Laslavic v. Principal Life Ins. Co., Civil Action No. 11-684

SCOTT A. LASLAVIC, Plaintiff,

v.PRINCIPAL LIFE INSURANCE COMPANY, Defendant.

Civil Action No. 11-684

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA

Dated: January 23, 2013

MEMORANDUM OPINION

Conti, District Judge

I. Introduction

This matter involves a challenge to the termination of long-term disability benefits previously received by an eligible individual over the course of several years. Pending before the court is a motion for summary judgment filed by defendant Principal Life Insurance Company ("Principal").¹ (ECF No. 29.) For the reasons that follow, that motion will be denied.

II. Background

Plaintiff Scott A. Laslavic ("Laslavic") was born on December 13, 1971. (ECF No. 28-4, PLIC 2015.) He dropped out of school after completing the tenth grade at Seneca Valley High School. (ECF No. 28-2, PLIC 1026.) He obtained his General Educational Development certification in 1991. (ECF No. 28-6, PLIC 2640.) In 1998, Laslavic was employed by Wholesale Auto Services, Inc. ("Wholesale Auto") as a body shop repairman. (ECF No. 41 ¶ 1.) As an employee of Wholesale Auto, he qualified as a participating "Member" under a disabilityinsurance policy provided by Principal.² (Id.) The policy defines the term "disability" as follows:

Disability; Disabled

A Member's inability, solely and directly because of sickness or injury:

a. during the Benefit Waiting Period and the two year period immediately following the Benefit Waiting Period:

1) if not working, to perform the majority of the material duties of his or her normal job; or

2) if working, to earn more than 80% of his or her Indexed Predisability Earnings; and

b. after completion of the Benefit Waiting Period and the two year period immediately following the Benefit Waiting Period:

1) if not working, to perform the majority of the material duties of any job that reasonably fits the Member's background and training; or

2) if working, to earn more than 66 2/3% of his or her Indexed Predisability Earnings.

(ECF No. 1-1 at 9.) The "Benefit Waiting Period" referenced in the policy begins with the onset of a "disability" and continues for a period of six months. (Id. at 21.) The plain language of the policy indicates that an individual who is unable "to perform the majority of the material duties of his or her normal job," but capable of performing "the majority of the material duties of any job that reasonably fits [his or her] background and training" ceases to be "disabled" after the expiration of the Benefit Waiting Period and the ensuing two years. (Id.)

Laslavic applied for short-term disability benefits on November 13, 1998, alleging that he was "disabled" because of "shin splints." (ECF No. 41 ¶ 3.) Principal approved the application and started to pay benefits to Laslavic. (Id. ¶ 4.) In a letter dated March 12, 1999, Natasha Johnson ("Johnson"), a customer consultant employed by Principal, informed Laslavic that hiseligibility for long-term disability benefits was being considered. (ECF No. 28-4, PLIC 1982.) In the letter Johnson stated that since Laslavic's disability was not expected to continue for twelve months, it was not necessary for him to apply for benefits under the Social Security Act, 42 U.S.C. §§ 401-33, 1381-83f. (ECF No. 28-4, PLIC 1984.) Johnson explained that such an application would need to be submitted if the length of Laslavic's disability were to change. (Id.)

Laslavic was approved for long-term disability benefits on April 16, 1999. (ECF No. 41 ¶ 5.) He was informed of this approval in a letter from Becky Trickey ("Trickey"), a client consultant for Principal, dated June 9, 1999. (ECF No. 28-4, PLIC 1964-66.) The letter stated that Laslavic was entitled to a monthly payment in the amount of $958.81. (ECF No. 28-4, PLIC 1965.) This amount was roughly equivalent to two-thirds of Laslavic's monthly earnings. (Id.) The policy directs that the amount of an individual's monthly benefit be reduced by "all payments for the month received by [him or her] under the first-party income replacement provisions of a motor vehicle policy" obtained pursuant to Pennsylvania's Motor Vehicle Financial Responsibility Law ("MVFRL"), 75 PA. CONS. STAT. § 1701 et seq. (ECF No. 1-1 at 22.) Trickey's letter advised that Laslavic's "monthly benefit" could be affected by his receipt of "income from other sources," and that he should notify Principal of any such income in order to "avoid a possible overpayment of [his] disability claim." (ECF No. 28-4, PLIC 1965.)

On January 10, 2000, Laslavic was seriously injured in a motor vehicle accident. (ECF No. 41 ¶ 6.) The accident occurred when his vehicle was struck "head-on" by a vehicle operated by Douglas Lample ("Lample"). (ECF No. 28-7, PLIC 2733.) After the collision, Laslavic went to the emergency room at St. Francis Hospital Cranberry ("St. Francis") in Cranberry, Pennsylvania, complaining of pain in his neck, left shoulder and lower back. (ECF No. 28-7,PLIC 2739.) X-rays revealed that none of his bones had been fractured. (Id.) Laslavic was discharged with prescriptions for pain medication and instructed to wear a cervical collar. (Id.)

During the course of the ensuing year, Laslavic continued to experience pain in his back. (ECF No. 28-7, PLIC 2757-62.) A magnetic resonance imaging ("MRI") scan of his lumbar spine conducted on June 28, 2000, revealed that he had degenerative disc disease with associated bulging and disc protrusion. (ECF No. 28-7, PLIC 2767.) On November 10, 2000, Dr. Robert M. Sutherland administered an epidural steroid injection to Laslavic's back. (ECF No. 28-7, PLIC 2773-2774.) A provocative discography performed on November 30, 2000, detected the presence of a "posterior radial tear." (ECF No. 28-7, PLIC 2775-76.)

On January 17, 2001, Laslavic underwent a "[l]umbar decompression and radical discectomy at L5-S1 with interbody fusion and iliac graft." (ECF No. 28-7, PLIC 2781.) The operation was performed by Dr. Daniel M. Bursick and Dr. Eric M. Altschuler at Mercy Hospital in Pittsburgh, Pennsylvania. (ECF No. 28-7, PLIC 2778-80.) After the surgery, Laslavic received additional treatment for his back pain. (ECF No. 28-7, PLIC 2783-93.) He continued to receive long-term disability benefits during that period of time. (ECF No. 41 ¶ 14.)

In the aftermath of his surgery, Laslavic started to undergo physical therapy through Phoenix Rehabilitation and Health Services, Inc. ("Phoenix"). (ECF No. 28-2, PLIC 1311-12.) The objective of the therapy sessions was to enable him to return to work in a "light or modified duty capacity." (ECF No. 28-2, PLIC 1312.) During the summer of 2001, Dr. Bursick requested that a functional capacity evaluation be conducted to determine whether Laslavic could work. (ECF No. 28-2, PLIC 1307.) Daniel W. Glatz ("Glatz"), a physical therapist affiliated with Phoenix, performed the evaluation on July 24, 2001. (Id.) After completing the evaluation,Glatz reported that Laslavic could perform tasks at the "light" level of exertion. (ECF NO. 28-2, PLIC 1309.)

Dr. Dennis J. Courtney, a treating physician, administered a "three-dimensional lifting assessment" on August 22, 2001, to ascertain Laslavic's "ability to perform lifting tasks." (ECF No. 28-3, PLIC 1345.) During the assessment, Laslavic "demonstrated the ability to perform medium work" under the standards defined in the Department of Labor's Dictionary of Occupational Titles ("DOT"). (ECF No. 28-1, PLIC 0896; ECF NO. 28-3, PLIC 1347.) In a letter dated September 27, 2001, Dr. Courtney stated:

Mr. Laslavic is currently being treated by me with a trigger point injection program with concomitant physical therapy modalities. He is not permitted to work in any capacity during this treatment. Once treatment has concluded, Mr. Laslavic's work capacities will be evaluated to determine safe restrictions and limitations for his return to work in some capacity. I have reviewed Mr. Laslavic's pre-injury job description from Wholesale Auto Rehabilitation. As the prognosis for Mr. Laslavic every [sic] returning to the type of heavy duty work he has done in the past is poor, I have instructed him to consider retraining options that would enable him to obtain future employment in a sedentary or light capacity, once he is medically released to do so. Functional capacity testing performed also supports my opinion.

(ECF No. 28-7, PLIC 2802.) The letter was addressed to an undisclosed recipient. (Id.)

Laslavic ultimately brought a claim against Lample to recover damages stemming from the accident. (ECF No. 28-7, PLIC 2733.) The parties settled the claim for $15,000.00, which was the maximum amount of liability coverage available to Lample under a policy provided by New Hampshire Indemnity Insurance Company. (ECF No. 28-7, PLIC 2732-33, 2842.) Viewing the amount of the settlement to be insufficient to compensate him for his injuries, Laslavic made a claim for underinsured motorist ("UIM") coverage through his automobile insurance policy with State Farm Insurance Company ("State Farm"). (ECF No. 28-7, PLIC 2733-37.) On December 22, 2003, State Farm paid $165,000.00 to Laslavic. (ECF No. 41 ¶101.) After deductions for counsel fees and expenses, Laslavic received a net recovery in the amount of $109,495.90. (ECF No. 28-7, PLIC 2840.)

Investigators employed by Omega Insurance Services ("Omega") monitored Laslavic's daily activities between April 27, 2005, and April 29, 2005. (ECF No. 28-5, PLIC 2122.) Videotapes depicting his conduct were created. (ECF No. 28-5, PLIC 2122-29.) An investigative report prepared by Omega personnel described instances in which Laslavic had worked in his yard with a noticeable limp. (ECF No. 28-5, PLIC 2124, 2128.) The report attributed Laslavic's limp to an impairment in his left leg. (Id.)

Thomas D. Wood ("Wood"), a physical therapist, performed a physical work performance evaluation of Laslavic on May 26, 2005. (ECF No. 28-2, PLIC 1196-1202.) After completing the evaluation, Wood opined that it was "difficult...