under the policy because "The State Board of Dental Examiners, of the State of California has determined that I suffer from a mental disability that prevents me from practicing dentistry." (Id. Ex. B.)
On August 8, 1995, Damascus filed a complaint against Provident and Lee Francis LaMarca
in the Superior Court for the County of Santa Clara, alleging claims for breach of contract, bad faith, unfair claim settlement practices, breach of statutory duties, conspiracy, fraud, errors and omissions in the sale of insurance, and negligent and intentional infliction of emotional distress. On December 6, 1995, that complaint was removed to this Court.
Provident now moves for summary judgment on the ground that Damascus' license revocation was due to his negligence and unprofessional conduct, and not due to mental illness; thus, no benefits are due under the policy.
Rule 56(c) of the Federal Rules of Civil Procedure provides that a court may grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." The Supreme Court's 1986 "trilogy" of Celotex Corp. v. Catrett, 477 U.S. 317, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986), Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986), and Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986), requires that a party seeking summary judgment show the absence of a genuine issue of material fact. Once the moving party has made this showing, the nonmoving party must "designate 'specific facts showing that there is a genuine issue for trial.'" Celotex, 477 U.S. at 324 (quoting Fed. R. Civ. P. 56(c)). "When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586. "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Liberty Lobby, 477 U.S. at 249-50 (citations omitted).
Damascus' cause of action alleges that the Board has held that he has a mental disability preventing him from practicing dentistry and, thus, Provident's failure to pay benefits on his insurance policy constitutes breach of contract. (Compl. PP 11-16.) In insurance disputes, the burden is on the insured to prove all facts necessary to show that his claim falls within the terms and conditions of coverage. Garvey v. State Farm Fire & Casualty Co., 48 Cal. 3d 395, 406, 257 Cal. Rptr. 292, 298, 770 P.2d 704 (1989).
Provident argues that Damascus cannot possibly prove that he is totally disabled within the meaning of the policy because the Board revoked Damascus' license for gross negligence and unprofessional conduct, not for mental illness. (Harnsberger Decl., Ex. M at 4, 5, 7.) Provident further points to the following evidence as proof that Damascus' mental illness, if any, was not the cause of his Total Disability, as defined in the policy:
1. The Board's 1991 probation order did not find Damascus unfit to practice dentistry, but required only that he practice dentistry under supervision for a probationary period. (Id., Ex. K at 5-6.)
2. Damascus continued to practice dentistry after the probationary order was issued, and only stopped practicing when the Board revoked his license for gross negligence and unprofessional conduct. (Id., Ex. M.)
3. During the 1991 hearings before the Board, Damascus testified that he was not mentally ill. (Fleming Decl., Ex. A, Hr'g Tr., July 2, 1991, at 5:23-24.)
4. During the 1991 hearings, Damascus' witness, Dr. John Stewart McGovern, testified that he did not believe that Damascus suffered from an emotional disorder or mental incompetence that would interfere with his ability to practice his profession. (Id., Ex. B, Hr'g Tr., Apr. 11, 1991, at 137:3-138:5.)
5. On August 23, 1991, Damascus filed a petition for administrative mandamus and asserted under oath that the evidence did not establish that he had a mental illness affecting his ability to practice dentistry. (Id., Ex. C at P 6, Pet. for administrative mandamus; and Ex. D at P 4(e), Decl. of Alexander Damascus.) In support of his petition, Damascus submitted declarations from three doctors stating that he did not suffer from mental illness. (Id., Ex. E, Decl. of Donald L. Tasto, Ph.D.; Ex. F, Decl. of Donald Lunde, M.D.; and Ex. G, Decl. of John Stewart McGovern, Ph.D.)
6. In Damascus' statement of claim, filed with Provident in June 1995, he listed the date of sickness as August 12, 1994, and the nature and details of sickness as "Diagnosis of Paranoid Personality made by Dental Board in 1991 became effective when appeal process ended." (Harnsberger Decl., Ex. D.) In answer to the question, "What injuries result from accident?", Damascus responded, "No injury -- just court declaration." (Id.)
7. The Attending Physician's Statement submitted to Provident by Damascus in October 1995 states that Dr. McGovern, Damascus' Board-approved psychotherapist, did not believe that Damascus suffered from Paranoid Personality Disorder, despite the Board's diagnosis. (Id., Ex. F.)
8. The only evidence submitted by Damascus in support of his insurance claim that showed that he ever suffered from a mental illness was a 1990 report from Dr. Gary S. Nye, which was five years old at the time it was submitted to Provident. (Id., Ex. E.)
Provident argues that Damascus suffers only from a legal disability imposed by the Board, and not from a mental disability that prevents him from performing the duties of his occupation. "It is a general rule that disability insurance policies . . . provide coverage for factual disabilities (i.e., disabilities due to a sickness or injury) and not for legal disabilities." Goomar v. Centennial Life Ins. Co., 855 F. Supp. 319, 325 (S.D. Cal. 1994) (citing 15 George J. Couch, Cyclopedia of Insurance Law, § 53:41 at 76 (2d ed. 1983)), aff'd, 76 F.3d 1059 (9th Cir. 1996).
In Goomar, plaintiff sued an insurance company for failure to pay benefits on a disability policy that contained a definition of Total Disability nearly identical to that at issue in this case. Goomar's license to practice medicine was revoked because of his history of molesting patients. Later, Goomar began experiencing psychiatric difficulties, and he submitted a claim under his disability policy, claiming that his psychological disability led to the conduct that caused the loss of his medical license and inability to work. The Ninth Circuit affirmed the district court's grant of summary judgment in favor of the insurer, holding that Goomar had failed to present a material issue of fact as to whether his alleged sickness caused the loss of his license. Id. at 1063.
The key difference between this case and Goomar is that in Goomar, plaintiff had not been previously adjudged mentally ill by the board that revoked his license. Thus, the obvious argument for Damascus to make is that his mental illness in 1990-91 caused the gross negligence and unprofessional conduct that ultimately resulted in revocation of his license. But Damascus does not make this argument and, indeed, does not present any evidence that he suffered from any mental illness after 1990.
Damascus' first argument is that the Board expressly incorporated its 1991 decision finding Damascus mentally ill in the Accusation that led to the Board's 1995 revocation order. Thus, Damascus argues that the Board would never have revoked his license but for its earlier determination that he was mentally ill. The Board's 1995 revocation order, however, expressly states that the Board's prior order was not considered in reaching its decision to revoke Damascus' license. (Harnsberger Decl., Ex. M at 4.) Moreover, in the 1995 proceedings, Administrative Law Judge Robert Coffman repeatedly stated that the Board's prior order had little or no relevance to the current matter, and refused to admit psychiatric testimony. (Fleming Supp. Decl., Ex. 1, Hr'g Tr., May 23, 1995, at 287-300; Ex. 2, Hr'g Tr., May 25, 1995, at 116:2-118:15.)
Damascus' mere argument that the Board lied when it stated that it was not revoking his license for mental illness does not create a genuine issue of material fact requiring the case to go to trial.
See Liberty Lobby, 477 U.S. at 256 ("[A] party opposing a properly supported motion for summary judgment may not rest upon mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial.").
Damascus then appears to argue
that there is a dispute over the definition of "Total Disability" under the policy that requires that the case go to trial. He claims that there is no definition of "Injuries or Sickness" in the policy. The policy, however, clearly states that the policy insures against loss resulting from "(1) accidental bodily injuries occurring while this policy is in force, hereinafter referred to as Injuries; or (2) sickness or disease which is first manifested while this policy is in force, hereinafter referred to as Sickness." (Harnsberger Decl., Ex. A at 1.) The policy lists a monthly benefit for "Total Disability." (Id. at 3.) The policy defines "Total Disability," in relevant part, as "your inability to perform the duties of your profession." (Id. at 5.) The policy also provides that:
If Injuries or Sickness result in Total Disability, the Company will pay periodically during the continuance of such Total Disability, indemnity at the rate of the Monthly Benefit for Total Disability shown . . . .
Indemnity will not be paid for disability during any period of time that you are not under the care and attendance of a Physician.