Trial Magazine

McClure v. Country Life Ins. Co., No. CV-15-2597-PHX-DLR  (D. Ariz. Sept. 8, 2017).

After suffering a traumatic brain injury and then developing severe depression, husband and father Benjamin McClure was unable to work, drive, or perform other daily activities without assistance. He was hospitalized multiple times and received ongoing medical and therapeutic treatment. McClure’s doctors determined that he was “totally disabled,” and he filed a disability insurance claim in 2012 with Country Life Insurance Co.

Country Life initially approved monthly benefits under the policy but ended the benefits suddenly after about a year and officially terminated the claim in April 2014. It determined that McClure was not physically or cognitively disabled, despite his doctors’ certification of disability. Country Life refused to reconsider its termination decision, even after another hospitalization.

In 2016, after trying to get Country Life to reevaluate its termination, McClure sued for breach of contract and bad-faith termination of his benefits. He alleged that the defendant did not obtain his medical records from his treating physicians for about eight months before the termination notice, despite stating that its decision was based on a thorough review of his records. It also hired a neuropsychologist to examine McClure and quickly terminated the claim based on her report—even though its in-house nurse did not know how to interpret the report and testified that she believed that the ­doctor’s opinions were inconclusive. McClure also sued CC ­Services, Inc., which employed the people who evaluated and adjusted claims for ­Country Life.

Country Life reversed course nearly a year into litigation and made a strategic decision to reinstate McClure’s claim—but only starting after his last hospitalization and not covering the time before its initial termination.

A jury found that Country Life had acted with “conscious disregard” because it knew the likelihood of harm its actions would cause McClure. It awarded more than $6.5 million, including $5 million in punitive damages divided equally between the two defendants.

Attorneys Steve German, of Scottsdale, Ariz., and Steve Dawson and Anita Rosenthal, both of Sedona, Ariz., represented McClure at trial. German noted the toll that terminating disability benefits can wreak. “You’ve got someone who’s already struggling because he can’t work and whose life has been disrupted. That person relies on private disability insurance, and it is crippling when it is taken away. This is not like other claims where the item is replaceable or fixable, like when something is stolen or your house burns down.”

Conveying to the jurors the magnitude of Country Life’s wrongdoing was the crux of the case, and an expert who could do that was key. The attorneys started the trial with a bad-faith insurance expert, who explained the industry standards that underpinned the case. This helped the jurors understand from the outset what disability insurance is and how companies are supposed to evaluate and adjust claims.

For example, German explained, “an insurance company can’t hire its own doctors and then ignore a treating physician, or if an insured is approved for Social Security disability, it can’t reject or ignore that—it has to give that significant weight.”

The expert testified that the defendant violated industry standards by altering the terms of its contract to precondition benefits on proof of “objective evidence” of a disability, indicating in letters to McClure that it was terminating his claim because it did not have objective evidence of an ongoing impairment. “When you have a mental illness,” German said, “there is no objective evidence. There’s no test or X-ray that can tell you that a person suffers from bipolar disorder, depression, or cognitive deficits.”

The expert also explained to the jurors that another industry standard requires insurers to continually order and review updated medical records from the treating physicians, but that the defendant did not do that here.

Rosenthal and Dawson had seen similar behavior from Country Life before in another case—making it clear to them that this was a pattern at the company. In that case, Country Life withheld damaging evidence in discovery until just before the adjuster’s deposition, including an email from the adjuster that she did not support the denial and refused to sign the termination letter. After an evidentiary hearing, the judge ruled that the insurer and its attorneys intentionally withheld evidence. The company was sanctioned, its answer was struck, and a default judgment was entered against it. (Sell v. Country Life Ins. Co., 189 F. Supp. 3d 925 (D. Ariz. 2016).) 

Although the defendant could not appreciate the ­gravity of the harm it caused McClure and his family, the jurors did. And they ­understood that his ­disability’s invisible symptoms didn’t make it any less real. “I think he felt ­vindicated—that this ­wrongdoing was aimed at him and the hardship he went through was recognized by his peers,” German said.

The outcome of the case has given McClure hope—for himself, his family, and others in his position. Even though McClure felt overwhelmed by the litigation process, and his disability prevented him from being in court for more than a brief time during the trial, the jury’s ­verdict was empowering. The jurors noted that a portion of McClure’s damages award was intended for his young ­daughters’ educations.

Despite the personal challenges of going through the trial, McClure was determined to hold the defendant accountable to ensure that others like him did not suffer the same treatment. ­German recalled telling McClure at their first meeting that his story was not over yet. Now, German said, McClure wants to spread that message to others—“to let them know that there’s a light at the end of the tunnel.”

Kate Halloran is a Trial Senior Associate Editor.