Giddens v. Equitable Life Assur. Society of the U.S., 2006 U.S.App.LEXIS 8970 (11th Cir. April 12, 2006).

The plaintiff, a dentist, purchased two ''own occupation'' disability policies from Equitable. Both policies contained provisions for total disability as well as residual (partial) disability. The issue before the court was whether Allen Giddens was totally or partially disabled after he became ill due to a liver disease and was no longer able to practice dentistry or work in the field of real estate development and investment that he was performing while he was actively practicing dentistry, although he discontinued active work in that business as well after the disability onset. Despite undergoing a liver transplant, Giddens never fully recovered and residual symptoms persisted.

After receiving the claims under the policies, Equitable began making payments; however, after the insurer learned that Giddens had ceased practicing dentistry four years before making a claim, it terminated the benefit payments.

The plaintiff contended that he had dual occupations of dentist and real estate developer; however, both the district court and the court of appeals concluded that the occupation he was engaged in at the time he became disabled was real estate developer. The court reasoned that since Giddens had not practiced dentistry for four years at the time he made his claim, he was not ''regularly'' engaged in the practice of dentistry at the time he became disabled even if he intended to return to that practice at some point in the future.

However, the court went on to rule that Giddens could still receive benefits if he was disabled from the real estate occupation. Equitable contended that it was merely a passive investment, but the evidence showed that Giddens's involvement was more than that of a casual investor and that he performed significant entrepreneurial, financial, planning, coordinating and administrative duties. Equitable attempted to dispute the plaintiff's contentions by citing a Social Security report he had signed in which he stated that the real estate work did not involve any significant physical activities. However, the uncontroverted medical evidence showed that Giddens suffered from both physical and mental impairments, including cognitive problems that the plaintiff contended precluded him from performing the mental aspects of his occupation.

Equitable's response was that Giddens had to be incapable of performing all of his duties; and that if he were capable of performing even one of his job duties, he could not be totally disabled, but merely partially or residually disabled. Reviewing the applicable law the issue, the court explained that the policies were unclear; and relying on Dowdle v. National Life Insur.Co., 407 F.3d 967 (8th Cir. 2005), the court explained that the total disability clause is ambiguous since ''the policies' definitions of 'total disability' are susceptible to differing interpretations, because the policies do not speak in terms of 'any,' 'all,' 'some,' or 'the most important part' of [the insured's] duties. We agree with the 8th Circuit that the policy language here is ambiguous. We do not suggest that 'all' is an unreasonable interpretation of the policy language, but we do say that 'most' or the 'majority' of the substantial and material duties is also a reasonable interpretation if an insured is unable to engage in his regular occupation as a result of his inability to perform most or the majority of those duties.'' *31-*32.

Accordingly, the ambiguity required the court to construe the policy in favor of the insured in a manner that meant ''Giddens may establish total disability if he cannot engage in his real estate occupation because he is unable to perform most or the vast majority of the substantial and material duties of his occupation.'' *33. The court further explained, ''That Giddens may be able to perform one or more of the substantial and material duties associated with that occupation simply does not preclude a showing of total disability under the terms of the Policies, as Equitable claims. Even if Giddens can perform a few substantial and material duties — including, for example, selecting house plans, materials, and subcontractors — his ability to perform those tasks in isolation still would not allow Giddens to continue in his real estate development occupation because he is unable to perform his entrepreneurial, financial, planning, coordinating, and administrative duties, which were the heart of his real estate occupation. See Dowdle, 407 F.3d at 972 (concluding that surgeon who could no longer stand long enough to perform orthopedic surgery but could conduct office visits, see patients, read x-rays, perform IMEs, interpret data, and promote referrals was totally — not residually — disabled because he could not perform 'the most important substantial and material duty').'' *33.

Finally, the court rejected Equitable's argument that such an interpretation would nullify the residual disability clause. The court noted, ''This argument is unpersuasive. Quite obviously, there is a continuum of disability. If the insured is unable to perform only ''one or more'' of many material occupational duties, then the insured would not be totally disabled. Where the insured, such as Giddens, is unable to perform most or the majority (but not all) of the material duties and thus cannot engage in his regular occupation, the insured nevertheless is totally disabled from his regular occupation, and this interpretation does not nullify the Residual Disability clause. n15 At some point, a line must be drawn where the disability becomes so severe, and affects such a large percentage of the insured's material and substantial duties, that the disability is total rather than residual. The language of the Residual Disability clause does not suggest where that line should be drawn and certainly does not require that it be drawn only where Equitable suggests. If Equitable means 'all' in its Total Disability clause, then Equitable may make that simple change to its policy forms.

''n15 Indeed, taking Equitable's argument to the logical extreme would nullify the Total Disability clause. Residual Disability, by its definition, includes the inability to perform one or more of the material duties; a literal reading would include a total inability to perform all duties, since all duties are clearly 'one or more' duties.'' *39-*40.

Discussion: The interplay between total disability and residual disability clauses in insurance policies has been extensively discussed in a number of rulings. In addition to Dowdle, which is discussed in Giddens, other very useful decisions include Giampa v. Trustmark, 73 F.Supp.2d 22 (D.Mass. 1999)(chiropractor unable to perform manipulations could still qualify for total disability benefits) and Gammill v. Provident, 346 Ark. 161, 168, 55 S.W.3d 763 (2001) (cardiologist able to perform majority of pre-disability duties still qualified for total disability benefits if unable to perform any material duty of occupation. ''It is only necessary that it be shown that he is unable to perform any one or more of the substantial or material acts of his occupation in his usual and customary manner. Nor does the mere fact that one continues to work at his regular job establish a lack of disability. It is only a factor to be considered, and where an insured is able to continue his employment with the aid of his fellow employees or in some manner other than his usual and customary one, he may still be 'disabled.' ''). Likewise, Gross v. UnumProvident Life Insurance Co., 319 F.Supp.2d 1129 (C.D.Cal. 2004) and Raithaus v. Unum Life Insur.Co. of America, 335 F.Supp.2d 1098 (D.Hawaii 2004) (question of fact as to whether urologist disabled; however, court determined that ability to perform surgery was a material and substantial job duty) dealt with these issues as well.

Another useful case is one authored by the 7th Circuit, which found that when a claimant is unable to perform the substantial and material duties of his regular occupation in the customary manner, the insured is entitled to total disability coverage, ''whenever there is a substantial change in the responsibilities, terms or conditions of [his] occupation.'' McFarland v. General Am. Life Ins. Co., 149 F.3d 583, 588 (7th Cir.1998). McFarland goes on to explain that a ''qualitative performance reduction'' can give rise to ''total disability'' and occurs if the claimant is ''no longer able to perform an essential duty of his regular occupation, resulting in the loss of his position'' or precluding him from continuing in his pre-injury employment. Id. at 587-88 (noting that ''[t]his would be the case even if, in percentage terms, the disability affected an essential duty that comprised … only 5% of the person's overall duties''). McFarland presents the example of a shortstop who could no longer perform ''one core and essential aspect of his job (throwing) as a result of an injury,'' and explains that such an individual would be totally disabled since the impairment, ''while affecting only one of several core skills, would be enough to prevent him from continuing to perform as a shortstop,'' even if that individual might perhaps be able to continue working as a baseball player in a different position such as designated hitter. Id. at 588. Thus, Giddens is no aberration and represents the majority viewpoint in allowing the insured to collect total disability benefits even if capable of performing one or more material occupational duties so long as other material aspects of the occupation can no longer be performed.