Bosetti v. United States Life Ins. Co. in City of New York

Opinion

CROSKEY, J.

Plaintiff and appellant Linda L. Bosetti was employed by defendant and respondent Palos Verdes Peninsula Unified School District (PVSD). As part of her employment benefits, she was covered under a group long-term disability insurance policy (the policy) issued by The United States Life Insurance Company in the City of New York (U.S. Life). The third party claims administrator for the policy was Keenan & Associates (Keenan).

Bosetti’s job was eliminated for economic reasons. Shortly after she learned that her employment would be terminated, she saw a doctor for depression and was placed on temporary disability. Her disability would ultimately extend for two years, and had a physical component as well as an emotional one. Under the policy, Bosetti could obtain disability benefits for two years if she was disabled from her own occupation. After that time, she could only obtain disability benefits if she was disabled from any occupation. Keenan directed Bosetti to perform a Functional Capacity Evaluation (FCE); the results of the FCE indicated that Bosetti could perform sedentary or light physical work. Therefore, U.S. Life concluded that Bosetti was not disabled from any occupation and terminated her disability benefits at the end of two years.

Bosetti brought suit against U.S. Life, Keenan, and PVSD, seeking additional disability benefits. Keenan successfully demurred on the basis that, as a third party claims administrator, it could not be liable on the policy. PVSD sought summary judgment on the basis that it had fulfilled every duty it owed Bosetti as her employer, and that any coverage disputes were exclusively between Bosetti and U.S. Life. PVSD was granted summary judgment, and was also awarded its costs and attorney fees under Code of Civil Procedure section 1038.

[1214]

During the course of the litigation, U.S. Life concluded that, regardless of whether Bosetti was still disabled after two years of payments, another defense was available to it. The policy limited benefits for disabilities due to “mental, nervous or emotional disorders]” to only two years. U.S. Life took the position that, although Bosetti ultimately suffered some level of physical disability, she did not suffer a physical disability prior to the termination of her employment. As coverage under its policy ceased at the time of the termination of Bosetti’s employment, U.S. Life argued there could be no coverage for any physical disability which may have arisen thereafter. U.S. Life sought, and obtained, summary judgment on this basis.