1996 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

4-15-1996

Hofkin v. Provident Life

Precedential or Non-Precedential:

Docket 95-1608

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Recommended Citation

"Hofkin v. Provident Life" (1996). 1996 Decisions. Paper 196.

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1 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

 

No. 95-1608 

 

MARK HOFKIN, 

 Appellant 

v. 

PROVIDENT LIFE & ACCIDENT 

INSURANCE COMPANY 

 

On Appeal from the United States District Court 

for the Eastern District of Pennsylvania 

(D.C. Nos. 93-cv-01044 & 93-cv-01051) 

 

Argued March 11, 1996 

Before: STAPLETON, SCIRICA and COWEN 

Circuit Judges

(Filed April 15, l996) 

Alan I. Lourie (argued) 

Law Offices of Michael Steiman 

17th & JFK Boulevard 

1750 Eight Penn Center 

Philadelphia, PA 19103 

 Counsel for Appellant 

Richard L. McMonigle, Jr. 

Sara J. Thomson (argued) 

McKissock & Hoffman 

1700 Market Street 

Suite 3000 

Philadelphia, PA 19103 

 Counsel for Appellee 

 

OPINION OF THE COURT 

 
2 

COWEN, Circuit Judge. 

 In this diversity action we are called upon to 

interpret the meaning of insurance policy language that a state 

statute requires to be included in all Pennsylvania insurance 

contracts. Plaintiff-appellant Mark Hofkin contends that 

language in the "Proofs of Loss" and "Legal Actions" clauses in 

his accident and sickness insurance policy require only that he 

submit adequate proofs of loss within ninety days after the 

termination of a continuous period of disability. Defendantappellee Provident Life & Accident Insurance Company 

("Provident") argues that it properly denied Hofkin's claims 

because the policy language, considered as a whole, requires the 

insured to submit monthly proofs of loss in order to be eligible 

to receive disability benefits. 

 Provident filed a motion to dismiss pursuant to Rule 50 

of the Federal Rules of Civil Procedure on statute of limitations 

grounds. The district court, citing policy considerations that 

underlie suit limitations provisions, granted Provident's motion 

to dismiss. In so doing, the district court declined to follow 

the majority of state and federal courts that have interpreted 

identical policy language to require only that a claimant submit 

adequate proofs of loss within ninety days after an uninterrupted 

aggregate period of disability covered by the policy.

 
3 

 The language contained in the Provident policy is 

essentially a verbatim recitation of the terms of the 

Pennsylvania statute we must interpret. The Pennsylvania courts 

have not addressed the issue as to when proofs of loss are 

required to be filed in cases involving a continuous period of 

disability. We predict that the Pennsylvania Supreme Court would 

elect to follow the majority of courts that have interpreted the 

phrase "period for which the insurer is liable" to require the 

insured to submit proofs of loss within ninety days after the 

termination of a continuous period of disability, rather than on 

a monthly basis during the entire period of disability. 

 Under our interpretation of the policy language, an 

issue of fact remains as to whether Hofkin was totally disabled 

for the continuous period of time that he has alleged. As such, 

the order of the district court 

granting Provident's Rule 50 motion to dismiss will be reversed 

and the matter remanded for further proceedings. As to the other 

issues raised on this appeal, we will affirm the district court's 

rejection of Hofkin's argument that his claims were denied in bad 

faith. The district court's denial of Hofkin's application to 

amend his complaint will also be affirmed. 

I.

 Mark Hofkin was insured by Provident under an accident 

and sickness policy that took effect in July of 1980. At that 

time, Hofkin was the sole proprietor of a heating and air 

conditioning installation company. On March 13, 1986, Hofkin was 
4 

involved in an automobile accident in which he injured his neck, 

back, left wrist and elbow. Hofkin contends that he has never 

recovered fully from the injuries he sustained in this accident. 

 On September 13, 1986, Hofkin had his attorney submit 

to Provident a supplementary statement of claim form. On this 

form, Hofkin indicated that he had been totally disabled0 from 

March 13, 1986 through June 16, 1986. Hofkin also contended that 

he was partially disabled from June 17 up until the time he 

submitted his claim form in September. On September 16, 1986, 

Provident paid Hofkin $5,760.00 for the time he was totally 

disabled in the months immediately following the accident. In 

addition to the cash payment, Provident also sent Hofkin a claim 

form that he was required to complete in order to be eligible to 

receive residual disability benefits.0

 

0 The Provident policy provides the following definition of 

"total disability": 

(a) Until the date you attain age 55, or 

until the date indemnity for total disability 

has been paid during a period of disability 

under this policy for five years, whichever 

is later, 'Total Disability' means your 

inability to perform the substantial and 

material duties of your occupation. 

App. at 21. 

0 The policy defines "residual disability" in the following 

manner: 

(a) your inability to perform one or more of 

your important daily business duties, or 

(b) your inability to perform your usual 

daily business duties for as much time as is 

usually required for the performance of such 

duties. 
5 

 On January 19, 1987, Hofkin submitted an application 

for residual disability benefits, alleging that he had been 

unable to work full time since June of 1986. Hofkin failed, 

however, to include necessary details as to the amount of income 

he had lost as a consequence of the March 1986 accident. In a 

letter dated January 23, 1987, a Provident claims representative 

responded by sending Hofkin a letter requesting the additional 

information he would be required to provide in order to be 

eligible to receive any residual disability benefits. 

 In March of 1987, Hofkin submitted a statement of claim 

for residual disability benefits, a supplementary statement of 

claim, an accountant's report and a 1985 tax return. Again, 

specific financial information as to Hofkin's alleged loss of 

income, which was required to calculate residual disability 

benefits, was omitted. Within a week, a Provident representative 

contacted Hofkin's attorney and reiterated the insurer's need for 

more complete information. Hofkin responded on April 29, 1987, 

with a revised claim form for residual benefits, simply stating 

"None" where he was asked to indicate his present income. On 

June 25, 1987, Provident sent yet another letter to Hofkin 

requesting further documentation of his alleged reduction of 

income and additional information regarding the extent to which 

his business activities had been curtailed. 

 On March 8, 1990, after almost a three-year gap in 

communication between Hofkin and Provident, Hofkin's counsel 

 

Id. at 16. 
6 

again wrote to Provident requesting additional claims forms. 

Although Provident supplied the forms, Hofkin never completed 

them. Additional proofs of loss were sent to Provident only 

after the onset of litigation. On March 12, 1993, June 17, 1993, 

June 30, 1993, March 7, 1994, and March 10, 1994, Hofkin provided 

supplementary proofs of loss in support of his claim for total 

disability benefits. 

 Hofkin's attorney filed a writ of summons in the Court 

of Common Pleas of Philadelphia County in January of 1993. In 

March of 1993, this matter was removed to the District Court for 

the Eastern District of Pennsylvania. Hofkin asserted the 

following claims in his district court complaint: (1) he is 

entitled to total disability benefits from June of 1986 until the 

present; (2) in the alternative, he is entitled to residual 

disability benefits from June of 1986, until the present; and 

(3) Provident has acted in "bad faith" under 42 PA. CONS. STAT.

ANN. § 8371 by refusing to pay Hofkin's claims and failing to 

inform him of his alleged eligibility for total disability 

benefits at a much earlier date. Hofkin filed a motion for 

leave to file an amended complaint which was denied. On December 

1, 1994, after a four day jury trial, the district court granted 

Provident's motion for judgment as a matter of law on the basis 

of the Legal Actions clause contained in the Provident policy. 

Hofkin then filed a motion to vacate the judgment as a matter of 

law, a motion for a new trial, and requested leave to file an 

amended complaint pursuant to Fed. R. Civ. P. 59. By order dated 
7 

June 30, 1995, the district court denied Hofkin's postjudgment 

motions. This appeal followed. 

II.

 The district court had jurisdiction pursuant to 28 

U.S.C. § 1332. We have appellate jurisdiction under 28 U.S.C. 

§1291. An entry of judgment as a matter of law is subject to 

plenary review. Lightning Lube, Inc. v. Witco Corp., 4 F.3d 

1153, 1166 (3d Cir. 1993). A Rule 50 motion should be granted 

"only if, viewing the evidence in the light most favorable to the 

nonmovant and giving it the advantage of every fair and 

reasonable inference, there is insufficient evidence from which a 

jury could reasonably find liability." Id. A Rule 50 motion 

must be denied "if there is evidence reasonably tending to 

support the recovery by plaintiff as to any of its theories of 

liability." Bielevicz v. Dubinon, 915 F.2d 845, 849 (3d Cir. 

1990) (citation omitted). 

 This dispute is governed by Pennsylvania law. The 

district court's application and interpretation of state law is 

subject to plenary review. C.L. Grimes v. Vitalink 

Communications Corp., 17 F.3d 1553, 1557 (3d Cir.), cert. denied, 

115 S. Ct. 480 (1994). As a state statute required the 

dispositive policy language, we must discern the intent of the 

Pennsylvania General Assembly, not the contracting parties. As 

such, our review of the district court's interpretation of the 

Legal Actions clause is plenary. See, e.g., Ogelsby v. Penn 

Mutual Life Ins. Co., 877 F. Supp. 872, 886 n.9 (D. Del. 1995) 

("Since [the] policy provision is required by statutory mandate, 
8 

the Court looks to rules of statutory construction."); Laidlaw 

v. Commercial Ins. Co. of Newark, 255 N.W.2d 807, 811 (Minn. 

1977) ("The usual rule of construction most favorable to the 

insured does not apply to a provision required by statute."); cf.

Margolies v. State Farm Fire and Cas. Co., 810 F. Supp. 637, 640 

(E.D. Pa. 1992) (insurance company cannot contractually override 

the statutorily mandated suit limitation provisions of 

§753(A)(11)).0

 We review the district court's denial of Hofkin's 

motion for leave to file an amended complaint for an abuse of 

discretion. See Gay v. Petsock, 917 F.2d 768, 772 (3d Cir. 

1990). A district court abuses its discretion when its "decision 

rests upon a clearly erroneous finding of fact, an errant 

conclusion of law, or an improper application of law to fact." 

International Union, United Auto., Aerospace and Agric. and 

Implement Workers of Am., UAW v. Mack Trucks, Inc., 820 F.2d 91, 

95 (3d Cir. 1987), appeal on remand, 917 F.2d 107, cert. denied, 

499 U.S. 921, 111 S. Ct. 1313 (1991). Under Pennsylvania law, an 

insurer's "bad faith must be established by clear and convincing 

evidence and not merely insinuated." Terletsky v. Prudential 

 

0 This is not to say that Pennsylvania's rule of contra 

proferentum in construing policy language drafted by the insurer 

is necessarily inapplicable when evaluating the language of 

specific policy provisions required by statute. Section 753(A) 

expressly permits an insurer to "substitute for one or more such 

provisions corresponding provisions of different wording approved 

by the commissioner which are in each instance not less favorable 

in any respect to the insured or the beneficiary." Under this 

analysis, if the insurer chose to modify the required language, 

any modifications that are ambiguous should be construed in the 

insured's favor. The language that we must interpret in the 

instant case is strictly provided by statute. 
9 

Property & Cas. Ins. Co., 649 A.2d 680, 688 (Pa. Super. 1994), 

alloc. denied, 659 A.2d 560 (Pa. 1995). Our review of the 

dismissal of Hofkin's bad faith claim as a matter of law is 

plenary. Polselli v. Nationwide Mut. Fire Ins. Co., 23 F.3d 747, 

750 (3d Cir. 1994). 

III.

A.

 The disposition of this case rests upon our 

interpretation of the Provident policy's "Legal Actions" clause 

and "Proofs of Loss" clause. The Provident policy language 

mirrors that of the controlling statutory language: 

§ 753. Policy Provisions

 (A) Required Provisions. Except as 

provided in paragraph (C) of this section, 

each such policy delivered or issued for 

delivery to any person in this Commonwealth 

shall contain the provisions specified in 

this subsection in the words in which the 

same appear in this section: Provided, 

however, That the insurer may, at its option, 

substitute for one or more of such provisions 

corresponding provisions of different wording 

approved by the commissioner which are in 

each instance not less favorable in any 

respect to the insured or the beneficiary. . 

. . 

 . . . 

(7) . . . 

 Proofs of Loss: Written proof of loss 

must be furnished to the insurer at its said 

office in case of claim for loss for which 

this policy provides any periodic payment 

contingent upon continuing loss within ninety 

days after the termination of the period for 

which the insurer is liable and in case of 
10 

claim for any other loss within ninety days 

after the date of such loss. Failure to 

furnish such proof within the time required 

shall not invalidate nor reduce any claim if 

it was not reasonably possible to give proof 

within such time, provided such proof is 

furnished as soon as reasonably possible and 

in no event, except the absence of legal 

capacity, later than one year from the time 

proof is otherwise required. 

 . . . 

(11) . . . 

 

 Legal Actions: No action in law or in 

equity shall be brought to recover on this 

policy prior to the expiration of sixty days 

after written proof of loss has been 

furnished in accordance with the requirements 

of this policy. No such action shall be 

brought after the expiration of three years 

after the time written proof of loss is 

required to be furnished. 

PA. STAT. ANN. tit. 40, § 753(A)(7), (11) (1992 & 1995 Supp.) 

(emphasis added). The only difference between the Provident 

Proofs of Loss clause and the language of § 753(A)(7) is the 

substitution of the word "Company" for "insurer." The language 

of the statutory Legal Actions section is identical to that 

contained in the Provident policy. 

 The district court looked to policy considerations to 

support its conclusion that Hofkin's construction of the Proofs 

of Loss and Legal Actions clauses was "unreasonable." Looking to 

what it perceived to be the consequences of interpreting § 753 in 

the manner favored by Hofkin, the district court opined that 

 [e]ven in interpreting the policy in 

light most favorable to plaintiff, it would 

be unreasonable to interpret the clause as 

plaintiff suggests. Under plaintiff's 

proposed interpretation of the three year 

suit limitation clause, there would be no 
11 

limitation during a policyholder's lifetime 

until after he reaches age of fifty-five, 

when the policyholder would no longer meet 

the contract definition of total disability 

because of his age. Theoretically, a 

policyholder may sit on a claim for more than 

fifty years before he files suit. Therefore, 

the policy of having a suit limitation 

clause, as mandated by the State of 

Pennsylvania legislature, to expedite 

litigation and to discourage the pursuit of 

stale claims in order to reduce prejudice 

toward the defense would be inconsistent with 

plaintiff's interpretation. 

Hofkin v. Provident Life and Accident Ins. Co., No. CIV.A.93-

1044, 1995 WL 394118, at *5 (E.D. Pa. June 30, 1995). 

 As a general observation, we do not disagree with the 

district court's assessment that statutes of limitations can and 

do serve beneficial purposes. Indeed, the Pennsylvania Supreme 

Court has stated recently that statutes of limitations "are vital 

to the welfare of society and are favored in the law. They are 

found and approved in all systems of enlightened jurisprudence. 

They promote repose by giving security and stability to human 

affairs. An important public policy lies at their foundation." 

Armco, Inc. v. Worker's Compensation Appeal Bd. (Mattern), 667 

A.2d 710, 716 n.12 (Pa. 1995) (citations omitted). Although we 

agree with the district court that important policy 

considerations underlie suit limitation provisions, these 

statutes nonetheless must be enforced as written. Therefore, the 

policy considerations upon which the district court premised its 

dismissal of Hofkin's suit should not have been addressed prior 
12 

to making an effort to interpret what the "plain meaning" of the 

relevant paragraphs of § 753.0 

 The interpretation of Pennsylvania statutes is governed 

by the state's Statutory Construction Act of 1972, 1 PA. CONS.

STAT. ANN. §§ 1501-1991 (1995 Supp.). When interpreting statutory 

language, the Pennsylvania Supreme Court is guided by the "plain 

meaning" rule of construction. Commonwealth v. Stanley, 446 A.2d 

583, 587 (Pa. 1982) (citing 1 PA. CONS. STAT. ANN. § 1903(a)).0

"When the words of a statute are clear and free of ambiguity, the 

letter of it is not to be disregarded under the pretext of 

pursuing its spirit." 1 PA. CONS. STAT. ANN. § 1921(b) (1995 

Supp.). 

 Under Pennsylvania law, the policy considerations cited 

by the district court would have been relevant only if the court 

had found the language of the Proofs of Loss and Legal Actions 

 

0 Nor do all of the policy considerations involved here weigh in 

favor of Provident. Although Provident contended at oral 

argument that the plain meaning of "period for which the Company 

is liable" obviously referred to monthly payment intervals, when 

confronted with the implications of its reading of the statute, 

Provident attempted to distance itself from the natural 

consequences of this reading, contending that, in actual 

practice, Provident would not make monthly demands for proofs of 

loss upon insurance claimants. 

0 Section 1903(a) provides as follows: 

 Words and phrases shall be construed 

according to rules of grammar and according 

to their common and approved usage; but 

technical words and phrases and such others 

as have acquired a peculiar and appropriate 

meaning or are defined in this part, shall be 

construed according to such peculiar and 

appropriate meaning or definition. 

1 PA. CONS. STAT. ANN. § 1903(a) (1995 Supp.). 
13 

clauses is ambiguous. See id. § 1921(c). An insurance policy 

term is deemed to be "ambiguous if reasonable people, considering 

it in the context of the entire policy, could fairly ascribe 

different meanings to it. . . . A court, however, should not 

torture the language of the policy to create ambiguities." 

Atlantic Mut. Ins. Co. v. Brotech Corp., 857 F. Supp. 423, 427 

(E.D. Pa. 1994) (citations omitted), aff'd, 60 F.3d 813 (3d Cir. 

1995). Statutory ambiguities are to be resolved with reference 

to § 1921(c) of the Statutory Construction Act.0 We conclude, 

however, that when the policy language is considered as a whole, 

the insurance policy terms mandated by § 753 are not ambiguous 

and thus are amenable to "plain meaning" analysis under § 1903(a) 

of the Statutory Construction Act. 

 

0 See 1 PA. CONS. STAT. ANN. § 1921(c) (1995 Supp.): 

(c) When the words of the statute are not 

explicit, the intention of the General 

Assembly may be ascertained by considering, 

among other matters: 

 (1) The occasion and necessity for the 

statute. 

 (2) The circumstances under which it 

was enacted. 

 (3) The mischief to be remedied. 

 (4) The object to be attained. 

 (5) The former law, if any, including 

other statutes upon the same or similar 

subjects. 

 (6) The consequences of a particular 

interpretation. 

 (7) The contemporaneous legislative 

history. 

 (8) Legislative and administrative 

interpretations of such statute. 
14 

B.

 Both parties contend that the policy language is not 

ambiguous and warrants a decision in their favor. Hofkin argues 

that since the Proofs of Loss section states that no proofs have 

to be submitted until "90 days after the termination of the 

period for which the Company is liable," there is a jury question 

as to whether Hofkin met the contractual definition of total 

disability on a continuous basis. 

 Provident, on the other hand, places emphasis upon the 

terms "periodic payment," "period" and "monthly" in the policy 

language. Provident notes that the Proofs of Loss clause states 

that "for loss for which this policy provides any periodic 

payment contingent upon continuing loss," written proof of loss 

must be furnished "within 90 days after the termination of the 

period for which the company is liable." Provident also refers 

to language contained in the policy's "Time of Payment of Claims" 

clause,0 which states, in relevant part, that "subject to due 

 

0 See PA. STAT. ANN. tit. 40, § 753 (A)(8): 

 Time of Payment of Claims: Indemnities 

payable under this policy for any loss other 

than loss for which this policy provides any 

periodic payment will be paid immediately 

upon receipt of due written proof of such 

loss. Subject to due written proof of loss, 

all accrued indemnities for loss for which 

this policy provides periodic payment will be 

paid . . . . . . . . . . . . (insert period 

for payment which must not be less frequently 

than monthly) and any balance remaining 

unpaid upon termination of liability will be 

paid immediately upon receipt of due written 

proof. 
15 

written proof of loss, all accrued indemnities for loss for which 

this policy provides periodic payment will be paid monthly." 

Provident construes this language as meaning that the "periodic 

payment" interval is what determines the subsequently referenced 

"period for which the Company is liable." Under this 

interpretation, the Legal Actions clause's three-year limitation 

period would begin to run after the expiration of the ninety-day 

period following the first month for which benefits are at issue. 

 Although Pennsylvania state courts have not ruled upon 

this question, a significant number of state and federal courts 

have addressed the issue as to how the same (or virtually 

indistinguishable) statutorily mandated insurance policy language 

should be construed. A substantial majority of those courts have 

expressly rejected Provident's construction of the statute, 

holding that the most plausible reading of "period for which the 

Company is liable" requires that this phrase be interpreted to 

encompass the entire length of an ongoing period of disability. 

 The meaning of the phrase "period for which the Company 

is liable" was most recently discussed by the district court in 

Ogelsby v. Penn Mutual Life Insurance Co., 877 F. Supp. 872 (D. 

Del. 1994). The Ogelsby court interpreted insurance policy 

language prescribed by Delaware law which was essentially 

identical to the policy language at issue here. See 18 Del. C. 

§3311 ("Written proof of loss must be furnished to the company at 

 

Within the terms of this section, Provident elected to set the 

payment period on a monthly basis. 
16 

its said office in case of claim for loss for which this policy 

provides any periodic payment contingent upon continuing loss 

within ninety days after the termination of the period for which 

the company is liable. . . ."), quoted in Ogelsby, 877 F. Supp. 

at 885 n.7. The Ogelsby court elected to follow the weight of 

authority in this area of the law, noting that "the 

interpretation that plaintiff advances has been characterized as 

the most natural interpretation." Ogelsby, 877 F. Supp. at 886. 

 The one Pennsylvania diversity case that has expounded 

upon the same Pennsylvania statute that we must interpret has 

also favored Hofkin's interpretation of § 753. In Liberto v. 

Mutual Benefit Health & Accident Ass'n, 323 F. Supp. 1274 (W.D. 

Pa. 1971), an action was brought to recover under an accident 

policy four years after the company had discontinued paying 

benefits. Id. at 1275. The insurer argued that the plaintiff's 

claim was time barred under § 753. Expressly rejecting this 

argument, the district court held that the policy's Proofs of 

Loss and Legal Actions clauses, considered along with other 

language in the policy providing that "the insurer is liable to 

pay the totally and permanently disabled insured `so long as the 

insured lives'," id. at 1276, necessarily led to the conclusion 

that the three-year period in the Legal Actions clause had not 

yet run, and would not be triggered until the claimant was 

deceased. By analogy, the continuing period of disability in the 

instant case could conceivably continue until Hofkin reached age 

fifty-five, the expiration date of the policy. 
17 

 In Wall v. Pennsylvania Life Insurance Co., 274 N.W.2d 

208 (N.D. 1979), the Supreme Court of North Dakota interpreted 

identical language from state-required Proofs of Loss and Legal 

Actions clauses. Adopting the reasoning of the court below, the 

Wall court held that the 

"period for which the insurer is liable" 

phrase means the total period of liability in 

a continuous disability case and not a 

monthly period during which benefits accrue. 

Penn's own provision authorizing monthly 

benefits payments does not alter the specific 

wording of [the statute which provides] that 

proof of loss must be filed only after the 

insurer's liability terminates. 

Id. at 213-14. The supreme court agreed with the lower court's 

determination "that Wall's claim against Penn. Life was based 

upon continuing disability, Penn. Life's period of disability had 

not terminated, proof of loss was not yet required to be 

furnished and the Statute of Limitations had not begun to run." 

Id. at 214. See Goodwin v. National Ins. Co., 656 P.2d 135, 143-

44 (Idaho Ct. App. 1982) (same). 

 Similarly, interpreting Arkansas law, the Court of 

Appeals for the Eighth Circuit has concluded that 

[a]ny theory that supplying of proof of loss 

was a condition precedent to liability under 

the policy tends to be dispelled by the 

following policy language: "written proof of 

loss must be given . . . within 90 days after 

. . . the period for which the company is 

liable." . . . Thus the policy itself 

contemplates that proof of loss may be 

submitted after disability terminates; and 

at least to some extent difficulty the 

insurer may have in investigating a 

disability that has already ended is part and 

parcel of the insurance agreement. 
18 

Clark v. Massachusetts Mut. Life Ins. Co., 749 F.2d 504, 507 (8th 

Cir. 1984). 

 The Supreme Court of Minnesota has also addressed this 

issue. In Laidlaw v. Commercial Insurance Co. of Newark, 255 

N.W.2d 807 (Minn. 1977), the court held that an expansive 

interpretation of "period for which the Company is liable" was 

warranted by identical language contained in the Proofs of Loss 

and Legal Actions clauses, considered along with substantially 

similar language contained in a Time of Payment of Claims clause. 

The Laidlaw court found that Hofkin's interpretation of "period 

for which the Company is liable" was "the most natural 

interpretation of the phrase," id. at 811, and held that "`the 

period for which (Company) is liable' refers to the total 

continuous period of disability, be it short or long, and not 

individual four-week periods." Id. When a Laidlaw-type claim is 

presented, "the question becomes whether a genuine issue of 

material fact exists as to the existence and continuity of [the 

claimant's] total disability." Ryan v. ITT Life Ins. Corp., 450 

N.W.2d 126, 129 (Minn. 1990). 

 A New York trial court has also addressed this specific 

issue and concluded that judgment as a matter of law was 

inappropriate. In Turner v. Mutual Benefit Health & Accident 

Ass'n, 160 N.Y.S.2d 883, 890 (Sup. Ct. Oneida Cty. 1957), aff'd, 

172 N.Y.S.2d 571 (App. Div. 1958), the New York supreme court, 

interpreting the phrase "period for which the Association is 

liable," noted that 
19 

plaintiff's affidavit detail[ed] at length 

his circumstances during the period in 

question and sets forth facts which, if 

believed, might establish that he has been 

continuously disabled . . . . In these 

circumstances, an issue of fact is presented 

which cannot be disposed of on a motion for 

summary judgment. 

 Finally, in Continental Casualty Co. v. Freeman, 481 

S.W.2d 309 (Ky. 1972), the court interpreted identical language 

in the Legal Actions and Proofs of Loss clauses as meaning 

either (a) that one proof of loss will 

suffice for one continuous period of 

disability or (b) that each month of 

continuing loss must be covered by a proof of 

loss submitted within 90 days thereafter. 

Neither of these alternatives would appear to 

achieve an entirely satisfactory arrangement, 

but we see no room for any other possible 

construction of the sentence as it is worded. 

The most natural import of the expression 

'the period for which the company is liable' 

is the total continuous period, be it five 

days or five years 

Id. at 312. Interpreting the statutory language in a manner that 

favored the insured, the Freeman court concluded that "the clause 

is not ambiguous and there is no reason not to construe it as 

meaning just what it says." Id. at 311-12. 

 There is, however, some case authority in support of 

Provident's position as to how the policy language at issue 

should be interpreted. In Nikaido v. Centennial Life Insurance 

Co., 42 F.3d 557 (9th Cir. 1994), the Ninth Circuit, applying 
20 

California law, held that a "more reasonable reading of these 

provisions" supports the conclusion that "`the period for which 

the Company is liable' refers to each month of disability." Id.

at 560. 

 Similarly, in Goff v. Aetna Life and Casualty Co., 563 

P.2d 1073 (Kan. Ct. App. 1977), a state appellate court also 

interpreted "period for which the insurer is liable" in the 

manner that Provident urges us to adopt. The state court 

concluded that 

[th]e phrase [period for which the insurer is 

liable] speaks of a 'period' and applies only 

in a case where 'any periodic payment' is due 

under the pollicy (sic). Where, as here, 

payments are due monthly it seems inescapable 

that each month for which a payment is due is 

a 'period for which the insurer is liable.' 

 

Id. at 1077. 

 We expressly reject and depart from this reasoning and 

analysis. We agree with the North Dakota Supreme Court's 

statement in Wall that the policy language "authorizing monthly 

benefits does not alter the specific wording of [the policy] that 

proof of loss must be filed only after the insurer's liability 

terminates." Wall, 274 N.W.2d at 214. Provident's reading of 

§753, by contrast, is far less straightforward. To adopt 

Provident's "plain meaning" interpretation would require the 

adaptation of a strained analytical framework that imparts 

questionable significance to various discrete references in the 

statute. See Bertera's Hopewell Foodland, Inc. v. Masters, 236 

A.2d 197, 204 (Pa. 1967), appeal dismissed, 390 U.S. 597, 88 S. 
21 

Ct. 1261 (1968) ("A statute cannot be dissected into individual 

words, each one being thrown onto the anvil of dialectics to be 

hammered into a meaning which has no association with the words 

from which it has violently been separated."), overruled on other 

grounds by Goodman v. Kennedy, 329 A.2d 224 (Pa. 1974). The 

"plain meaning" that Provident asks us to adopt is not at all 

clear from the face of the statute. 

 If the Proofs of Loss clause had simply included the 

word "monthly" before "period for which the Company is liable" 

Provident's reading of the statute would obviously be correct. In 

order to obtain such a change, however, Provident would be 

required to obtain the approval of the Commissioner of Insurance. 

See PA. STAT. ANN. tit. 40, § 753(A). We seriously doubt that 

such permission would be forthcoming. Given our interpretation 

of the statute and the weight of authority interpreting 

essentially identical policy language, we refuse to interpolate 

by judicial fiat the term "monthly" before "period for which the 

Company is liable," when the Pennsylvania General Assembly 

declined to follow this course. 

IV.

 The district court also based its decision that 

Hofkin's claim was timed barred on the alternative ground that 

even if Hofkin's reading of the statute were to be adopted, the 

fact that Hofkin gave timely notice of the March 1986 accident 

and that he 

last submitted [a] claim . . . on April 29, 

1987, the running of the three year time 

limit for filing suit under the Legal Actions 
22 

clause was triggered at that time because the 

submission, which also included submissions 

on behalf of plaintiff by his attorney and 

physicians, constituted sufficient proofs of 

loss. 

Hofkin, 1995 WL 394118, at *3. The district court went on to say 

that 

 [r]egardless of when proof of loss was 

required to have been furnished under the 

Proofs of Loss clause to trigger the Legal 

Actions clause as interpreted by plaintiff or 

the court, plaintiff admits in his complaint 

that he gave timely notice of his accident 

and that he provided the defendant with all 

required proofs of loss. Therefore, in 

having fulfilled his obligation to provide 

proofs of loss, he was under obligation 

mandated by statute to file suit within three 

years after the time proofs of loss were 

required to be furnished. Clearly he did not 

do so, and that is why plaintiff is barred 

from proceeding in this case. 

Id. at *6. We reject this reading of § 753(A)(11). The Legal 

Actions clause provides, in relevant part, that "No action . . . 

shall be brought after the expiration of three years after the 

time written proof of loss is required to be furnished." PA.

STAT. ANN. tit. 40, § 753 (A)(11) (1992 & 1995 Supp.) (emphasis 

added). Nothing in this language suggests that Hofkin should be 

penalized for at least attempting, however intermittently, to 

provide proofs of loss at an earlier time than is required by 

§753(A)(11). We therefore conclude that a factual issue remains 

as to the period of time, if any, that Hofkin was continuously 

disabled in order to assess properly his eligibility for total 

disability or residual disability benefits. 
23 

V.

 We must still dispose of two other issues Hofkin has 

raised on appeal; i.e., Hofkin's bad faith claim and his 

argument that he was improperly denied the opportunity to amend 

his complaint. We reject both of these claims. 

A.

 Pursuant to 42 PA. CONS. STAT. ANN. § 8371 (1982 & 1995 

Supp.), an insurer can be held liable for punitive damages and 

other sanctions if it is found to have acted in bad faith toward 

the insured.0 Based on proofs of loss that Provident had 

received in 1986, Hofkin alleges that Provident was aware that he 

has been totally and continuously disabled since that time. Thus, 

the argument goes, by informing him that he may qualify for 

additional residual disability benefits but not telling him that 

he might qualify for additional total disability benefits, 

Provident had acted in bad faith. As the district court noted, 

 

0 Section § 8371 provides as follows: 

 In an action arising under an insurance 

policy, if the court finds that the insurer 

has acted in bad faith towards the insured, 

the court may take all of the following 

actions: 

 (1) Award interest on the amount of the 

claim from the date the claim was made by the 

insured in an amount equal to the prime rate 

of interest plus 3%. 

 (2) Award punitive damages against the 

insurer. 

 (3) Assess court costs and attorney 

fees against the insurer. 

42 PA. CONS. STAT. ANN. § 8371. 
24 

however, § 8371 did not take effect until July 1, 1990. Liberty 

Mut. Ins. Co. v. Paper Mfg. Co., 753 F. Supp. 156, 158 (E.D. Pa. 

1990). Therefore, even if we were to assume arguendo that 

Provident acted in bad faith before that date, such conduct is 

not actionable under § 8371. Lombardo v. State Farm Mut. Ins. 

Co., 800 F. Supp. 208, 213 (E.D. Pa. 1992). Furthermore, Hofkin 

has failed to provide clear and convincing evidence that 

Provident acted in bad faith after July 1, 1990. The record is 

clear that Hofkin and the attorneys retained in his on-and-off 

pursuit of earlier benefits claims have been less than diligent 

in providing information that was necessary to evaluate Hofkin's 

various claims. The record does not show that Provident engaged 

in any improper business practices. At most, Provident appeared 

to hold Hofkin to its own regulations. There was plainly no bad 

faith here. 

B. 

 Finally, the district court did not abuse its 

discretion by denying Hofkin's motion for leave to file an 

amended complaint. Hofkin filed the motion to amend on September 

22, 1994, seeking to include a claim for refund of premium. 

Hofkin concedes that his complaint did not specifically plead 

waiver of premium but argues that the "Wherefore" clause of the 

complaint, which stated that Hofkin was entitled to "any other 

relief this Honorable Court deems appropriate," was sufficient to 

apprise Provident of Hofkin's intention to seek a refund of 

premium in this case. We disagree. Given the late date of the 
25 

request and the prejudice it would impose upon Provident 

(requiring it to prepare new defenses), the district court did 

not abuse its discretion in denying Hofkin's motion to amend his 

complaint. 

VI.

 We hold that the Pennsylvania Supreme Court would adopt 

the majority approach and interpret "the period for which was 

Company is liable" language in the Proofs of Loss clause as 

referring to a continuous period of disability. Under this 

analysis, it is still possible that the suit limitation provision 

in the Legal Actions clause has not yet been triggered. 

Therefore, the order of the district court granting Provident's 

Rule 50 motion for judgment as a matter of law will be reversed 

and the matter remanded to the district court to conduct the 

necessary fact finding. We will affirm the June 25, 1995 order 

of the district court insofar as it denied Hofkin's bad faith 

claim and his motion to amend his complaint. Costs taxed against 

the appellee.