Summary
denying summary judgment on partial disability where work history and medical evidence indicated inability to tolerate full-time work
Summary of this case from EICK v. NORTHWESTERN MUTUAL LIFE INSURANCE COMPANYOpinion
No. C 99-1042 MJM
July 5, 2001
OPINION and ORDER
In this action the plaintiff, Dr. Robert Merrick, alleges breach of contract and bad faith by the defendant, Northwestern Mutual Life Insurance Company (NWML), in refusing to provide disability coverage to Dr. Merrick. The suit was originally filed in the Iowa District Court for Dubuque County. NWML removed the action to this court and presently seeks summary judgment as to both claims. NWML's motion is premised on its assertion that Dr. Merrick's state law claims are preempted by ERISA or, alternatively should the court reject the ERISA argument, that Dr. Merrick cannot raise a genuine issue regarding the presence of a disability or NWML's alleged bad faith. In his resistance, Dr. Merrick argues that ERISA is not applicable to the dispute in this case and genuine issues of material fact preclude summary judgment on either of his state law claims.
Accordingly, the court will treat Dr. Merrick's resistance brief as a cross-motion for partial summary judgment on the ERISA issue.
Because removal to federal court was premised on both ERISA and diversity jurisdiction, this court's continued jurisdiction is not contingent on a particular resolution to the issues presented in this motion.
Standard of Review
The standard for granting summary judgment is well-established. A motion for summary judgment may be granted only if, after examining all of the evidence in the light most favorable to the nonmoving party, the court finds that no genuine issues of material fact exist and that the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) ( quotation omitted); Montgomery v John Deere Co., 169 F.3d 556, 559 (1999). A fact is material if it might affect the outcome of the suit under the governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Beyerbach v. Sears, 49 F.3d 1324, 1326 (8th Cir. 1995). An issue of material fact is genuine "if it has a real basis in the record." Hartnagel v. Norman, 953 F.2d 394, 395 (8th Cir. 1992) (citing Matsushita, 475 U.S. at 586-87).The party moving for summary judgment bears the "initial responsibility of informing the district court of the basis for its motion and identifying those portions of the record which show lack of genuine issue." Celotex, 477 U.S. at 323. Once the moving party has carried its burden, the opponent must go beyond the pleadings and designate specific facts-by such methods as affidavits, depositions, answers to interrogatories, and admissions on file-that show that there is a genuine issue for trial. See Fed.R.Civ.P. 56(e); Celotex, 477 U.S. at 324. The evidence of the nonmoving party is to be considered as true, and justifiable inferences arising from the evidence are to be drawn in his or her favor. Anderson, 477 U.S. at 255. If the evidence of the nonmoving party is "merely colorable," or is "not significantly probative," summary judgment may be granted. Id. at 249-50. Thus, the nonmoving party does not have to provide direct proof that genuine issues of fact exist for trial, but the facts and circumstances that the nonmoving party relies upon must "attain the dignity of substantial evidence and must not be such as merely to create a suspicion." Metge v. Baehler, 762 F.2d 621, 625 (8th Cir.), cert. denied, 474 U.S. 1057 (1985). In essence, the evidence must be "such that a reasonable jury could find a verdict for the nonmoving party." Anderson, 477 U.S. at 248.
Facts
The facts are drawn from the parties' respective statements of fact in support of, and resistance to, summary judgment. (Doc. nos. 17 and 33). Unless otherwise noted, the factual allegations herein were proposed by NWML and admitted by Dr. Merrick.
1. Procedural history:
Since 1979, Dr. Merrick has been employed as a diagnostic radiologist by Mercy Radiologists of Dubuque, P.C. ("Mercy Radiologists"), an Iowa professional corporation. In 1981, Dr. Merrick purchased from Northwestern Mutual Life Insurance Company ("NWML") an occupational disability income protection insurance policy countersigned by Patrick Steele, an authorized agent of NWML. In subsequent years, Dr. Merrick purchased supplemental disability coverage with NWML. The policy numbers are D213141, D685172, D879622 and 9381449.
Because Dr. Merrick's policies with NWML provide occupational — as opposed to general — disability insurance protection, he is entitled to benefits if a disability renders him totally or partially unable to perform or spend as much time at his occupation as a diagnostic radiologist (even if he could feasibly perform other comparable medical work). See, e.g., Policy no. D213141 (1981), §§ 1.1 and 1.3 (defining, inter alia, "his occupation" and "partial disability").
In May 1998, Dr. Merrick requested from NWML partial disability benefits on the grounds that a predominantly psychological medical condition forced him to switch from full-to part-time work. By letter dated April 22, 1999, NWML notified Dr. Merrick of the denial of his application for disability benefits.
2. Dr. Merrick's substantive disability claim:
The facts relating to Dr. Merrick's substantive state law claims are either undisputed or are recited in the light most favorable to Dr. Merrick. Unless otherwise noted, the recited factual allegations were proposed by NWML and subsequently admitted by Dr. Merrick.
Dr. Merrick showed signs of stress-related illness as early as 1992, as evidenced by work-place problems that resulted in medical staff review. (Facts, ¶¶ 31 32). In October 1993, Dr. Merrick went to see Dr. Boxleiter, a psychiatrist, who diagnosed him with "major depressive disorder, recurrent, having a single episode." (Facts, ¶ 33). Dr. Boxleiter prescribed medication and in December 1993 changed his diagnosis to "major depressive disorder, recurrent, in remission." (Id.). Dr. Merrick continued with the medication and met with Dr. Boxleiter periodically through October 2000; throughout that time period, Dr. Boxleiter's clinical notes continued to reflect that Dr. Merrick's major depressive disorder was in remission. (Facts, ¶ 35).
Dr. Merrick contends that despite his representations to Dr. Boxleiter to the contrary, his condition was deteriorating from 1994 onward as manifested by his increasingly erratic reactions to stress in the workplace resulting in increasing conflict with his colleagues and supervisors. For example, in February 1996, Dr. Merrick, in response to a perceived slight, resigned as President of Mercy Radiologists on the grounds that "the leader of any group needs to be in sync with that group and have the group's support." (Facts, ¶ 34). In May 1997, Dr. Merrick wrote to Dr. Ross Madden, an administrator at the Medical Associates Clinic to air his grievances regarding the manager of the x-ray department and his sense that radiologists were not being supported. (Facts, ¶ 36). In the same letter, Dr. Merrick accused the department management of lies and cover-ups. (Id.). In September 1997, Dr. Merrick had a conflict with a hospital administrator, Jerry Richards, in which Dr. Merrick accused colleagues of Medicare "billing discrepancies." (Facts, ¶ 37). Dr. Merrick was subsequently asked by Dr. Clifford, Chairman of the Radiology Department, to apologize to the hospital administrator with whom he had had the altercation. (Facts, ¶ 38). Dr. Merrick refused. (Id.).
Following this latter incident, Dr. Merrick received the following letter from Dr. Iverson, President of Mercy Health Center Staff:
It is the recommendation of the Ad Hoc Committee that you begin medical evaluation with the intent of better understanding, and therefore, allowing you to better control behaviors which are currently interfering with your capacity to function as a staff radiologist as well as the function of the Department of Radiology. As per your verbal and written consent, the concerns of the Ad Hoc Committee with regard to these behaviors, will be forwarded to your treating physician, Dr. Thomas Boxleiter, M.D.
. . .
It is also the recommendation of the Ad Hoc Committee that should any further episodes of uncontrolled anger, or behaviors felt to be unprofessional, which either interfere with the quality of care delivered to patients at Mercy Health Center, or impede the ability of the Department of Radiology to provide expected services, that it will be necessary to temporarily suspend your privileges until this problem is resolved.
(Facts, ¶ 39) (letter dated September 10, 1997).
After the September 10th threatened suspension of his hospital privileges, Dr. Merrick's attorney referred him to clinical psychologist, Dr. Thomas Sannito, Ph.D. (Facts, ¶ 40). On September 16, 1997, Dr. Sannito wrote to Dr. Merrick's attorney:
"I am very optimistic that Dr. Merrick will improve. . . . This seems to be a situational problem that can be worked out." (Facts, ¶ 41). It was anticipated that the letter would be used with the hospital administration to resolve Dr. Merrick's suspension of privileges. (Id.).
Dr. Sannito referred Dr. Merrick to psychologist Dr. Beckman, Ph.D. (Facts, ¶ 42). On October 13, 1997, Dr. Beckman wrote:
"I have confidence in [Dr. Merrick's] ability to break free of his depression and to transform his sometimes aggressive behavior into a more socially comfortable assertiveness." (Facts, ¶ 43). On March 2, 1998, in his application for reappointment of privileges at Mercy Health Center, Dr. Merrick wrote: "I do not believe my ability to exercise my privileges is affected [by my treated depression] (it was temporarily in the past . . .), nor do I believe I need any accommodation." (Facts, ¶ 44). On March 4, 1998, Dr. Beckman confirmed that Dr. Merrick continued to visit on a bimonthly basis and reported that his depression was in decline.
(Facts, ¶ 45).
During this same time period, Dr. Merrick continued to have stress-related concerns with his heart. He consulted Dr. Johnson, a cardiologist, and underwent numerous procedures — including EKGs, echocardiograms, and renal scans — to allay his fears of coronary artery disease which were exacerbated when he read his own preoperative chest x-ray and thought he saw some ventricular deterioration. (Facts, ¶ 46). Dr. Johnson initially concluded that Dr. Merrick's only risk factor for coronary disease was hypertension and was advised to check his blood pressure often and adjust his blood pressure medication as necessary. (Id.). In March, 1998, Dr. Johnson noted that the renal scan was "normal, ruling out renal artery stynosis as the cause of his hypertension." (Facts, ¶ 47).
On March 31, 1998, Dr. Merrick told Dr. Beckman that he intended to switch to a part-time schedule on a permanent basis. (Facts, ¶ 49). On July 4, 1998, Dr. Merrick began sharing a full-time position with Dr. Schreiber, and from that date Dr. Merrick has worked approximately half the number of hours he did as a full-time radiologist.
3. Dr. Merrick's benefits request and NWML's subsequent investigation:
On May 26, 1998, Dr. Merrick requested disability benefits in conjunction with his anticipated change to part-time status. (Facts, ¶ 53). In conjunction with that request, Dr. Beckman completed an Attending Physician's Statement ("APS") in which he states that he "suggested to Dr. Merrick that he reduce his work load" but did not name any specific limitations. (Facts, ¶ 54). In response to an NWML request for more specific information, Dr. Beckman diagnosed Dr. Merrick with dysthymic disorder and social phobia. (Facts, ¶ 58). Dr. Boxleiter also completed an APS but indicated that he had not restricted Dr. Merrick's work activities in any way. (Facts, ¶ 55). In June, 1998, Dr. Johnson completed an APS indicating that Dr. Merrick's diagnosis was "hypertension" and "possible coronary artery disease" and restricting him to "reduced work time." (Facts, ¶ 56). In response to an NWML request for more specific information, Dr. Johnson diagnosed Dr. Merrick with "essential hypertension" and noted that Dr. Merrick's specific activity limitations were "physical exertion — rapid walking." (Facts, ¶ 57).
On October 7, 1998, Dr. Duchelle, M.D., a cardiologist, after reviewing Dr. Merrick's medical records at NWML's request, concluded that there was no cardiac basis for Dr. Merrick's limitations. (Facts, ¶ 59). That conclusion was reiterated by two other cardiologists, both of whom reviewed Dr. Merrick's records at NWML's request. Dr. Rosenberg concluded that "full-time work was not contra-indicated." (Facts, ¶ 65). And Dr. Cam Campbell, M.D., consulted in conjunction with this litigation, wrote: "Overall, and strictly based upon a cardiovascular diagnosis, I don't believe that Dr. Merrick meets criteria for disability." (Facts, ¶ 72).
NWML's reviewers reached similar conclusions with regard to Dr. Merrick's alleged psychiatric condition. Dr. Logan, M.D., a psychiatrist, reviewed Dr. Merrick's psychiatric records and concluded that Dr. Boxleiter's diagnosis of depression in remission was accurate but that the diagnosis did not support the restrictions imposed by Dr. Beckman. (Facts, ¶ 60). Dr. Fosdale, M.D., another psychiatrist, conducted an examination of Dr. Merrick on NWML's behalf and concluded that there was no evidence of a type of mental disease or disorder. (Facts, ¶ 66). And finally, Dr. Raymond R. Crowe, a psychiatrist at the University of Iowa Hospitals and Clinics consulted in conjunction with this litagation, wrote: "In conclusion, I did not find any substantiation in these records for a conclusion that Dr. Merrick is occupationally disabled or unable to work at his full time job for medical reasons." (Facts, ¶ 71).
Despite NWML's contentions, Dr. Merrick's physicians maintained that his psychiatric condition would not allow a return to full-time work. In that respect, on April 6, 1999, Dr. Sannito wrote the following:
I evaluated Dr. Robert Merrick on 2-19-99 and have come to certain conclusions. When I saw him originally, on 9-16-97, he was suffering from severe depression and high stress from job-related problems. More recently, since he cut back to one-half time he is doing better. However, make no mistake, he should not go back to full-time work. He should remain on the present schedule of part-time employment as a radiologist. Should he go back to full-time work, it is my opinion that he will be in danger of a psychological/emotional setback, to say nothing of the physical effect of the high stress. By reducing his load, he is able to function in his profession. A return to full-time medicine would probably result in total disability at some point.
(Facts, ¶ 67).
Dr. Beckman, in deposition testimony, reiterated Dr. Sannito's conclusion:
The first time — I think this man, as I said, bravely was holding himself together and he was just building and building and building over the years until he had a crisis, he had a breakdown, he got very sick, and all of these letters that you handed me showing that there was tremendous conflict with Medical Associates, his colleagues, the administration at Mercy, I think are just symptoms of his breakdown, symptoms of this man unraveling mentally, emotionally. And that if he went back to full time, my prediction would be that this would take years for him to get to that place again. I think it would take months and he would be overwhelmed and he would be at risk.
(Facts, ¶ 75(i)).
Discussion
NWML moves for summary judgment as to all claims on multiple grounds. First, NWML argues that the suit should be dismissed because ERISA preempts Dr. Merrick's state law claims for breach of contract and bad faith. Alternatively, NWML argues that the state law claims should be dismissed because Dr. Merrick cannot, as a matter of law, raise a triable issue as to either the presence of a disability or bad faith on NWML's part. The court shall address the ERISA preemption dispute first. To the extent that the court's ERISA analysis does not fully resolve the motion, the court will then address the parties' substantive claim arguments.
A. ERISA
ERISA was enacted to protect the interests of participants and beneficiaries in employee benefit plans by providing minimum standards to assure the equitable character of such plans and their financial soundness. 29 U.S.C. § 1001 (1988). An integral part of ERISA's statutory scheme is a broadly worded preemption clause that explicitly supersedes state laws that "relate to any employee benefit plan." 29 U.S.C. § 1144(a). "The purpose of the preemption clause is to enhance the efficient operation of the federal statute by encouraging uniformity of regulatory treatment through the elimination of state and local supervision over ERISA plans." Johnson v. Watts Regulator Co., 63 F.3d 1129, 1132 (1st Cir. 1995) (citing Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 142 (1990)). NWML argues that the disability policies at issue in this case are governed by ERISA and, as such, plaintiff's state law claims are preempted. Conversely, plaintiff argues that ERISA is not applicable in this case.
The question of whether ERISA applies to a particular plan or program requires an evaluation of the facts combined with an interpretation of the law. Bonestroo v. Continental Life and Accident Co., 79 F. Supp.2d 1041, 1046 (N.D.Iowa 1999) (citing Kulinski v. Medtronic Bio-Medicus, Inc., 21 F.3d 254, 256 (8th Cir. 1994) (explaining that the existence of an ERISA plan is a mixed question of fact and law)). ERISA defines an "employee welfare benefit plan" as:
any plan, fund, or program . . . established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, . . . medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment
. . . .
29 U.S.C. § 1002(1). Employee welfare benefit plans can be funded through the purchase of group or individual policies. See Agrawal v. Paul Revere Life Ins. Co., 205 F.3d 297, 301 (6th Cir. 2000); Peterson v. American Life Health Ins. Co., 48 F.3d 404, 407 (9th Cir. 1995); Donovan v. Dillingham, 688 F.2d 1367, 1373 (11th Cir. 1982). Therefore, the fact that Dr. Merrick was covered by an individual rather than a group policy does not prevent a finding that he was a participant in an ERISA plan if the requirements set forth in the statute are otherwise met.
For an employee benefit plan to come within ERISA's sphere of influence, it must, among other things, be "established or maintained" by an employer. See 29 U.S.C. § 1002(1); Donovan, 688 F.2d at 1370 (enumerating necessary components of an ERISA plan). In that respect, Department of Labor regulations set out a "safe harbor" provision explaining when an employer may be involved with an employee welfare benefit plan without having "established or maintained" it. See 40 Fed. Reg. 34, 527 (1975) (explaining rationale underlying safe harbor regulation). This regulation, found at 29 C.F.R. § 2510.3-1(j), provides in pertinent part:
[T]he term "employee welfare benefit plan" . . . shall not include a group or group-type insurance program offered by an insurer to employees or members of an employee organization, under which:
(1) No contributions are made by an employer or employee organization;
(2) Participation in the program is completely voluntary for employees or members;
(3) The sole functions of the employer with respect to the program are, without endorsing the program, to permit the insurer to publicize the policy to employees or members, to collect premiums through payroll deductions . . . and to remit them to the insurer; and
(4) The employer or employee organization receives no consideration in the form of cash or otherwise in connection with the policy other than reasonable compensation, excluding any profit, for administrative services actually rendered in connection with payroll deductions . . .29 C.F.R. § 2510.3-1(j). It is only when all four of the "safe harbor" provisions are satisfied that an employer is not considered to have "established or maintained" the program or plan, thereby escaping ERISA's preemption. See Thompson v. American Home Assur. Co., 95 F.3d 429, 435 (6th Cir. 1996). However, because the claim of ERISA preemption is a defense, the burden is on defendant to establish that the safe harbor regulation is inapplicable. See Kanne v. Connecticut Gen. Life Ins. Co., 867 F.2d 489, 492 and n. 4 (9th Cir. 1988) (citing Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987)).
Thus, determining whether a plan is subject to the strictures of ERISA generally involves a two-step factual inquiry. First, the court must apply the safe-harbor regulation to determine whether the program was exempt from ERISA. Second, if the regulation is not fully satisfied, the court must look to see if there was a "plan" by inquiring whether "`a reasonable person [would] be able to ascertain the intended benefits, a class of beneficiaries, source of financing, and procedures for receiving benefits.'" Northwest Airlines, Inc. v. Federal Ins. Co., 32 F.3d 349, 354 (8th Cir. 1994) (quoting Donovan, 688 F.3d at 1373); accord Bannister v. Sorenson, 103 F.3d 632, 636 (8th Cir. 1996) (citing and approving Donovan factors); Harris v. Arkansas Book Co., 794 F.2d 358, 360 (8th Cir. 1986) (same).
In this case there is, additionally, a preliminary step in which the court must address NWML's contention that the disability insurance plan at issue is part and parcel of a comprehensive employee benefits plan from which it cannot be severed for the purpose of the safe harbor regulation. It is uncontroverted that Mercy Radiologists provides a group life and health insurance plan for its employees and contributes 100% of the employees' health insurance premiums without subsequent deduction from bonuses. Thus, if NWML's non-severability theory is correct, Mercy Radiologists' failure to satisfy the "no employer contribution" provision with regard to health insurance precludes safe-harbor status for the disability insurance plan as well. Dr. Merrick argues that the challenged disability insurance plan is wholly distinct from the group life and health plans and must be evaluated independently from the latter.
1. Severability for purposes of the safe harbor regulation
In support of its position that the safe harbor analysis must consider all insurance plans in place at Mercy Radiologists, NWML relies on a Tenth Circuit opinion, Gaylor v. John Hancock Mutual Life Insurance Company, 112 F.3d 460 (10th Cir. 1997). In Gaylor, the employer purchased two group insurance policies from Hancock for the purpose of providing insurance benefits to its employees. See id. at 462. The life and accidental death and dismemberment policies were mandatory while other coverage, including disability, was optional. See id. The employer contributed the entire cost of the premiums for its employees' life and accidental death insurance but did not contribute to the premiums for disability insurance. See id. The appellate court found that the plaintiff could not sever her optional disability coverage from the rest of the benefits she received "because the [optional] coverage was a feature of the Plan, notwithstanding the fact that the cost of such coverage had to be contributed by the employee." Id. at 463 (citations omitted). Thus, the safe harbor provision could not be applied to the optional disability coverage as a separate plan. See id.; accord Smith v. Jefferson Pilot Life Ins. Co., 14 F.3d 562, 567 (11th Cir.), cert. denied, 513 U.S. 808 (1994). But see, Kemp v. IBM Corp., 109 F.3d 708, 713 (11th Cir. 1997) (holding that "non-ERISA benefits do not fall within ERISA's reach merely because they are included in a multibenefit plan along with ERISA benefits"); Slamen v. Paul Revere Life Insurance Company, 166 F.3d 1102, 1105 (11th Cir. 1999) (holding that a disability insurance policy covering only the employer did not become an ERISA plan merely because the employer had in place other insurance for his employees).
While the above-cited cases suggest some discord in the courts' treatment of this issue, reconciliation of the case law is unnecessary for resolution of the dispute in this case. Even assuming that NWML's statement of the law is correct, it is necessarily premised on the assumption that the challenged policies were, in fact, part of a comprehensive benefits plan. There is virtually no evidence in the record that would support such a conclusion in this case. NWML's only evidence on this point is language in Dr. Merrick's employment contract which references provision of the following fringe benefits: (a) a qualified employee's pension and/or profit sharing plan; (b) $150,000.00 Group Life Insurance; (c) an accident and health plan for the payment or reimbursement of Employee's medical care expenses; and (d) a disability insurance plan. See Merrick Employment Contract, Tabs 2 and 19 (the latter substituting malpractice insurance for pension plan). The disability insurance plan was to "provid[e] for payment to the Employee of disability benefits of $1,500.00 per month as permitted under I.R.C. 106, said disability payments to commence six months from date of disability and after the salary continuation payments cease, as provided in numbered paragraph 9 of this agreement." See id. (the latter amended to provide for commencement three months from date of disability).
While the employment contract references disability insurance among other benefits, NWML has offered no evidence to suggest that the disability policies at issue in this action were purchased in conjunction with the contract terms and, in fact, the evidence in its entirety overwhelmingly supports a contrary conclusion. There is uncontroverted testimony that at the time of Dr. Merrick's initial employment Mercy Radiologists did have in place a group disability insurance policy purchased from UNUM (subsequently transferred to Paul Revere Insurance Company) which corresponded to the terms of the contract. See Merrick affidavit, at p. 9; Clifford affidavit, at p. 2; Scott affidavit, at p. 2; Steele depo., at p. 9. There is further uncontroverted testimony that the NWML policies at issue here were sold to the Mercy Radiologists physicians by insurance agents Pat and Mike Steele as a "better" alternative to the restrictive, limited coverage provided by the group plan. According to Dr. Stephen M. Clifford, President, shareholder, and employee of Mercy Radiologists, the Steeles communicated with him and others about the "Cadillac" policy available from NWML and how it was much better than the group policy the P.C. had purchased and provided to the shareholders. Clifford affidavit, at p. 3. Dr. Clifford was told such things as:
"the group policy could be canceled, the [NWML] policy could not, also that the group coverage was available only so long as [Clifford] was an employee of the P.C., but with [NWML] if I left I could take that coverage with me."Id. Dr. Clifford was also told that the NWML coverage was "individual" and had "the advantage of paying if [he] was only partially disabled as opposed to totally disabled — [he] was even told that the [NWML] policy would cover [him] if [he] could practice medicine but not diagnostic radiology." Id. Dr. Clifford stated that when purchasing any coverage, he would meet with Pat Steele at which time they would talk about the various kinds of coverage and what was best for him. See id. at 4. He averred that "[a]t no time as a shareholder or employee or officer of Mercy Radiologists . . . was I ever required to buy any sort of insurance . . . more particularly disability; if I was to purchase anything, it was my decision, and it was my decision as to how much I would purchase if I'd purchase anything at all . . . ." Id. See also Scott affidavit, at 2-6 (noting, inter alia, that "[s]everal times I heard agent Steele . . . contrast the group's disability policy with UNUM with what he had available from [NWML]"); Merrick affidavit, at p. 9-10 (discussing differences between UNUM and NWML touted by the Steeles); Steele affidavit, at p. 9-11 (contrasting UNUM group plan with NWML individual policies).
This uncontroverted testimony demonstrates a clear distinction between the group disability insurance in place at the time of the contract signing and that purchased by Dr. Merrick from NWML two years later. The UNUM and NWML policies are substantially different in nearly every aspect and there is nothing to tie the expansive NWML policy — purchased and paid for by the individual physicians — to the much more meager fringe benefit referenced in the contract. That being the case, NWML cannot piggy-back the challenged disability insurance plan onto the other group plans for purposes of ERISA analysis. Accordingly, the court will turn to an analysis of the disability insurance plan itself to determine whether it, standing alone, is an ERISA plan.
2. Existence of an ERISA plan
As noted above, the safe harbor of § 2510-3.(j)(1) is applicable if the employer, in this case Mercy Radiologists, satisfies four necessary conditions: (1) no employer contribution; (2) voluntary employee participation; (3) no employer endorsement; and (4) no employer consideration. See 29 C.F.R. § 2510.3-1(j). This court finds no serious dispute that Mercy Radiologists has satisfied subsections (1), (2) and (4) of the regulation. Mercy Radiologists made no contribution to the policies at issue since all disability insurance premiums initially paid by it were subsequently deducted from each employee's bonus and the court sees no difference between employer collection of premiums through payroll deductions, expressly permitted under the regulation, and collection of premiums from bonus deductions. There is no evidence to suggest that purchase of disability insurance from NWML was anything other than completely voluntary and NWML appears to tacitly concede that Mercy Radiologists received no compensation or consideration in relation to the plan. Thus, the applicability of the safe harbor regulation turns on whether Mercy Radiologists' conduct in connection with the disability insurance program fell within or outside of the regulation's "no endorsement" provision in subsection (3), and it is on that issue that the court will focus its analysis.
ERISA's statutory scheme reflects the fundamental policy concerns at its core — namely, protection of substantive employer and employee expectations in benefit plans through uniform regulation, oversight and enforcement. See Massachusetts v. Morash, 490 U.S. 107, 115 (1989) ("Congress' primary concern was with the mismanagement of funds accumulated to finance employee benefits and the failure to pay employee benefits from accumulated funds."); Belanger v. Wyman-Gordon Co., 71 F.3d 451, 454 (1st Cir. 1995) ("ERISA's substantive protections are intended to safeguard the financial integrity of employee benefit funds, to permit employee monitoring of earmarked assets, and to ensure that employer promises are kept.") (citing Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 11 (1987)). Subsection (3) of § 2510-3.(j)(1) is premised on the notion that in the absence of employer involvement these policy concerns are not implicated and the necessity for ERISA safeguards is vitiated. See Johnson, 63 F.3d at 1133. To this end, the Department of Labor has called employer neutrality "the key to the rationale for not treating such a program as an employee benefit plan . . ." 40 Fed. Reg. 34,526, cited in Johnson, 63 F.3d at 1134.
Again, this provision requires that "the sole functions of the employer with respect to the program are, without endorsing the program, to permit the insurer to publicize the policy to employees, collect premiums through payroll deductions and remit them to the insurer." 29 C.F.R. § 2510.3-1(j)(3).
In theory, then, an employer "can assist its workforce by arranging for the provision of desirable coverage at attractive rates, but, by complying with the regulation, assure itself that, if it acts only as an honest broker and remains neutral visàvis the plan's operation, it will not be put to the trouble and expense that meeting ERISA's requirements entails." Johnson, 63 F.3d at 1133. As long as the employer merely advises employees of the availability of the plan, accepts payroll deductions, passes them on to the insurer, and performs other ministerial tasks that assist the insurer in publicizing the program, it will not be deemed to have endorsed the program under the regulation. See id.; Cecchanecchio v. Continental Casualty Co., 2001 WL 43783 (E.D.Pa. 2001) ("Neutrality is maintained if the employer performs only administrative tasks and eschews any role in drafting of the plan, working out its structural components, determining eligibility for coverage; interpreting policy language, investigating claims, or handling litigation of negotiating settlements.") (citation omitted). It is only when an employer intends to do more, and takes substantial steps in that direction, that it offends the ideal of employer neutrality. See Kulinski, 21 F.3d at 257 ("The pivotal inquiry is whether the plan requires the establishment of a separate, ongoing administrative scheme to administer the plan's benefits. Simple or mechanical determinations do not necessarily require the establishment of such an administrative scheme . . .").
"An employer will be said to have endorsed a program within the purview of the Secretary's safe harbor regulation if, in light of all the surrounding facts and circumstances, an objectively reasonable employee would conclude on the basis of the employer's actions that the employer had not merely facilitated the program's availability but had exercised control over it or made it appear to be part and parcel of the company's own benefit package." Johnson, 63 F.3d at 1135; Pierson v. Continental Casualty Co., 2000 WL 1879895, *6 (C.D.Cal. 2000) (quoting Johnson); Cecchanecchio, 2001 WL 43783 (same). Thus, while an employer may present evidence of its intent to establish an ERISA plan, it is the manifestation of that intent which is of relevance to the inquiry before the court. See Johnson, 63 F.3d at — (holding that employee's viewpoint should constitute the principal frame of reference in determining whether endorsement occurred); Thompson v. American Home Assurance Co., 95 F.3d 429, 436-37 (6th Cir. 1996) (holding that "the relevant framework for determining if endorsement exists is to examine the employer's involvement in the creation or administration of the policy from the employee's point of view. . . . [E]mphasis should be placed on those circumstances which would allow an employee to reasonably conclude that the employer had compromised its neutrality in offering the plan."); Custer v. Pan American Life Ins. Co., 12 F.3d 410, 417 (4th Cir. 1993) ("There must be some payment and manifestation of intent by the employer . . . to provide a benefit to the employees . . . of the type described in [ERISA].") (emphasis added).
In determining endorsement, courts have looked to a hodgepodge of factors, with no one factor conclusive of the issue. In Bonestroo, a recent decision in this district cited by both parties as illustrative of the applicable fact-sensitive inquiry, the court relied on the following facts in reaching its conclusion that the employer had endorsed the insurance policies provided by the insurer: (1) the employer, A-1, chose the insurer, Continental, and entered into a written contract with Continental as its group insurer; (2) employees could not independently subscribe with Continental under the policy because the employees were insured only through A-1; (3) certain benefits were not available to employees if A-1 ceased to be insured under the contract with Continental; (4) when an employee ceased working for A-1 their coverage under the policy likewise ceased; (5) A-1 determined which employees were eligible for coverage under the policy and also dictated the benefits an employee could obtain; (6) A-1 was responsible for notifying employees if they were covered under the policy and notifying them of their right to continued coverage; and (7) A-1 was liable for all premium payments during the grace period and was designated "trustee of the foresight employers trust." 79 F. Supp.2d at 1048. The court concluded that "[a] group plan with this level of employer involvement and lack of employee autonomy is the type of plan that ERISA was designed to govern." Id. See also Butero v. Royal Maccabees Life Ins. Co., 174 F.3d 1207, 1213-14 (11th Cir. 1999) (finding endorsement where employer did "a lot more" than merely permit insurer to publicize; employer also picked the insurer, decided on key terms such as portability and amount of coverage, deemed certain employees ineligible to participate, incorporated the policy terms into the self-described summary plan description in its cafeteria plan, and retained the power to alter compensation reduction for tax purposes); Baig v. New England Mutual Life Ins. Co., 166 F.3d 1, 5 (finding no ERISA plan even though employment agreement required employer to provide disability coverage where employee purchased the policy and "the policy itself did not bear any relationship to [the particular] employment, and would have continued in effect as long as [the employee] continued to pay the premiums, regardless of any change in his employment situation"); Robinson v. Linomaz, 58 F.3d 365 (8th Cir. 1995) (finding ERISA plan where group policy purchased by employer, no employee eligible for coverage under group policy purchased by employer unless he or she was an active full-time employee, and coverage would terminate if the employee ceased to be an active full-time employee); Cecchanecchio, 2001 WL 43783, at *2-3 (finding the following facts relevant to endorsement determination: (1) employer, Kmart, analyzed, negotiated and procured the type and style of insurance, and benefits under the plan are only available to Kmart employees; (2) Kmart implemented changes to plan to keep it affordable for employees; (3) Kmart reserved right to terminate or amend coverage; (4) Kmart told its employees to contact it with any questions regarding coverage; (5) Kmart handles claim filing for employers); O'Brien v. Mutual of Omaha Ins. Co., 99 F. Supp.2d 744, 749 (E.D.La. 1999) (finding no endorsement where no evidence that employer was involved in creation of individual policies other than allowing insurer to market the plan to employees; each employee purchased own policy directly with insurer; no mention in employee's policy of employer or that insurance is in any way tied to that employment; and employer provides no insurance administration or help with claim processing).
Other courts have looked to the extent to which the employer "tied" its name and approval to the particular plan at issue. For example, in Hansen v. Continental Insurance Company, 940 F.2d 971 (5th Cir. 1991), the Fifth Circuit held that where the employer distributed a booklet, embossed with its logo, to all employees which encouraged them to give the policy "careful consideration," as it could be a "valuable supplement to your existing coverage," and which referred to the plan as "our plan," the employer had endorsed the plan. See also Cecchenecchio, 2001 WL 43783, at *3 (finding relevant to endorsement determination that "[t]he Plan Summary and Master Document describe the plan as a company plan, and the documents refer to the disability plan as the Kmart Corporation Long Term Disability Income Plan, while making no reference to the [insurer]"); Pierson, 2000 WL 1878985, at *7 (finding endorsement where employees received information regarding particular disability plan through advertisements in employer calendar, mailers and publications, each of which contained a prominent "[Employer] approved" logo, language encouraging teachers to consider "[Employer] approved disability income protect plans," and language introducing the insurer as an "endorsed" company). In contrast, the Sixth Circuit held that endorsement could not necessarily be inferred where a cover letter encouraging employees to obtain accident insurance merely introduced "a plan" without any necessary inference that the plan at issue was endorsed by the employer. See Thompson v. American Home Assurance Co., 95 F.3d 429 (6th Cir. 1996); accord Johnson, 63 F.3d at 1136 (holding that "endorsement of a program requires more than merely recommending it").
Again, the touchstone of all these cases appears to be whether the employer acted in a way which would cause an objective employer to reasonably believe that he was signing on to a "joint venture" of the employer and the insurance company. A mere agency relationship is not enough.
While the question of endorsement is a mixed question of fact and law, ["i]n some cases the evidence will point unerringly in one direction so that a rational factfinder can reach but one conclusion [and i]n those cases, endorsement is a question of law." Johnson, 63 F.3d at 1135 n. 3 (citations omitted). After thoroughly reviewing the record, the court concludes that this is just such a case. Virtually none of the factors deemed relevant to a determination of endorsement are present here. Application of the Bonestroo factors illustrates the stark contrast between it and the present case. Here, the contract for disability insurance was made between the individual employee and the insurer, NWML, and Dr. Merrick is listed as both the insured and the owner on each of the relevant policies. Employees could independently subscribe with NWML. Employees determined the extent of their coverage under the individual policies and NWML's relationship with Mercy Radiologists bore no consequence to the extent of disability coverage under the individual policies. The policies were completely portable in that when an employee ceased working for Mercy Radiologists he was free to maintain the policy himself and uncontroverted evidence demonstrates that employees had, in fact, done so. And there is no evidence that Mercy Radiologists played any role in keeping employees apprised of their continued coverage eligibility under the individual policies. The "administrative functions" cited by NWML in its brief do not amount to anything more than ministerial functions which were ancillary to permitted activities under the regulation and do not rise to the "level of employer involvement and lack of employee autonomy [that] is the type of plan that ERISA was designed to govern." Bonestroo, 79 F. Supp.2d at 1048; see, e.g., Johnson, 63 F.3d at 1136 (finding employer's activities in maintaining list of enrollees and tracking eligibility ministerial).
Nor can this court find any other actions by Mercy Radiologists which would reasonably demonstrate an "endorsement" of the NWML disability policies. This is not a case where the employer endorsed, or even made reference to, the plan in company literature. NWML has offered no employer brochures, no cover letters, no correspondence whatsoever that would suggest that Mercy Radiologists had substantively endorsed the NWML disability insurance plan. There is only evidence that Mercy Radiologists permitted an insurance agent to address employees regarding the NWML disability plan at occasional meetings. The regulation expressly allows for such "publication permission" by an employer and, absent more, the mere presence of an NWML agent at an occasion office meeting will not amount to endorsement. See Johnson, 63 F.3d at 1134 (holding that ministerial tasks that "assist the insurer in publicizing the program" will not be deemed endorsement).
NWML points to two additional facts which purportedly demonstrate the existence of an ERISA plan: the designation of Mercy Radiologists as the "applicant" on Dr. Merrick's disability insurance policies and Mercy Radiologists' execution of an ERISA disclosure statement for each disability policy. In light of the absence of other evidence of endorsement, the court concludes that these two facts, alone, do not raise a triable issue on endorsement. Mercy Radiologists' designation as "applicant" on forms completed by an independent insurance agent does not evidence endorsement, establishment, or maintenance of a plan. It is merely a ministerial function which does not rise to the level of involvement contemplated by the regulation. See, e.g., Zavora v. Paul Revere Life Ins. Co., 145 F.3d 1118, 1122 (9th Cir. 1998) (finding mere designation of employer as plan administrator does not conclusively establish that plan falls within ERISA if actions in that respect are merely ministerial or ancillary to other activities within the safe harbor) ; Gotlib v. Paul Revere Life Ins. Co., 26 F. Supp.2d 989, 993 (E.D.Mich. 1998) (stating that in light of persuasive direct evidence of non-ERISA status, the mere fact that employer listed as payor on application, where insurance agent filled out form, does not bring plan within ERISA). As to the ERISA disclosure statements, the court concludes that such filings are not particularly relevant to the endorsement analysis where there is no evidence that any employees were aware of the filings and ERISA was not mentioned in any other documents distributed to the employees. See Johnson, 63 F.3d at 1137 n. 5 (protective filing of ERISA disclosure form with Department of Labor is insufficient to prove employer endorsed a policy in the absence of any evidence that the employees knew of this filing).
In sum, while no single factor in and of itself is dispositive, the court concludes that uncontroverted evidence in this case overwhelmingly demonstrates the absence of endorsement and, hence, the absence of an ERISA plan. See 29 C.F.R. § 2510.3-1(j) (excluding ERISA application where all four regulation conditions are satisfied by employer). NWML has presented no evidence which would have reasonably alerted Dr. Merrick or other employees that Mercy Radiologists had endorsed the individual NWML disability insurance plans or that those plans were governed by ERISA.
This conclusion is wholly consistent with the policy concerns underlying ERISA as the disability insurance plan at issue is not of a type that implicates those concerns. As to protection of fund assets, Mercy Radiologists' financial obligations were limited to deduction of the pre-paid annual premiums from Dr. Merrick's annual bonus, a practice easily monitored for accuracy by Dr. Merrick since it was he who determined how much coverage he wanted to purchase. See Baig, 166 F.3d at 5 (finding no ERISA policy concerns implicated where "[t]he administrative burdens on [the employer] were nearly nonexistent, and its financial obligations were limited to after the fact reimbursement, such that there was little chance for abuse, carelessness or misappropriation of funds of the sort that might escape [the employee's] oversight or threaten his benefits."). As to protection of mutual employer and employee expectations regarding coverage obligations, there is little to no evidence that any such expectations existed as there was no summary plan description or other documentation provided to Dr. Merrick which would alert him to the possibility that he was subject to the benefits and strictures of ERISA. See, e.g., Baig, 166 F.3d at 5 n. 6 (noting that presence of such documentation constituted evidence of employer intent to provide benefits on a regular and longterm basis although absence of such documentation should not necessarily lead to a finding that there is no ERISA plan).
Thus, both substantive and policy grounds support the court's finding that NWML has failed to raise a genuine issue of material fact as to whether the challenged disability plans are governed by ERISA. The uncontroverted evidence overwhelmingly evidences the absence of any such plan and, accordingly, the court shall now turn to NWML's proposed alternative grounds for summary judgment on Dr. Merrick's state law claims.
B. Dr. Merrick's State Law Claims
NWML moves for summary judgment on both counts in Dr. Merrick's complaint. With regard to the breach of contract claim, NWML argues that Dr. Merrick cannot raise a triable issue as to the presence of a disability under the challenged policy and thus there can be no breach of coverage under the policy. As to the bad faith claim, NWML contends that the undisputed facts demonstrate an absence of bad faith as a matter of law. The court will address each argument in turn.
1. Breach of Contract
Dr. Merrick's breach of contract claim alleges that NWML has wrongfully refused to pay benefits to which he is entitled under his occupational disability insurance policies. NWML argues that summary judgment in its favor is warranted because Dr. Merrick is not disabled under the terms of the policies. In each of the three policies, section 1.3, entitled "Proportionate Benefit for Partial Disability," provides in relevant part:
The Insured is partially disabled when:
why he is unable to perform one or more of the principal duties of his occupation; or
why he is unable to spend as much time at his occupation as he did before the disability started.
Policy no. D213141, § 1.3 (1981). In this action, Dr. Merrick relies upon the second category of coverage and thus the relevant requirement in all three policies is that he be unable to spend as much time at his occupation as he did before the disability started.
The additional policies subsequently purchased in 1989 and 1992 alter the language slightly to require that the principal duties which the insured can no longer perform must account for at least 20% of the time spent by the insured at his occupation prior to the disability or that the insured have at least a 20% loss of time spent at his occupation. See Policy no. D685172 (1989) and D879622 (1992).
Disability is not otherwise defined in the policy, except that section 1.1 directs that benefits are provided for the Insured's total or partial disability only if:
why the Insured becomes disabled while this policy is in force;
why the Insured is under the care of a licensed physician other than himself; and
why the disability results from an accident that occurs, or from a sickness that first appears, while this policy is in force. A sickness is considered to have appeared if it would have caused a prudent person to seek medical attention.
Section 1.1., "General Terms."
This dispute turns wholly on Dr. Merrick's claims that he suffers from psychological conditions which preclude full-time work and satisfy the policies' requirements for partial disability benefits. NWML argues that as a matter of law Dr. Merrick cannot meet the policy preconditions in that he cannot show that his work schedule has been shortened because of his alleged condition. Rather, NWML contends, the undisputed evidence demonstrates that even when his condition was at its worst, Dr. Merrick could — and can — work full-time if he so chooses.
After thoroughly reviewing the record in this case, the court concludes that material factual disputes remain which preclude the entry of summary judgment on the issue of whether Dr. Merrick is partially disability within the meaning of the contract. As evident from the court's recitation of the facts, Dr. Merrick's work and medical history can be characterized as complicated, lengthy and contradictory. Viewing the record in the light most favorable to Dr. Merrick, the nonmoving party, the evidence shows that Dr. Merrick first experienced difficulties in 1992 which caused him to seek medical advice and treatment from 1993 onward. Despite his continued treatment, Dr. Merrick felt that his condition was deteriorating. This deterioration manifested itself in his inability to control his anger and demeanor at work, which resulted in problems with his colleagues and a threatened loss of privileges. Following the latter, Dr. Merrick went to see Dr. Sannito and Dr. Beckmann who maintain that Dr. Merrick's psychological condition was such that he could not tolerate full-time work.
The court need not belabor the contradictory evidence offered by NWML on this issue. Suffice it to say, NWML's experts dispute Drs. Beckman's and Sannito's diagnoses and conclusions. In light of the facially credible evidence on both sides, it is this court's conclusion that this "battle of the experts" can be better resolved at trial, during which the experts' opinions can be explored and tested through direct and cross-examination.
The policy language also weighs against summary judgment in this case. The critical inquiry under the clause at issue is whether, due to his disability, Dr. Merrick is unable to spend as much time at his occupation as he did before the disability arose. NWML has failed to show an absence of genuine issue on this point. Instead, NWML reiterates its appealing but far from necessary contention that Dr. Merrick's ability to perform all the principal duties of his occupation on a part-time basis conclusively proves he could do the same at full-time status and thus his shift to part-time work is merely an exercise of voluntary choice. A careful reading of the policy language belies NWML's characterization of the issue. Given the policy's explicit alternative bases for partial disability eligibility — an inability to perform one's principal duties or to spend as much time on them — the better interpretation of the policy is that its drafters foresaw and provided for the possibility that the only effect a disability might have would be in a decreased tolerance for quantity of work — not quality.
In sum, this case boils down to a simple factual inquiry: does Dr. Merrick's psychological condition render him unable to work full-time? It is this court's conclusion that the answer cannot be made on the record before the court without indulging in impermissible credibility determinations and evidence-weighing. Accordingly, NWML's motion for summary judgment on Dr. Merrick's breach of contract claim shall be denied.
2. Bad Faith
Under Iowa law, to recover on a first-party bad faith claim, the plaintiff bears the burden of proving: (1) there was no reasonable basis to deny the claim and (2) the defendant knew or had reason to know that the denial was without basis. Thompson v. United Fidelity and Guaranty Co., 559 N.W.2d 288, 291 (Iowa 1997) (citing Morgan v. American Family Mutual Ins. Co., 534 N.W.2d 92, 96 (Iowa 1995); Wetherbee v. Economy Fire Casualty Co., 508 N.W.2d 657, 661-62 (Iowa 1993); and Kiner v. Reliance Ins. Co., 463 N.W.2d 9, 12-13 (Iowa 1990)). Summary judgment should be granted to the defendant only when, viewing the record in the light most favorable to the nonmoving party, the plaintiff is unable to raise a genuine issue as to both elements of the claim, i.e., that the insurer lacked a reasonable basis for denial and that it knew or should have known it lacked such a basis. See id. (citations omitted). In appropriate circumstances, the question of whether the insurer had a reasonable basis for denying the claim can be decided by the court as a matter of law. See id. at 290 (citing with approval Chadima v. National Fidelity Life Ins. Co., 55 F.3d 345, 349 (8th Cir.), cert. denied, 516 U.S. 868 (1995)).
Applying these principles to the case at bar, it is overwhelmingly clear that NWML did not act in bad faith in denying Dr. Merrick's disability claim. The record is replete with medical records demonstrating the objective reasonableness of NWML's actions. Several psychiatrists and cardiologists have concluded that Dr. Merrick is able to work full-time without restrictions. See NWML Brief, at p. 15-17 (summarizing medical records in evidence). It is immaterial that Dr. Merrick disputes the accuracy of their conclusions or that there may be other medical records to the contrary. Such disputes go to the breach of contract claim. In a bad faith claim, it is the existence of an objectively reasonable basis which is critical to the summary judgment inquiry. See Morgan, 534 N.W.2d at 96 (insurer has a right to fairly debate claims in which there is contradictory evidence on the issue of coverage); Reuter v. State Farm Mutual Auto. Ins. Co., 469 N.W.2d 250, 254 (Iowa 1991) ("If an objectively reasonable basis for denial of a claim actually exists, the insurer, as a matter of law, cannot be held liable for bad faith."). Here, there is no question but that NWML can prove an objectively reasonable basis for its denial of Dr. Merrick's claims — the existence of significant medical records contradicting Dr. Merrick's claims of disability — and thus NWML's actions cannot, as a matter of law, be deemed to have been made in bad faith.
Dr. Merrick, in his brief, as much as concedes this point, opting not to counter NWML's substantive arguments as to this claim. Rather, Dr. Merrick invites the court to extend Iowa's first-party bad-faith law beyond the parameters currently elucidated by the Iowa courts. Dr. Merrick urges the court to find a triable bad-faith claim premised solely on intentionally abusive behaviors by an insurance company designed to intimidate the insured from presenting or following through on a claim. In this case, those actions allegedly include requiring Dr. Merrick to travel to Wisconsin for a medical examination and delaying response and follow-through to his claims process.
In arguing for an extension of Iowa law in this case, Dr. Merrick states that "[t]here is no contract remedy for such abusive behavior, absent a bad faith claim." However, Dr. Merrick, as plaintiff, is the master of his claim and was not limited to contract remedies if he believed that NWML's conduct would support recovery in tort under Iowa law. Dr. Merrick characterizes various actions taken by NWML as "outrageous" and intolerable, and thus potentially actionable under Iowa's tort of intentional infliction of emotional distress. If, as appears to be the case here, the allegedly wrongful actions caused no severe emotional distress, then the plaintiff is appropriately limited to remedies available under contract law, which is traditionally non-punitive in nature. In short, the court is not persuaded that, given the opportunity, the Iowa Supreme Court would alter its current formulation of a bad-faith claim to incorporate grievances better redressed in tort. Accordingly, because Dr. Merrick has failed to proffer evidence which would support a finding of bad faith under Iowa law as it currently stands, NWML is entitled to summary judgment on this claim.
ORDER
In accordance with the opinion filed herewith, it is ORDERED:
Defendant Northwestern Mutual Life Insurance's motion for summary judgment is denied in part and granted in part as follows: (1) defendant's motion for summary judgment with regard to the breach of contract claim in Count 1 of plaintiff's complaint is DENIED; and (2) defendant's motion for summary judgment with regard to the bad faith claim in Count 2 of plaintiff's complaint is GRANTED.
Done and so ordered this 5th day of July, 2001.