Opinion
Civil Action No. L-10-3146.
January 24, 2011
This case arises out of a decision by Defendant, Provident Life and Accident Insurance Co. ("Provident"), to award Plaintiff, Dr. Antonio Medina, only "residual disability" benefits, rather than the total disability benefits to which he believes he is entitled under a policy he purchased in 1989. Dr. Medina requests a declaratory judgment stating that he is eligible for total disability benefits, subject to the continuing eligibility requirements of the policy.
Dr. Medina originally filed this action in the Circuit Court for Baltimore County, and on November 5, 2010 Provident removed the action to this Court. On November 23, 2010, Dr. Medina filed the Motion to Remand now before the Court. Docket No. 16. The Court has carefully reviewed the papers and has determined that supplemental briefing is necessary.
I. BACKGROUND
Dr. Medina is an orthopedic surgeon. Since 1989, he has held a disability income policy written by Provident, designated policy # 46-00198476, pursuant to which he paid additional annual premiums for "pure definition" disability coverage, as opposed to the more standard "basic definition" coverage. According to the terms of the policy, one is totally disabled under either definition when, because of injury or sickness, one cannot perform the substantial and material duties of one's "regular" occupation. The difference between the two is that under "basic definition" coverage, the insured may not be engaged in any other occupation, in addition to his or her "regular" occupation. "Pure definition" coverage does not contain this restriction.
The instant suit apparently does not implicate a related Overhead Expense Disability Policy, also written by Provident, designated policy # 00198475.
The Complaint alleges that, beginning in 2000, Dr. Medina suffered occasional but recurrent attacks of vertigo and dizziness. The attacks grew increasingly severe, causing Dr. Medina to cease emergency room work in 2004 and to discontinue performing surgery altogether in 2007. Dr. Medina continued, however, in his practice of performing file reviews for the Social Security Administration. He maintains that, prior to closing his medical practice, this work constituted a minority of both his professional time and professional income.
In June of 2007, Dr. Medina applied for total disability benefits under the terms of the policy purchased from Provident. Provident initially classified Dr. Medina as "residually disabled," a condition which entitles the policyholder only to a percentage of total disability benefits, calculated based on the policyholder's income. According to Dr. Medina, these payments continued through August of 2010 while Provident continued to evaluate his claim.
By a letter dated August 31, 2010, Provident informed Dr. Medina that it had completed a third appeal review of his claim for total disability benefits and decided to deny total disability. According to Provident, in prior years Dr. Medina's income from Social Security work was actually greater than his income from his orthopedic surgery practice. It accordingly defined his "regular" occupation as both orthopedic surgeon and consultant, and determined that he was still able to perform a portion of his material and substantial duties, namely the Social Security case reviews.
Dr. Medina contends that this decision deprives him of the additional premiums he paid for "pure definition" disability coverage. He presumably reasons that Provident's decision to treat the Social Security work as part of his "regular" occupation puts him in the same position he would be in had he purchased only "basic definition" coverage, under which any additional occupation, regular or not, would foreclose the award of total disability benefits. Dr. Medina therefore seeks a declaration that he is totally disabled under the terms of the policy.
Following the filing of Dr. Medina's Complaint, Provident removed the action from the Circuit Court for Baltimore County to this Court. Dr. Medina then filed the instant Motion to Remand, arguing that Provident has failed to satisfy its burden of showing that the amount in controversy exceeds the statutory jurisdictional amount.
II. LEGAL STANDARD
Provident's removal is governed by 28 U.S.C. § 1441, which provides, in relevant part, that "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed." Federal District Courts have original jurisdiction over "all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens of different States." 28 U.S.C. § 1332(a)(1).
Removal of an action originally filed in state court raises significant federalism concerns, and removal jurisdiction must, therefore, be strictly construed. See Mulcahey v. Columbia Organic Chems. Co., 29 F. 3d 148, 151 (4th Cir. 1994). When a plaintiff claims damages less than $75,000, "removal is proper only if the defendant can prove to a `legal certainty' that the plaintiff would . . . recover more than that if she prevailed."Momin v. Maggiemoo's Int'l, L.L.C., 205 F. Supp. 2d 506, 509 (D. Md. 2002). When the Complaint does not allege a specific amount in damages, it is the burden of the removing party to establish federal jurisdiction by showing by a preponderance of the evidence that the amount in controversy is in excess of the jurisdictional amount. Id. at 509-10. The defendant must establish the amount in controversy with "competent proof," and the Court may require "summary judgment-type evidence" to demonstrate required amount in controversy. Id. at 510. Mere allegations in the notice of removal are insufficient. Green v. Metal Sales Mfg. Corp., 394 F. Supp. 2d 864, 866 (S.D.W.Va. 2005).
III. ANALYSIS
The parties do not contest that diversity of citizenship exists. Rather, Dr. Medina contends that the amount in controversy is less than $75,000, and that this Court, therefore, cannot maintain subject matter jurisdiction over the case.
Dr. Medina's theory is that the declaratory judgment he seeks would entitle him to the difference between the "residual" disability benefits that he has been paid thus far and the total disability benefits for which he applied. By his calculation, this sum is approximately $64,275 from the time of his application to the time he filed suit, well under the $75,000 requirement of 28 U.S.C. § 1332. See Pl.'s Mem. in Support of Mot. to Remand 10-11, Docket No. 16-1.
Provident, by contrast, ascribes to a declaratory judgment the full $12,770 monthly benefit that Dr. Medina would receive under total disability classification, which over the same three-year period sums to $459,720. See Def.'s Mem. in Opposition to Mot. to Remand 6, Docket No. 17-1. It contends that any benefits already paid to Dr. Medina may not be considered by the Court at this stage, since they would simply constitute a defense to its potential liability to pay the full amount.
The Fourth Circuit has made clear that, in cases where the Plaintiff seeks disability payments to which he is entitled only so long as the condition creating permanent disability continues, the amount in controversy is the amount of benefits sought up until the time suit is brought. Mutual Life Ins. Co. of New York v. Moyle, 116 F.2d 434, 435 (4th Cir. 1940). This is because, at least in theory, the condition may change at any time, and so no controversy exists with respect to any benefits which have not yet accrued. Id. "Such a case is to be distinguished from one where the controversy relates to the validity of the policy and not merely to liability for benefits accrued; for, in the latter case, the amount involved is necessarily the face of the policy in addition to the amount of such benefits." Id. at 436.
See also Beaman v. Pacific Mutual Life Ins. Co., 369 F. 2d 653, 655 (4th Cir. 1966) ("If appellant were entitled to recover only $200.00 per month for the period [until the complaint was filed,] manifestly, the amount in controversy was insufficient to sustain jurisdiction; but if appellant were entitled to recover that amount and also to treat appellee's failure to pay the benefits during that period as an anticipatory breach of appellee's obligation to pay benefits for total disability for the remainder of appellant's life, a sum in excess of [the jurisdictional limit] would be in controversy and the lower court would have jurisdiction. The decided cases in the Supreme Court of the United States and in this and other circuits are clear that in a suit like the case at bar, the measure of recovery and, hence, the amount in controversy, is only the aggregate value of past benefits allegedly wrongly withheld.")
The Court must, therefore, determine the amount of the benefits that would accrue to Dr. Medina from the time of his initial claim to the time he filed suit, were the Court to award the declaratory judgment he seeks. Dr. Medina nominally requests a declaration that he is entitled to full disability benefits. Nonetheless, despite Provident's attempt to characterize the benefits it has already paid as a "defense of set-off or partial accord and satisfaction" suitable only for later adjudication, it is clear from the face of the Complaint that the practical effect of such a declaration would be simply to entitle Dr. Medina to the additional payments he would receive under full disability designation. At no point does Dr. Medina claim that he has been denied benefits altogether or suggest that, if he prevails on the merits, Provident would be liable for $12,770 per month above and beyond what it has already disbursed. As such, the amount actually in controversy is the difference between the benefits Dr. Medina has received and those to which he believes he is entitled under the terms of the policy.
As noted above, the Court may properly consider evidence outside the Complaint and Notice of Removal. It may "look to the entire record before it and make an independent evaluation as to whether or not the jurisdictional amount is in issue." Green, 394 F. Supp. 2d at 866. In cases where the amount in controversy is contested, courts have often requested that parties submit additional evidence to supplement the pleadings. See, e.g.,Manguno v. Prudential Property and Cas. Ins. Co., 276 F. 3d 720, 724 (5th Cir. 2002) (holding that defendant has carried its burden by submitting an undisputed affidavit stating that aggregate attorney's fees would likely exceed $75,000); Momin, 205 F. Supp. 2d at 510 ("One way of [determining whether attorneys' fees would be enough to satisfy the jurisdictional amount] might be for each side to present to the court in camera their billing records for the case thus far; another is for the court to allow the defendant limited discovery on the question of attorneys' fees.")
As such, the Court will allow supplemental briefs on the limited issues of: (i) the relevant time period during which Dr. Medina claims benefits (ii) the amount of total disability benefits that would have been paid to Dr. Medina during that time had he been so designated, and (iii) the amount of residual disability benefits actually paid during that time. Dr. Medina's Motion to Remand suggests that the relevant time period is September 2007 through September 2010, and that during this time period he received residual disability payments of $408,214.11. Total disability benefits of $12,770 per month over this 37-month (inclusive) period would sum to $472,490, suggesting that the difference, and the relevant amount for determining the existence of federal jurisdiction, is $64,275.89. However, since Provident's arguments in opposition to the Motion focused almost entirely on the appropriateness of this calculation, rather than its correctness, Provident will be given an opportunity to present additional evidence by which it may meet its burden.
This is Dr. Medina's calculation. Provident's pleadings calculate the amount of total disability payments for the relevant time period on the basis of 36 months, presumably as a result of excluding, rather than including, either the first or the last month. This method yields a total disability payment of $459,720, and an even lower difference of $51,505.89.
Since Dr. Medina has already presented his position fairly thoroughly, a full round of briefing is unnecessary. Provident is directed to file its position on the above-enumerated questions within 14 days of the date of this Order. Dr. Medina may, if he so chooses, file a response within 10 days of Provident's filing. Provident's filing should be no more than ten double-spaced pages, and Dr. Medina's no more than five, exclusive of supporting exhibits.
Despite the informal nature of this letter, it shall constitute an Order of the Court, and the Clerk is directed to docket it accordingly.