In Fiorentini v. Paul Revere Life Insurance Company, No. 17-3137, 2018 U.S. App. LEXIS 16741 (7th Cir. June 21, 2018), the Seventh Circuit determined that a business owner that had once been receiving total disability benefits but had since returned to work was not eligible for continued total disability benefits despite his argument that he was not able to perform all his job duties because he was unable to what it takes to generate new business.
In 1982, Henry Fiorentini founded Panatech Computer Management, Inc., a small information-technology company that specializes in providing customized software to small businesses. In 1998, he was diagnosed with invasive basal cell carcinoma of the right ear which required several surgeries, including the eventual amputation of the ear and replacing it with a prosthetic one. After the surgeries, he experienced permanent hearing loss, fatigue, migraines, dry mouth, tinnitus (a constant ringing sound), and an inability to localize sound. After the last of the surgeries, which occurred in 2008, Fiorentini submitted a claim for total disability benefits under an occupational disability insurance policy he had purchased from Paul Revere. The policy defined “total disability” as being unable to perform the important duties of his “occupation.” In his original application he listed his occupation as “President & Owner” of Panatech and said that his occupation entailed four “important duties”: sales (6–8 hours per week), consulting/meetings (7–10 hours per week), programming (15–25 hours per week), and administrative work (2–3 hours per week). Paul Revere concluded that he was unable to perform these duties, approved his claim and began paying Fiorentini total disability benefits in February 2009.
Five years later, Paul Revere notified Fiorentini that he no longer met the total disability requirements of his policy. He had been cancer-free since 2009 and was working regularly again. While he allegedly continued to suffer side effects from the surgery and worked fewer hours than he had before, the company determined that he was now well enough that he was exercising full control over Panatech. However, while it found him ineligible for total disability benefits, Paul Revere invited Fiorentini to apply for “residual disability” benefits under his policy. Coverage under that provision would have required Fiorentini to show that he was either unable to perform “one or more of the important duties” of his occupation or could only perform his important job duties for “80% of the time normally required to perform them” and that he earned at least 20% less than he did predisability.
Fiorentini did not submit that information. Instead, he let his policy lapse and sued Paul Revere, seeking damages for breach of contract, statutory penalties for unreasonable and vexatious conduct under Illinois law, and a declaratory judgment. The district court entered summary judgment for Paul Revere. On appeal, Fiorentini argued that the “total disability” clause covered him even though he could still do almost everything his occupation required him to do. In fact, he did not dispute that he was able to perform three of the important duties listed on his claim for total disability benefits: consulting with clients, programming, and administrative duties. He did however, claim that he was unable to perform the fourth, which he characterized as essential: sales.
He alleged that ever since his surgery, Panatech had survived exclusively on work from its existing clients; that he was the only one who can bring in new clients; and that he can do so only by meeting personally with prospects, giving presentations, and attending seminars. He claimed that that kind of face-to-face contact was now impossible for him because of his continuing symptoms, including tinnitus and fatigue. He also dismissed the suggestion that he could solicit new business through phone calls, emails, the internet, or a marketing company because he claimed that for his small business, only in-person contact will do.
The appeals court noted that Fiorentini’s claim that his inability to execute one task renders him “unable to perform the important duties of [his] Occupation” seized upon an opening in Seventh Circuit caselaw that suggests that the inability to perform one task might sometimes qualify under similarly worded policies. Fiorentini cited wording from another Seventh Circuit case that had noted that a shortstop who could no longer throw would be unable to do his job even if he could still run, hit, and catch and Fiorentini claimed that in-person solicitation is to him what throwing is to a shortstop—utterly essential. In other words, he claimed that because he couldn’t sell, he couldn’t do his job even if he could still program, consult with existing clients and do administrative tasks. The appeals court quickly dismissed this argument by stating “[a] shortstop who can’t throw can’t be a shortstop; Fiorentini, on the other hand, functions daily as Panatech’s president. While his capacity as Panatech’s president has been diminished by his inability to perform one of his important duties, he is not unable to continue his occupation.” It further noted that under the plain language of the Paul Revere policy, a “diminished ability to perform his occupation” was not covered, only the inability to continue it.
The court further noted that Fiorentini’s ineligibility for benefits under the total disability provision of the policy was contained in his own testimony because he admitted that he met regularly with existing clients at their businesses or over lunch, visited job sites weekly to discuss and address computer problems and offered no explanation for why he could meet with existing clients but not potential clients. He further admitted that he renewed his pilot’s license and spent 75–80 hours a year flying around the Midwest, primarily to have breakfast with other recreational pilots and still played in a weekly adult hockey league. The court concluded by noting that while the record supported the inference that Fiorentini could not discharge his duties as Panatech’s president in precisely the same manner as he did before, such a reduced capacity to perform job duties was addressed by the policy’s “residual disability” provision, which Fiorentini chose not to apply for.