssary conditions unde r the policy , including that he was
un de r t he re g ula r c are of a ph y sic ian for his dis a

bil ity . The c ourt

he ld t hat U .S. L if

e wa s n ot l ia

ble
un de r t he Mic hig an Uni fo rm Tr a de Pr a c tic e Ac t be c a us e , und e r t

he n- g ov e rn ingpr e c e de nt, c la ims

“ re a so na bly in dispute ” we re no t su bje c t to the 12 % i nte re st p e na lty pr ov ide d b y

that A c t f

or late pa y me nt. L al appe als, cla i m i n g t h at a subseque nt chang e in Michig an law r equire s that he re ceive a 12% intere st rate on his judg ment. U.S. L ife a lso appea ls, claiming th at L al was not unde r the regular care of a phy sician for his disabilit y

as the c ontrac t require s, and that the c ontrac t terminated in 1997 when Michig an suspende d L al’s license . The last issue is dispositi ve. II. The 1997 suspension of L al’s license , though shor t-lived, was suff

ici en t t o trig g er the termination clause in the contra ct and thus re quires judg ment for U.S. L ife. The c ontrac t term at issue provides that cover ag e ends “ upon the suspension or re vocation in any state of [L al’s] lice nse to prac tice medicine as a r esult of a c riminal act, e thical violation, or g ross malprac tice . . . .”Nos. 07-2009, 07-2055

Lal v. U.S. Life Insurance Co.

- 5 - The 1997 s u s p en s i o n went into eff ect a fter L al re ceive d service of the orde r of summary suspension on Marc h 31, 1997. L ater that day , the state c ircuit court e ntere d an orde r: Ex Parte Or der Stay

ing the Orde r of Summary Suspension Th is m a tte r h avin g c ome be fo re the Court on a Pe tit ion

fo r E x Par

te Orde r t o Stay the Order of Summary Suspension and the Court having been f ully advised in the pre mises, I T I S HEREBY OR DE R E D as fo llo ws : The Or der of

Summary

Suspension filed in the above captioned matter on Mar ch 27, 1997, bea ring Complaint Number 43 97 0316 00 is h e re by sta y e d unti l Ap ril

14 , 1 99 7 a t 1: 30p. m. he aring on thi s pe tit ion . P e tit ion e r sh all no t pre sc rib e an

yna rc oti c or

pa in medicine

. [i talicized material ha ndwritten] All further

proce eding s u n t i l 2 0 0 3 did not result in the suspension of L al’s license . Such pr oc e e din g s a s o c c ur

re d in oth e r a g e nc ie s d o no t sh e d li g ht o n th e le g a l r e a so nin g be hin d th e c ir c uit court orde r. Th e un a mbi g uo us language of t he co nt ractsai d t hat L al’ s co nt ractter mi nat ed o nce h is li cense was suspende d for e thical violations. Nothi n g in the lang uag e sug g ests that an extremely short period of suspe nsion is not s ufficie nt to trigg er te rmination. L al does not ar g ue that the c ontrac t l an gu age i s ambig uous, though if the lang uag e we re ambig uous it would be interpre t ed in hi s favor
. See A urelius v. State Farm Fire &Cas. Co. , 894 N. E. 2d 76 5, 76 9 (I ll. Ap p. Ct. 20 08 ). Rathe r, L a l argue s th a t th e langua g e is u nambi g uo us in h is favor . But L al’s cla im that the state mere ly “took action” to suspend his license in 1997 rather than

“ su spend ing ” it c ann ot b e re c on c ile d w iththe un ambi g uo us me anin g of tho se te rm s, pa

rt ic ula rl yNos. 07-2009, 07-2055

Lal v. U.S. Life Insurance Co.

- 6 - g ive n th a t th e c on tr a c t r e fe rs to b oth su sp e ns ion

and re vo c a tio n. L a l’ s a

rgume nt i mpl ie s th a t on ly
re vo c a tio n w ou ld t e rm inate c ov e ra g e , a posi tio n not re c on c ila ble wi th t he langua g e of

the c on tr a c t. L al ar g ues that the provision should be re ad as not immediate ly terminating cover ag e if the state suspends a lice nse wrong fully or without leg al justification. But whe ther or not suc h a libera l
rea ding is wa

rra nted, in this case L al had committ ed ethica l and cr iminal violations befor e the 1997 suspension. The only

thing that sug g ests that the 1997 suspension was imprope r is the state c ourt’s stay of that suspension—but that court did not provide its rea soning in staying the suspension, and the record as a whole provides no rea son to conclude that the state ac ted wrong fully by suspending L al’s license in 1997. I n r e fu sin g U. S. L if

e ’s mot ion

fo r s umm ary

judgm ent be low , th e dis tr ic t c ourt e vid e ntl y conclude d that the state court stay ed the suspension nunc pro tunc, ef fec tively “unsuspending ” L al retroa ctively

for the f ew hour s betwee n the suspension taking eff ect and the entry

of the stay . But the or de r d id n ot e xplic itl y say tha t it a c te d r e tr oa c tiv e ly

and g ave no re a so n to ass um e that it so acte d. Even if the court were to have issued its order with the intent of r etroa ctively shielding a

ny unlicensed pr actice o f medicine L al may have c ommitt ed on Mar ch 31, it is hardly clea r that the
c ourt c ou ld e x part e re ins tate L a l’ s c ov e ra g e wi th U. S
. L if e in c on tr ave nti on

of the te rm s o f h is
c on tr a c t. B e c a us e c ov e ra g e te rm inate d on c e the state su sp e nd e d L a l’ s li c e ns e , th e dis tr ic t c ourt sh ou ld have g ra nte d s umm ary

jud g me nt t o U .S. L if

e . T he rem ainingiss ue s r a ise d o n a pp e a l and c ro ssa pp e a l are the re fo re moo t.Nos. 07-2009, 07-2055

Lal v. U.S. Life Insurance Co.

- 7 - III . F or the se re a so ns , w e re ve rs e the jud g me nt o f t he dis tr ic t c ourt
.Nos. 07-2009, 07-2055

Lal v. U.S. Life Insurance Co.

- 8 - WHITE , Circuit Judge, dissentin g. Ire sp e c tf ull y dis se nt, and

wo uld a ff ir m. The orde r of summary

suspension order ed that L al’s license to prac tice medicin e in Michig an “s h al l be and he reby

is summarily

suspended c ommencingthe date this orde r is serve d upon Respondent.” The order

was ser ved on L al on Marc h 31, 1997. On that same da y , a cir cuit court stay ed the or der until it could hold a hea ring
. On April 7, the court enter ed an amende d order staying the orde r of summ ary suspension until afte r hearingand dec ision by the administrative ag ency . On J uly 30, an Administrative He aringOffic er sig ned a stipulated or der liftingthe orde r of summary
s u s p en s i o nan d

re s t ri ct i n g L al ’s au t h o ri t y t o p re s cr i b e an d d i s p en s e n ar co t i c m ed i ca t i o n , p en d i n g a final dete rmination by

the Disci p l i n ary

authority . The July

30 order was amended on August 28. The B oard of

Medicine D isciplinary

Subcommitt ee e ntere d its Final Orde r on January 17, 2003, suspending L al’s license for six m onths and one da y . The orde r stated “this order shall be ef fec tive 30 day s from the date” of signing
. On the basis of the se fa cts, the district judg e conc luded that the circ uit c ourt’s order staying the orde r of summary

suspension operated t o prese rve the status quo, “the last, uncontested status prec edingcommence ment of the c ontroversy [,] ” L a l v. Un i t ed Stat es Life Ins. Co., No. 1:05-CV-853, 2 0 0 6 W L 3 5 4 2 6 7 0 , at * 3 (W
. D. M i ch
. De c. 7 , 2 0 0 6 ), ci t i n g Blaylock v. Chek er Oil Co. , 547 F.2d 962, 965 (6th Cir.1976), and that L al’s license was not ef fe ct i vely suspended on Ma

rch 31, 1997. Thus , th e c ourt

c on c lud e d, the po lic y re ma ine d in e ff e c t until F e br

ua ry 16 , 2 00 3, the e ff

e c tiv e date of the suspension. The m aj o rity reje cts this reasoning , concludinginstead that L al’s license wasNos. 07-2009, 07-2055

Lal v. U.S. Life Insurance Co.

- 9 - suspended f

rom the t i m e t h e o rd er of summary suspension was ser

ved until the stay

order was
e nte re d, and

that th is s us pe ns ion tr ig g e re d th e te rm inatio n c la us e . I wo uld a ff ir m th e dis tr ic t c ourt
. Th e po lic y

sta te s: TERM IN AT ION - D at e Ins ur anc e Ends Your insura

nce w ill end on the ear liest of: 1. the date the g ro up po lic y e nd s; 2. the end of

the per iod for which the last premium has bee n paid by y ou; 3. the date you retire ; 4. the ce rtificate anniver sary coincidin g wi t h or next following the date you attain ag e 75; 5. the date you cea se to be a n Eligible Me mber a

nd not Actively

at Work; 6. up on the su sp e ns ion

or re vo c a tio n in

any state of your l ic e ns e to prac tice medicin e as a result of a criminal ac t, ethical violation, or g ross malprac tice; or upon y our surre nder of y our license to prac tice medicine in any

state prior to, during , o r i n l ieu of a ny medical licensure board inquiry , investigation or other a ction perta ining to a criminal ac t, ethical violation, or g ross malprac tice . Al t h o u g h the terms “a ctively at work” and “r etired” are define d by the policy , “suspension” a nd

“ r e v o c a ti o n ” ar e n o t. N e v e rth e le s s , a ll th e te r mi n a ti n g e v e n ts c o n te mp late e it h e r th a t t h e p o licy expires or that the insured is no long er c o v ere d due to ag e or ina ctivity . I t is not clear that L al’s license w as suspende d on Marc h 31, 1997, even f or a br ief pe riod of time. Although the policy does not use the ter m “final suspension,” it also doe s not use the term “take action to suspend.” The term “suspension” connotes that one’s privileg e to pra ctice ha s been abrog ated or

withheld. Had the B oard of Medicine de cided on a

lesser sa nction in its Final Orde r,
o n e c o u l d c e rt a i n l y h av e d e b a t e d w h e t h e r L a l ’ s l i c e n s e w a s e v e r s u s p e n d e d a ta l l u n d e r t h e p o l i c y.Nos. 07-2009, 07-2055

Lal v. U.S. Life Insurance Co.

- 10 - The orde r of

s u m m ary s u s p en s i o ns t at edt h at L al ’s l i ce n s e w o u l d b e s u s p en d ed“commenc ing th e d a te [th e ] o r d e r is s e r v e d ;” it d id n o t s tate “ u

p o n s e r v ic e . ” A c o u rt o f c o mp e te nt jurisdiction stay ed the or der the same da te it was ser

ved
. T h u s , ev en b y

the terms of the order s, it is unclear whether L al’s license was e ver suspe nded. The district court conc luded that the e ff ec t of the stay was to p re s er v e “the status quo so that L al’s license was not suspende d pursuant to the Or der of Summary Suspension.” Lal , 2 00 6 WL 35 42 67 0, a t *3 . G ive n th e tim ing of the or de rs , this wa s a sound conclusion. While the Boa rd of Me dicine took action to summarily suspend L al’s li cense , that action was stay ed by the court. Notwithstanding the order of summary suspension, as a c onsequenc e of the c ircuit court’ s order , L al’s license continued to be in effec t until it was suspended on Fe bruar y 16 , 2 00 3. Iwo uld

a ff ir m.