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Mohney v. American Gen. Life Ins. Co.

Superior Court of Pennsylvania

May 8, 2015


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[Copyrighted Material Omitted]

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Appeal from the Judgment entered December 4, 2013, Court of Common Pleas, Armstrong County, Civil Division at No. 1995-0764-Civil.



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Appellant, Timothy A. Mohney (" Mohney" ), appeals from the judgment entered on December 4, 2013 by the Armstrong County Court of Common Pleas, following the trial court's non-jury verdict entered against Mohney on October 18, 2013. Appellee, American General Life Insurance

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Company (" American General" ), as successor-in-interest to U.S. Life Credit Life Insurance Company (" U.S. Life" ),[1] cross-appeals from the October 18, 2013 verdict. For the reasons set forth herein, we vacate the judgment and remand the case for a new trial.

In October 1991, Mohney, then a coal miner, purchased disability and life insurance on an automobile loan from U.S. Life. In September 1992, Mohney also purchased disability and life insurance from U.S. Life in connection with a home mortgage. These policies provided, inter alia, for the payment of benefits on these debts in the event that Mohney became totally disabled. The 1991 policy defined " Total Disability" as follows:

" Total Disability", as used in this Certificate means complete inability of the Insured Debtor to perform any and every duty of his occupation during the initial twelve month period of any disability covered by this Certificate and, thereafter, inability of the Debtor to engage in any occupation for wage, gain or profit for which he is qualified by reason of education, training or experience.

N.T., 4/16/2013, Exhibit 3. The definition in the 1992 policy differed only slightly, and imparted the same understanding that after the first twelve months, " disability means you are unable to perform any occupation that you are fitted for by means of your education, training or experience." Id., Exhibit 4.

In October 1992, Mohney suffered a back injury in a traffic accident and was unable to continue work as a coal miner. Pursuant to the two insurance policies, U.S. Life began making payments on Mohney's automobile loan and his mortgage. U.S. Life initially sent Mohney monthly continuation claims reports for his doctor to verify his disability, but in or around July 1993 he was placed on automatic status and monthly reports were no longer necessary.

U.S. Life did not contact Mohney again until October 1994, at which time it sent questionnaires to Mohney and Edward Miller, M.D. (" Dr. Miller" ), Mohney's treating physician, requesting information about the status of Mohney's current condition and ability to work. In response to the questionnaire directed to him by Lawrence Carroll (" Carroll" ), an " Investigative Specialist" in U.S. Life's claims department, Mohney advised that he had been diagnosed with a rheumatic disease called Ankylosing Spondylitis that had worsened his back injury. N.T., 4/16/2013, Exhibit 12. Mohney stated that while he could take care of himself, his ability to walk, drive, bend, and reach were " limited." Id. Mohney indicated that he did not expect to return to work, either part-time or fulltime, and further advised that he was receiving disability benefits from the Social Security Administration. Id.

In Dr. Miller's response to the initial questionnaire, he provided Mohney's medical records, advised that he saw Mohney every six months, and described Mohney's progress as " unchanged." Id., Exhibit 13. Dr. Miller identified Mohney's " current limitations and restrictions" as " no heavy lifting or bending." Id. In response to a question asking if he expected " the patient's condition to improve sufficiently in the future for him or her to return to work," Dr. Miller answered " No." Id. Regarding his prognosis " for this patient returning to work in this or some other occupation," Dr. Miller wrote " unlikely as

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a coalminer possibly in a light duty position." Id.

On January 19, 1995, Carroll then sent a second questionnaire to Dr. Miller that began as follows:

Thank you for responding to our medical questionnaire dated 1-5-95 regarding your above named patient.
After reviewing this questionnaire you state that your patients [sic] current restrictions are no heavy lifting or bending. You also stated that he could a light duty position [sic].
Mr. Mahoney [sic] responded to an occupational [sic] and stated that he could walk, drive, bend and reach. He also has 12 years of education and skills in assembly and as a laborer.

Id., Exhibit 14. Carroll then asked Dr. Miller if Mohney could perform the duties of a security guard, automobile salesperson, or an automobile self-service station attendant. Id. In his response dated January 26, 1995, Dr. Miller indicated " yes" to each of these jobs, but then qualified his answers with the following statement:

It is important that the patient be able to sit or stand (alternating) as needed. Some of these jobs require the patient to climb in and out of the car or bend over the hood of the car, etc. which could be problematic. A trial employment should be attempted first on a part time basis before proceeding to full time light duty employment.


On February 7, 1995, Carroll sent Mohney a letter terminating benefits under the two insurance policies. Carroll's letter set forth the definition of total disability under the insurance policies and then stated in relevant part as follows:

Records obtained from Dr. Edward Miller, your treating physician, indicated your current restrictions were no heavy lifting or bending. He also stated you could perform sedentary or light duty occupations such as a security guard, an automobile salesperson and an automobile self service station attendant.
On an occupational questionnaire you completed, you stated you could walk, drive, bend and reach. You also stated you have 12 years of education and skills in assembly and as a laborer.
Based on all the information and medical records contained in our file, it does not appear that you meet the covered criteria for total disability as stated in your certificates. Although you may not be able to perform the regular duties of your profession, our information does indicate that you are able to perform the regular duties of an occupation for which you are qualified by education, training or experience. Such occupations you appear to be qualified for, but not limited to, are stated above. Therefore, no additional benefits are payable at this time.
Your account will be paid through March 27, 1995. I trust the above sufficiently explains our position in this matter but if you feel we have not been given the proper understanding, we will be glad to review any additional information you may wish to submit.


On June 23, 1995, Mohney filed a praecipe for a writ of summons, and on June 20, 1997, Mohney filed a complaint alleging causes of action for fraud, breach of contract, violation of the Unfair Trade Practices and Consumer Protection Law (" UTPCPL" ), and bad faith insurance practices. U.S. Life filed preliminary objections, which the trial court granted. On December 1, 1997, Mohney filed an amended complaint adding new breach of contract claims. U.S. Life again filed preliminary objections, which the trial court

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granted in part. On October 28, 1998, Mohney filed a second amended complaint, to which U.S. Life filed an answer and new matter in the form of a demurrer and a request for attorney's fees. On July 19, 2001, U.S. Life filed a motion for summary judgment, which the trial court granted in part (on the bad faith claim). On July 15, 2003, the day scheduled for trial to begin, the trial court conducted a hearing out of the presence of the jury to determine whether Mohney could present a prima facie case with regard to his fraud, breach of oral promise, and UTPCPL claims. At the conclusion of the hearing, the trial court entered summary judgment in U.S. Life's favor on all of Mohney's claims except for breach of contract. The trial court also certified the case for immediate appeal pursuant to Rule 341(c) of the Pennsylvania Rules of Appellate Procedure, but on appeal, this Court concluded that no extraordinary circumstances were present to justify an immediate appeal and quashed.

On December 27, 2006, the trial court (hereinafter, the " Breach of Contract Trial Court" ) issued an opinion and adjudication on the issue of whether Mohney was " totally disabled under the terms of the insurance contract." Breach of Contract Trial Court Order, 6/12/06. The Breach of Contract Trial Court determined that Mohney proved " that he was totally disabled within the meaning of the two insurance policies he purchased from [U.S. Life]." Breach of Contract Trial Court Opinion and Adjudication, 12/27/06, at 10. As a result, the Breach of Contract Trial Court entered judgment against U.S. Life and in favor of Mohney on his breach of contract claim in the amount of $20,772.58. U.S. Life filed a notice of appeal and Mohney filed a notice of cross-appeal.

On appeal, this Court affirmed the trial court's ruling on the breach of contract claim and affirmed the dismissal of the claim under the UTPCPL. This Court reversed the trial court's award of summary judgment to U.S. Life on the bad faith claim, however, concluding as follows:

Due to its equivocal nature, Dr. Miller's opinion did not establish whether [Mohney] was unable to engage or perform any occupation. Viewed in the proper light, the opinion expressed by Dr. Miller, at best, suggested that [Mohney] may be able to perform the three jobs listed by [Carroll] but that such a suggestion should be tested by a trial, part-time employment. Thus, that opinion could not serve as a reasonable basis for denying [Mohney] benefits.

Mohney v. U.S. Credit Life Ins. Co., 917 WDA 2007, 18 (Pa. Super. July 1, 2008) (unpublished memorandum) (emphasis in original).

On remand, the sole question for the trial court (hereinafter, the " Bad Faith Trial Court" ) was whether U.S. Life had acted in bad faith. On April 12, 2013, Mohney requested leave to file a third amended complaint, which the Bad Faith Trial Court denied. The Bad Faith Trial Court then held a bench trial on April 15-16, 2013. On October 17, 2013, the Bad Faith Trial Court issued its decision, ruling in favor of U.S. Life. In particular, the Bad Faith Trial Court found that U.S. Life's investigation of Mohney's claim, " although ultimately leading to an incorrect conclusion, was reasonably thorough and sufficient to provide it with a reasonable basis to find [Mohney] to be not " totally disabled" under the terms of the policy certificates." Bad Faith Trial Court Findings and Adjudication, 10/17/2013, at 21. ...

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