Facts

In 1997, plaintiff Sherilee Aragon started working for the University of California's Office of the President (UCOP) as a web developer. As part of her optional benefits at UCOP, Aragon purchased a group disability insurance policy with Liberty Life Assurance Company of Boston (Liberty Life).

In April 2002, while horseback riding, Aragon was thrown from her horse and sustained two transverse process fractures. She had two spinal surgeries but still claimed she suffered from extreme back pain and trouble sitting down for extended periods of time.

On July 16, 2003, Aragon submitted a claim for disability benefits when she stopped work for an upcoming surgery. Aragon's doctor estimated she could return to work by Nov. 17, 2003. She had a lumbar laminectomy at the L5-S1 level and then returned to work part-time in October 2003. She stopped working again to have a second surgery at the L4-L5 level in April 2004. She then returned to work part-time from June to September 2004 when she stopped working altogether at UCOP. Liberty Life accepted her claim and paid disability benefits from July 26, 2003 until May 27, 2005, when it determined she was no longer totally disabled within the meaning of the policy.

Liberty Life investigated continued total disability, noting in the claim file that her medical treatment was exhausted without improvement, and that her doctor kept extending her temporary disability. The insurance company then hired Horseman Inc., a private investigation firm, to investigate Aragon. The investigators followed Aragon for five days, filming her going to and staying at a home to participate as an actress in a music video, getting in and out of a car, talking to a person in her driveway, driving to a physical therapy appointment, and picking a flower. Liberty Life also sent Aragon's medical records to a doctor who did determine she had a back condition, but who concluded she could still do work in a sedentary job.

In May 2005, Liberty Life discontinued Aragon's benefits. She appealed her denial and had three of her physicians write letters on her behalf, all stating she experienced severe pain as a result of her condition.

On Sept. 16, after reviewing Aragon's file and obtaining additional medical and vocational opinions, Liberty Life denied her appeal.

Claiming economic damages, Aragon sued Liberty Life for breach of contract and breach of the implied covenant of fair dealing. Horsemen was originally included as a defendant, but was granted a motion for summary judgment before trial on Aragon's claims of trespass and invasion of privacy.

PLAINTIFF'S CONTENTIONS:
Aragon claimed Liberty Life acted unreasonably and maliciously by fabricating a reason to deny her benefits even though the evidence clearly showed she was disabled.

DEFENDANT'S CONTENTIONS:
Liberty Life challenged Aragon's allegations, arguing that she was unable to demonstrate she was disabled and claiming she was attempting to find work as an actress. Liberty Life further argued that Aragon's pain claims were based on self-reporting and thus there was no objective way of verifying any of her pain.

Damages

Aragon sought roughly $400,000 in lost past and future disability benefits and unspecified damages for emotional distress and punitive damages.

Result

The jury returned a verdict for the plaintiff for breach of contract and breach of the implied covenant of fair dealing. The jury awarded Aragon $247,752 in loss of disability benefits and attorney fees. The jury did not award Aragon emotional distress damages or punitive damages.

Deliberation

one day

Poll

9-3 (on amount of damages); 12-0 (finding no malice; fraud or oppression)

Length

17 days