Confidential

Facts

Plaintiff was a 38-year-old surgeon who purchased two personal disability policies in September 1995. Several days before delivery of the policies, a physician diagnosed plaintiff as having suffered from a viral syndrome of unknown etiology. A chest x-ray was taken and the plaintiff was prescribed an antibiotic. When the policies were delivered, plaintiff denied writing that he had seen any physicians, taken any medicine or undergone any x-rays within the prior three years.
Beginning in late 1995, plaintiff became the subject of numerous malpractice actions. He closed his office in early 1997. Eventually plaintiff surrendered his license to practice medicine.
In December 1996, plaintiff made a claim for partial disability, claiming a wrist injury. In June 1997, plaintiff made a claim for permanent total disability due to bipolar disorder.
In July 1998, the defendant filed an action to rescind the policy, alleging that the plaintiff had made material misrepresentations during the application process and was suffering from a legal, rather than a factual, disability. Soon thereafter, plaintiff filed a lawsuit alleging insurance bad faith and related claims.
The court granted defendantÆs motion for summary judgment, ruling that ERISA governed.

The plaintiff contended that he was permanently disabled according to the terms of the policies due to bipolar disorder.
DEFENDANT CONTENTIONS:
The defendant contended that plaintiffÆs failure to disclose his viral syndrome, that he had undergone an X-ray and had taken medication was grounds for recission of the policies.
The defendant further contended that there was no coverage because plaintiff suffered from a legal rather than a factual disability.

Settlement Discussions

<m>The case was settled during a mediation presided over by mediator Vigo Boserup.</m>

Damages

The policies provided benefits totaling $13,750 per month, with COLA provisions, until age 65. The present value of the benefits until age 65 was $3.1 million. The past due benefits totaled $300,000.