An individual disability insurance policy issued by Northwestern Mutual to Joseph contained the following notice of claim provision: "Written notice of claim must be given to the Company within 60 days after the start of any loss covered by this policy. If the notice cannot be given within 60 days, it must be given as soon as reasonably possible."
In April 2011, Northwestern Mutual was notified by telephone that Joseph intended to submit a claim for benefits. Northwestern Mutual provided claim forms to Joseph and identified additional documents needed to evaluate his claim.
Eighteen months later – in October 2012 – Joseph submitted the completed claim form. In the form, Joseph stated that his claim was based on "consistent/ permanent" loss of hearing that began ten years earlier in April 2002, and a disc herniation that began causing pain in August 2012 and that prevented him from working the usual duties or hours of his occupation in September 2012. With the claim form, Joseph submitted individual tax returns for 2009, 2010, and 2011.
Less than two weeks later, Joseph told Northwestern Mutual that he was claiming benefits back to April 2002. Northwestern Mutual requested, and Joseph subsequently provided, proof of disability for the entire period claimed, including an employment chronology for the period 1997 through 2012, and financial information (e.g., individual and corporate tax returns, profit and loss statements) for the same period.
Northwestern Mutual determined that Joseph became partially disabled due to his hearing loss effective February 1, 2011. Since the completion of the 90-day elimination period, Northwestern Mutual has paid either the full benefit for total disability or the proportionate benefit for partial disability in an amount equal to the full benefit.
In May 2013, Joseph filed suit to recover additional disability benefits for the period January 2003 through February 2011. Northwestern Mutual moved for summary judgment based on three policy provisions – the three-year Legal Actions provision, the Notice of Claim provision, and the Proof of Disability provision.
The district court granted summary judgment in favor of Northwestern Mutual, finding "as a matter of law that Joseph failed to comply timely with the insurance policy's notice provisions."
The district court noted that under Georgia law the insured's compliance with a notice of claim provision is a condition precedent to the insurer's duty to pay. The court further noted that "issues relating to reasonableness and sufficiency" of the insured's compliance may be decided as a matter of law, depending on the sufficiency of the excuse and the insured's diligence after any disability has been removed.
Joseph offered several excuses for failing to submit a claim before October 2012. He "didn't really understand the details of [his] policy." He "wasn't incapacitated" and believed the policy applied to more catastrophic conditions. He thought his "hearing loss was going to get better." When his back condition worsened, he "got scared" and decided to submit a claim. And, he thought the business he started in 2003, after he purportedly became disabled, "was going to be successful."
Citing Equitable Life Assurance Society v. Studenic, 77 F.3d 412 (11th Cir. 1996), the district court concluded that each of Joseph's excuses was unreasonable as a matter of law. The court reasoned that the policy "clearly define[d] both total and partial disability and provided Joseph with sufficient notice about when the effects of a disability triggered coverage under the Policy and the requirements for initiating a claim."
The court also rejected Joseph's arguments that Northwestern Mutual waived compliance with the notice provision or was otherwise estopped from asserting a late notice defense, based on the company's failure to send a reservation of rights letter to Joseph, the company's repeated requests for records dating back to 2002, and the company's failure to show prejudice resulting from the late notice.
First, Georgia law "does not require an insurance company to show prejudice to bar coverage for late notice."
Secondly, Georgia law does not require insurers to send a reservation of rights letter in the context of first-party insurance contracts. Although some insurers may send such letters, the purpose for reserving rights in the third-party context is not furthered in the context of first-party claims.
Finally, a Georgia statute provides, "[w]ithout limitation of any right or defense of an insurer otherwise," that "none of the following acts by or on behalf of an insurer shall be deemed to constitute a waiver of any provision of a policy or of any defense of the insurer under the policy: (1) Acknowledgment of the receipt of notice of loss or claim under the policy; (2) Furnishing forms for reporting a loss or claim, for giving information relative to the loss of claim, or for making proof of loss or receiving or acknowledging receipt of any forms or proofs completed or uncompleted; or (3) Investigating any loss or claim under any policy or engaging in negotiations looking toward a possible settlement of any loss or claim." O.G.G.A. § 33-24-40.
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