THE WORKER'S COMPENSATION CONCEPT OF “PERMANENT TOTAL DISABILITY” DOES NOT APPLY TO DETERMINATION OF WHETHER AN INSURED IS “TOTALLY DISABLED” UNDER THE TERMS OF A CREDIT DISABILITY INSURANCE POLICY.

An insured separately purchased two credit disability insurance policies from an insurer in connection with his credit purchase of two automobiles.  The policies obligated the insurer to pay the insured’s monthly car payments if the insured became totally disabled while coverage was in effect.  The pertinent portion of the policies’ definition of “totally disabled” required that the insured be “unable to engage in any occupation for which [the insured is] reasonably qualified” and defined “reasonably qualified” as meaning “an occupation for which [the insured has] experience, education, or training.”

The insured later suffered a work-related injury and underwent a cervical diskectomy and fusion.  Immediately following surgery, the insured experienced pain in his right arm and shoulder which resulted in permanent work restrictions.  The insurer paid credit disability benefits for almost two years and discontinued payments upon determining that the insured no longer was totally disabled.  The insured secured other, part-time employment, but continued suffer from pain and was restricted in performing his job duties.  The insured sued the insurer for beach of contract and the insurer moved for summary judgment, arguing that the insured could not meet the policies’ definition of total disability.  During deposition, the insurer’s representative testified that part-time employment does not necessarily disqualify an individual from receiving credit disability benefits.

The trial court granted the insurer’s motion, determining that “totally disabled” under the policies means that an insured is unable to engage in any full or part-time occupation for which he reasonably is qualified.  The trial court analogized the scope of the policies’ language to the concept of total disability in the law of worker’s compensation and found that there was no reason to make a different determination regarding the scope of the policies’ definition of “totally disabled.”  Given that an ability to engage in any part-time employment disqualifies an individual to receive total disability benefits under the worker’s compensation laws, the trial court held that the insured was not “totally disabled” within the meaning of the language of the policies at issue.

The appellate court reversed and remanded, finding that Florida law does not support the conclusion that the concept of total disability, as defined in the area of worker’s compensation, should be applied to a disability insurance contract.  Noting that worker’s compensation law requires an individual seeking total disability benefits to demonstrate an inability to engage in any meaningful employment, the appellate court held that the worker’s compensation definition does not apply to the contracts at issue.  The appellate court held that the phrase “any occupation,” as used in the subject policies, was ambiguous and was not necessarily synonymous with the phrase “any gainful employment,” as set forth in the worker’s compensation law.  Due to the ambiguity in the phrase “any occupation,” the appellate court held that the trial court erred in apply the worker’s compensation standard and in awarding summary judgment in favor of the insured.

Strama v. Union Fidelity Life Ins. Co.,
26 Fla. L. Weekly D2210 (Fla. 1^st DCA Sept. 11, 2001).