Opinion ID: 3049939
Heading Depth: 3
Heading Rank: 1

Heading: History of Merrick’s Claim

Text: G. Clinton Merrick, Jr. purchased an “own occupation” disability policy from defendant Paul Revere Life Insurance Company in 1989. Under that policy, if Merrick was “unable to perform the important duties of [his] Occupation” due to “Injury or Sickness,” he was entitled to a “total disability” benefit of $12,000 per month for the duration of his disability. At the time, Merrick was one of three partners at a venture capital firm, responsible for raising capital, evaluating invest11114 MERRICK v. PAUL REVERE LIFE INSURANCE CO. ment options, and participating as a director in companies in which the firm invested. Merrick had entered the venture capital arena following a successful career as a marketing executive, where his accomplishments included campaigns for Country Time Lemonade, Crystal Light drink mix, and the “Kool-Aid Man.” In the early 1990s, Merrick began suffering from fatigue, muscle pain, mental confusion, and other difficulties that affected his work performance. His attending physician, Dr. Simon Epstein, referred him to several specialists to identify the problem. In August 1993, Dr. Stuart Mushlin indicated that Merrick may be suffering from Chronic Fatigue Syndrome (CFS) and found him unable to work. This diagnosis coincided with his partners’ decision to buy out Merrick’s interest in the firm due to recent underperformance, which Merrick attributed to his health problems. Merrick first alerted Paul Revere to his disability on May 31, 1994, stating that he was “suffering from a disabling condition” but was not yet filing a claim. Merrick then met with additional specialists and underwent a battery of specialized tests at the Mayo Clinic, some of which showed normal results and some of which indicated abnormalities. Dr. Michael Silber, summarizing the Mayo Clinic results, diagnosed Merrick as suffering from CFS and Lyme Disease, and advised that he “restart work at a much lower stress level than previously.” By this time Merrick was under the regular care of Dr. Alan Rapaport rather than Dr. Epstein; both Epstein and Rapaport concurred with the CFS diagnosis and found Merrick unable to work. Following the Mayo Clinic’s confirmation of the CFS diagnosis, Merrick filed a formal claim with Paul Revere. Paul Revere’s in-house physician reviewed Merrick’s documentation, questioned the diagnosis but ultimately agreed that the records supported a finding of “significant impairment.” MERRICK v. PAUL REVERE LIFE INSURANCE CO. 11115 Therefore Paul Revere began paying out Merrick’s claim as of December 1994, when his benefits began to accrue. Merrick tried to start a new venture capital firm in late 1994, but his illness prevented him from getting beyond the initial stages. Merrick’s other insurer, Northwestern Mutual, notified Paul Revere in June 1995 that Merrick was seeking to enter a new business venture. That August, a Paul Revere field representative offered to settle Merrick’s claim for an amount equal to four months of disability benefits, citing the “return to work and recovery” provision of his claim. Merrick declined, whereupon the representative left him with a check for one month of benefits. Merrick returned this check because he believed an endorsement provision on the check would have settled his claim upon cashing. Paul Revere then arranged for Dr. James Donaldson to perform an Independent Medical Examination in December 1995. Dr. Donaldson’s report was inconclusive: based on his tests, he concluded that Merrick “does not have either an active neurological problem or active Lyme disease” but did note his chronic fatigue, attributing it to depression. He also found that Merrick “deserves aggressive treatment, both pharmacotherapy and psychotherapy, by a seasoned psychiatrist.” Paul Revere’s claim file shows that the company interpreted Donaldson’s report as supporting “significant impairment,” and as implying that Merrick could not return to work.1 Dr. Rapaport, Merrick’s treating physician, disputed Dr. Donaldson’s conclusions and reiterated his CFS diagnosis. Paul Revere conducted an intensive review of Merrick’s claim file, which concluded that “there does not appear to be any neuropsychologically-based disability.” The field repre- 1 Dr. Donaldson’s report did not explicitly state whether he thought Merrick could return to work. Paul Revere’s internal examiner recommended that the company ask Donaldson to clarify his findings in this regard, but apparently this follow-up never happened. 11116 MERRICK v. PAUL REVERE LIFE INSURANCE CO. sentative again offered a compromise settlement, which Merrick refused. On December 9, 1996, Paul Revere denied Merrick’s claim on the ground that the internal review showed “no objective medical documentation which supports an inability to perform the duties of your occupation as a venture capitalist.” After Merrick protested, Paul Revere agreed to pay two additional months of benefits while Merrick provided the company with objective medical evidence. But the company’s medical consultants rejected the two follow-up reports Merrick offered to document his illness, so Paul Revere continued to deny Merrick’s claim. Merrick filed suit against Paul Revere and its parent corporation, Unum Provident, in April 2000, claiming breach of contract and of the duty of good faith and fair dealing.