Court Opinion

ID: 9957954
Source: CourtListenerOpinion
Date Created: 2024-04-05 20:01:01.632912+00
Date Added: 2024-06-11T08:17:33.794303
License: Public Domain

USCA11 Case: 22-12064    Document: 52-1      Date Filed: 04/05/2024   Page: 1 of 14

                                                    [DO NOT PUBLISH]
                                    In the
                 United States Court of Appeals
                         For the Eleventh Circuit

                           ____________________

                                 No. 22-12064
                           ____________________

        WILLIAM A. LEMONS, JR. MD,
                                                       Plaintiﬀ-Appellant,
        versus
        PRINCIPAL LIFE INSURANCE COMPANY,

                                                     Defendant-Appellee,

                           ____________________

                  Appeal from the United States District Court
                     for the Northern District of Alabama
                     D.C. Docket No. 2:18-cv-01040-CLM
                           ____________________
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        2                      Opinion of the Court                  22-12064

        Before GRANT, ABUDU, and ED CARNES, Circuit Judges.
        PER CURIAM:
                Appellant William A. Lemons, Jr., M.D., a doctor who spe-
        cialized in obstetrics and gynecology (“OB/GYN”), sued Principal
        Life Insurance Company (“Principal”) for breach of contract and
        bad faith for its refusal to pay him disability beneﬁts under a “regu-
        lar occupation rider” provision contained in his insurance policy
        with the company. A jury returned a verdict in Lemons’s favor on
        the breach of contract claim and in favor of Principal on the bad-
        faith claim. On appeal, Lemons challenges the district court’s rul-
        ings limiting the extent of damages he could recover, dismissing
        one of his purported claims as time-barred, and denying his motion
        for judgment as a matter of law or, in the alternative, for a new trial
        as to his bad-faith claim. He also argues that the district court im-
        properly allowed Principal to present a new theory of defense for
        the ﬁrst time at trial. After carefully reviewing the record and the
        parties’ briefs, and with the beneﬁt of oral argument, we aﬃrm the
        district court’s judgment.
            I.    FACTUAL BACKGROUND
                  A. Relevant Policy Provisions
               In November 1995, after completing his OB/GYN residency,
        Lemons purchased a long-term disability insurance policy from
        Principal. The policy included two provisions that are relevant to
        this appeal: (1) a “regular occupation rider”; and (2) a “beneﬁt up-
        date rider.”
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        22-12064               Opinion of the Court                         3

               The “regular occupation rider” provided disability beneﬁts
        to an insured if the following three criteria were satisﬁed:
               (1) Solely due to an injury or [s]ickness you are unable
               to perform the substantial and material duties of your
               regular occupation in which you were engaged just
               prior to the [d]isability;
               (2) You are receiving care from a [d]octor which is ap-
               propriate for the condition causing your [d]isability
               . . . ; and
               (3) You are engaged in another occupation.
                The “beneﬁt update rider” required Principal to review an
        insured’s disability beneﬁts every three years from the policy’s issu-
        ance date and to seek “current underwriting information prior to
        the [p]olicy [a]nniversary.” Based on the current underwriting in-
        formation received, Principal could increase a policyholder’s disa-
        bility beneﬁt and “adjust to the maximum allowable [d]isability
        [b]eneﬁt . . . based on the information received and [Principal’s]
        then current underwriting guidelines.” The policy noted, however,
        that the maximum monthly beneﬁt was capped at $10,000.
               Lemons received letters from Principal regarding the “ben-
        eﬁt update” rider provision in 2004, 2007, and 2010. The 2004 letter
        stated that Lemons had been approved for an increase under the
        rider provision to a monthly beneﬁt amount of $10,000. The 2007
        and 2010 letters both denied Lemons’s request for an increase pur-
        suant to the rider provision, explaining that after reviewing the
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        4                      Opinion of the Court                22-12064

        ﬁnancial information he sent, Principal had determined he was
        “fully insured for the maximum beneﬁt amount.”
                  B. Lemons’s Work History and Disability Beneﬁts
                     Claims
               From 2008 to 2015, Lemons worked as a staﬀ physician with
        Trinity OB/GYN at Trinity Medical Center. In August of 2015,
        Trinity terminated Lemons’s employment. Soon after his depar-
        ture from Trinity, Lemons decided to open his own OB/GYN prac-
        tice, which he called Covenant Gynecology & Wellness, P.C. (“Cov-
        enant”). In October 2015, during Covenant’s business development
        phase, Lemons worked for Blue Cross Blue Shield (“BCBS”) as an
        insurance claims consultant. A few months later, in February 2016,
        he began working at the Birmingham Metro Treatment Center, an
        opioid addiction treatment and recovery facility. A month later, he
        started working at the Fritz Clinic, another opioid treatment clinic.
                In April 2016, Lemons opened Covenant and started seeing
        patients. At ﬁrst, he only met with patients three days a week. He
        did not deliver babies or otherwise engage in obstetrics, and he did
        not submit any insurance claims for any obstetrics-related work.
        Eventually, Lemons devoted most of his time and resources to Cov-
        enant, and he reduced the number of hours at his other jobs to
        concentrate more on his OB/GYN practice. Unfortunately for
        Lemons, his solo medical practice was unsuccessful, and on July 15,
        2016, he closed Covenant because he was not seeing enough pa-
        tients.
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        22-12064               Opinion of the Court                        5

               Lemons’s deteriorating health also played a signiﬁcant role
        in his decision to close Covenant. Beginning in 2013, Lemons
        started developing hand tremors and was oﬃcially diagnosed with
        a neurological condition in March 2016. Consequently, while Cov-
        enant was open, he had to refer some of the few patients he did
        have to other doctors.
               After Lemons closed Covenant, Principal received a letter
        from Lemons’s neurologist regarding his medical condition and
        opened a claim for beneﬁts under the policy. On October 19, 2016,
        Principal sent Lemons a form that had a section titled “Proof of
        Loss Needed,” that directed Lemons to, among other things, com-
        plete a Health Insurance Portability and Accountability Act author-
        ization form, cooperate in interviews, and submit ﬁnancial infor-
        mation. Principal assigned senior claims consultant Amy Ralston
        to Lemons’s claim.
               In November 2016, Lemons completed a disability claim
        form and reported that, as of July 15, 2016, he was totally disabled
        and could no longer work as an OB/GYN. Ralston subsequently
        conducted a phone interview with Lemons. During the interview,
        Lemons stated that he was working at BCBS approximately 15
        hours per week, at Birmingham Metro approximately 12–18 hours
        per week, and at the Fritz Clinic 4 hours per week. He maintained
        that, at the time of his disability, his regular occupation was as an
        OB/GYN and, therefore, Principal should approve his claim under
        the “regular occupation rider.” Ralston responded that because
        Lemons was working other non-OB/GYN jobs when he became
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        6                      Opinion of the Court                 22-12064

        disabled, Principal could not just look at his occupation as an
        OB/GYN and would need to consider his other jobs in evaluating
        his claim.
                On January 23, 2017, Principal approved Lemons’s claim un-
        der a “loss of earnings” provision in the policy based on the reduc-
        tion to Lemons’s income as a result of his disability. A few weeks
        later, on February 9, 2017, Principal denied Lemons’s claim for ben-
        eﬁts under the “regular occupation rider” provision. Principal ex-
        plained that, because Lemons regularly worked at BCBS, Birming-
        ham Metro, and the Fritz Clinic prior to the onset of his disability,
        he was not “totally disabled from all occupations that [he was] en-
        gaged in prior to [d]isability” as the regular occupation rider re-
        quired.
                On two separate occasions, in June 2017 and February 2018,
        Lemons asked Principal to reconsider its position, and he chal-
        lenged Principal’s ﬁnding that July 15, 2016, was the trigger date for
        his disability coverage. Principal’s stance was that because Lemons
        had not provided any additional information to warrant a change
        in its position, it would not alter its decision regarding his claim.
            II.   PROCEDURAL HISTORY
               Lemons originally sued Principal in state court on June 4,
        2018, and Principal removed the case to federal court. In his second
        amended complaint, he included only two counts—one for breach
        of contract based on Principal’s failure to pay him disability bene-
        ﬁts under the regular occupation rider provision; and the other al-
        leging bad faith on Principal’s part. His bad faith insurance claim
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        22-12064               Opinion of the Court                        7

        operated under two diﬀerent legal theories: a failure-to-pay the full
        amount he was owed in disability beneﬁts, and a failure-to-investi-
        gate his beneﬁts claim properly. The second amended complaint
        contained allegations regarding Principal’s denial of beneﬁts, but it
        did not include any speciﬁc counts or factual allegations regarding
        the “beneﬁt update rider” provision, or anything related to the cap
        on disability beneﬁts.
               Following discovery, in his cross-motion for summary judg-
        ment, Lemons maintained that his beneﬁts should have been based
        on his regular occupation as an OB/GYN and the denial of beneﬁts
        under this provision was in bad faith. In addition, Lemons argued
        that the $10,000 cap on his insurance beneﬁts was a breach of con-
        tract because Principal marketed and sold him the policy as includ-
        ing a “capless” beneﬁt rider.
                Principal, on the other hand, argued in its cross-motion that
        (1) the term “regular occupation,” as deﬁned in the policy, meant
        all material work duties Lemons was performing prior to his disa-
        bility onset date; (2) there was no bad faith because Principal had a
        legitimate, arguable, or debatable reason for denying the regular
        occupation rider beneﬁts; and (3) Lemons never alleged a beneﬁt
        rider claim in his second amended complaint and, regardless, any
        such claim was time-barred.
               In separate orders, the district court denied the cross-mo-
        tions for summary judgment. It also dismissed Lemons’s “beneﬁt
        update rider” claim because he had not pled it in his complaint, and
        even if he had, it was time-barred and equitable tolling did not
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        8                      Opinion of the Court                22-12064

        apply. The court did grant, however, Lemons’s motion in limine to
        prohibit Principal from arguing any other basis for the denial of his
        “regular occupation rider” beneﬁts which Principal did not con-
        sider when making its decision. The case proceeded to trial.
               Towards the end of the trial, Lemons moved for judgment
        as a matter of law on his breach of contract and bad-faith claims.
        The district court denied the motion. The court also ruled that
        Lemons could not seek compensatory damages for emotional dis-
        tress and mental anguish on the breach of contract claim if success-
        ful. The jury ultimately awarded Lemons $492,409 in damages on
        the breach of contract claim. Lemons renewed his motion for
        judgment as a matter of law as to the jury’s verdict on the bad-faith
        claim and moved, in the alternative, for a new trial. The district
        court denied Lemons’s motions, and he ﬁled the instant appeal.
            III.   ANALYSIS
               Lemons argues the district court erred by: (1) not allowing
        him to seek mental anguish damages for the breach of contract
        claim; (2) dismissing his “beneﬁt update rider” claim; (3) denying
        his motion for judgment as a matter of law or a new trial with re-
        spect to his bad faith claim; and (4) allowing Principal to present a
        “proof of loss” defense. We address Lemons’s four arguments in
        turn.
                   A. Mental Anguish Damages
               Lemons contends that the district court erred in concluding
        that Alabama law prohibits the collection of damages for emo-
        tional or mental anguish in breach of contract cases involving
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        22-12064                Opinion of the Court                           9

        disability claims. In the alternative, Lemons asks us to certify the
        issue to the Alabama Supreme Court.
               Our prior precedent forecloses Lemons’s argument. See
        Walker v. Life Ins. Co. of N. Amer., 59 F.4th 1176, 1189 (11th Cir. 2023)
        (“The Supreme Court of Alabama has made clear that mental an-
        guish damages are unavailable for breach of contract claims related
        to long-term disability insurance policies . . . and no further clariﬁ-
        cation on this point of state law is needed.”). Moreover, “certiﬁca-
        tion [on this issue] is neither necessary nor appropriate, as Alabama
        law already answers the question presented.” Id. at 1191. There-
        fore, we aﬃrm the district court’s ruling as to Lemons’s recoverable
        damages.
                   B. The “Beneﬁt Update Rider” Claim
               We also reject Lemons’s argument that the district court
        erred in not allowing him to amend his complaint to include a
        breach of contract claim based on the policy’s “beneﬁt update
        rider” provision.
               We generally review the denial of a motion to amend for an
        abuse of discretion, but a denial based on futility is reviewed de
        novo. City of Miami v. Citigroup Inc., 801 F.3d 1268, 1275 (11th Cir.
        2015). Although “[a] court should freely give leave when justice so
        requires,” FED. R. CIV. P. 15(a)(2), a district court may deny a re-
        quest for leave to amend a complaint as futile “when the complaint
        as amended would still be properly dismissed,” Cockrell v. Sparks,
        510 F.3d 1307, 1310 (11th Cir. 2007).
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        10                     Opinion of the Court                 22-12064

               Lemons acknowledges that he did not speciﬁcally plead a
        separate claim related to the “beneﬁt update rider” provision. In-
        stead, he argues that he only became aware of the rider during dis-
        covery, and that the ﬁrst judge assigned to the case understood him
        to be raising such a claim. Because we agree with the district
        court’s alternative conclusion that any “beneﬁt update rider” claim
        that Lemons might have brought would have been time-barred and
        not subject to equitable tolling, we will not reach the issue of
        whether the district court erred in determining that he failed to ad-
        equately plead such a claim. See Fla. Wildlife Fed’n Inc. v. U.S. Army
        Corps of Eng’rs, 859 F.3d 1306, 1320 (11th Cir. 2017) (“The principle
        that we may decline to decide any issues unnecessary to resolving
        an appeal is a ﬁrm one.”).
               It is undisputed that Principal sent letters to Lemons regard-
        ing the “beneﬁt update rider” provision in 2004, 2007, and 2010.
        The 2004 letter explained that his beneﬁts had increased to $10,000
        per month, and the subsequent letters informed him that his bene-
        ﬁts had been capped at that amount. Thus, although Lemons ar-
        gues he was unaware of the cap before his lawsuit, Principal put
        him on notice of the cap in 2007 and, at the very latest, in 2010.
        Lemons, however, did not ﬁle suit until June of 2018. Because Al-
        abama has a six-year statute of limitations on breach of contract
        claims, see Ala. Code § 6-2-34(9), Lemons’s 2018 suit was outside of
        the statute of limitations and, therefore, time-barred.
              Lemons also argues, unsuccessfully, that the doctrine of
        fraudulent concealment tolled the statute of limitations. Under
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        22-12064                Opinion of the Court                         11

        Alabama law, the statute of limitations on a breach of contract
        claim can be tolled “when the defendant has fraudulently con-
        cealed” a claim. Dodd v. Consol. Forest Prods., LLC, 192 So. 3d 409, 412
        (Ala. Civ. App. 2015). Fraudulent concealment is an issue that “is
        removed from the purview of the jury and can be decided as a mat-
        ter of law” if “one receives documents that would put one on such
        notice that the fraud reasonably should be discovered.” Ex parte
        Am. Gen. Fin., Inc., 795 So. 2d 685, 689–90 (Ala. 2000) (citations and
        internal quotation marks omitted). Here, as explained above, in
        2007 and 2010, Lemons requested an update in beneﬁts, but Princi-
        pal denied those requests because he was already “fully insured for
        the maximum beneﬁt amount.” Therefore, the limitations period
        began to run when Lemons was in receipt of information that
        “would provoke inquiry in a reasonable person that, if followed up,
        would lead to the discovery of the fraud.” Dickinson v. Land Devs.
        Const. Co., 882 So. 2d 291, 298 (Ala. 2003). Lemons received such
        information in notices sent to him in 2007 and 2010 informing him
        that his beneﬁts had been capped. The district court, therefore, did
        not err in concluding that the statute of limitations could not be
        tolled.
                   C. The Bad-Faith Claim
               Next, Lemons contests the district court’s denial of his mo-
        tion for judgment as a matter of law under Federal Rule of Civil
        Procedure 50 or, in the alternative, his motion for a new trial under
        Federal Rule of Civil Procedure 59, on his bad-faith claim.
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        12                      Opinion of the Court                   22-12064

               “A Rule 50 motion for judgment as a matter of law is re-
        viewed de novo, and this Court applies the same standards em-
        ployed by the district court.” Abel v. Dubberly, 210 F.3d 1334, 1337
        (11th Cir. 2000). Judgment as a matter of law is appropriate if “a
        reasonable jury would not have a legally suﬃcient evidentiary basis
        to ﬁnd for the [nonmoving party.]” FED. R. CIV. P. 50(a). In deciding
        such a motion, we review all the evidence and draw all reasonable
        inferences in favor of the nonmoving party. Hubbard v. BankAtlantic
        Bancorp, Inc., 688 F.3d 713, 724 (11th Cir. 2012) (citing Reeves v. Sand-
        erson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000)). However, we
        do not assess credibility or weigh evidence; rather, we look to the
        evidence supporting the nonmoving party’s case and the unchal-
        lenged evidence supporting the moving party. See id. (citing Reeves,
        530 U.S. at 151).
                A Rule 59 motion for a new trial is reviewed for “a clear
        abuse of discretion.” See Wolﬀ v. Allstate Life Ins. Co., 985 F.2d 1524,
        1528 (11th Cir. 1993). The district court should grant such a motion
        “when the verdict is against the clear weight of the evidence or will
        result in a miscarriage of justice[.]” Lipphardt v. Durango Steakhouse
        of Brandon, Inc., 267 F.3d 1183, 1186 (11th Cir. 2001) (internal quo-
        tation marks omitted).
              The district court did not err in denying both of Lemons’s
        motions. For Lemons to prevail on the bad-faith claim, he needed
        to demonstrate: “(1) a breach of an insurance contract; (2) a refusal
        to pay the claim; (3) the absence of an arguable reason for failing
        to pay; and (4) the insurer’s knowledge of such an absence.”
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        22-12064               Opinion of the Court                         13

        Walker, 59 F.4th at 1186. Because Lemons was asserting a bad-faith
        claim under a failure-to-investigate theory as well, he needed to
        show “the insurer’s intentional failure to determine whether there
        [wa]s a legitimate or arguable reason to refuse to pay the claim.”
        Id. at 1886–87 (internal quotation marks omitted).
               At trial, Lemons testiﬁed that he spent most of his time
        working at Covenant prior to the onset of his disability. He also
        testiﬁed that during this same time period, he was working for two
        opioid addiction treatment centers and for BCBS, and none of
        those positions involved his skills as an OB/GYN. He further ad-
        mitted that he did not derive any income from his practice at Cov-
        enant and did not submit any insurance claims for OB/GYN ser-
        vices to patients. Given all the evidence, the jury could have found
        a “legally suﬃcient evidentiary basis” to determine that Lemons’s
        primary occupation was something other than an OB/GYN when
        he became disabled. See Hubbard, 688 F.3d at 724 (citing FED. R.
        CIV. P. 50(a)). Moreover, the fact that the jury ruled in Lemons’s
        favor on the breach of contract claim while ﬁnding no bad faith on
        Principal’s part is irrelevant for purposes of determining whether
        the jury’s verdict had a “legally suﬃcient evidentiary basis.” Id.
        (“Only the suﬃciency of the evidence matters; what the jury actu-
        ally found is irrelevant.”). The district court, therefore, did not err
        in denying Lemons’s motion for judgment as a matter of law. The
        jury also could have found that Principal had an arguable reason for
        not issuing Lemons beneﬁts pursuant to the “regular occupation
        rider” policy provision because the evidence showed that Principal
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        14                     Opinion of the Court                 22-12064

        gathered—as part of its decisional process—information suggest-
        ing that Lemons’s regular occupation was not as an OB/GYN.
               For these same reasons, the district court also did not clearly
        abuse its discretion in denying Lemons’s motion for a new trial.
        The verdict in this case was not against the clear weight of evidence
        given the genuine issue of fact as to whether a breach of contract
        occurred.
                   D. The “Proof of Loss” Defense
                Lemons’s ﬁnal argument on appeal also is without merit.
        He contends that, contrary to the district court’s ruling on his mo-
        tion in limine, Principal nevertheless introduced a new theory of
        defense during trial, accusing Lemons of failing to present proof of
        loss to support his beneﬁts claim. Not only does the record not
        support Lemons’s position, but Principal also actually admitted to
        receiving proof of loss from Lemons, upon which it relied in de-
        termining which insurance beneﬁts Lemons was due. Therefore,
        there is no basis for Lemons’s “proof of loss” argument, and the
        district court committed no error in this regard.
             IV.   CONCLUSION
             Based on the foregoing, we AFFIRM the district court’s
        judgment.