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Langer v. Monarch Life Insurance Co.

argued: May 31, 1989.

LANGER, TERRY, M.D. AND LANGER, JOAN, APPELLANTS
v.
MONARCH LIFE INSURANCE COMPANY, AND PRESBYTERIAN-UNIVERSITY OF PENNSYLVANIA MEDICAL CENTER



On Appeal from the United States District Court for the Eastern District of Pennsylvania (District Court Civil No. 87-4000).

Greenberg and Hutchinson, Circuit Judges and Rodriguez, District Judge*fn*

Author: Greenberg

Opinion OF THE COURT

GREENBERG, Circuit Judge

This appeal concerns the meaning of the disability insurance provision of the employment contract between Doctor Terry Langer, the plaintiff,*fn1 and the Presbyterian-University of Pennsylvania Medical Center (the Medical Center). On December 13, 1985, while Langer was employed by the Medical Center, he suffered a disabling stroke. At that time he was not covered by the disability insurance policy provided for in his employment contract, an omission which ultimately triggered a dispute regarding his entitlement to the disability benefits from the Medical Center. The district court concluded that the employment contract unambiguously placed the burden of obtaining the insurance on Langer and that, consequently, the Medical Center had no obligation to him other than to pay the premiums if he obtained the insurance. Thus, in this action in which Langer has sought to have the Medical Center held responsible for the disability payments as they accrue, the district court granted summary judgment in its favor. Because we conclude that the contract did not unambiguously place the risk of loss on Langer if the insurance was not obtained, we will reverse and remand.

I. BACKGROUND

A. Contract Formation

In the spring of 1985, Langer, who was 45 years old, was a medical doctor serving on the faculty of the University of Pennsylvania Medical School and on the staff of the Hospital of the University of Pennsylvania (HUP). Unquestionably he was, as the district court described him, "a world renowned cardiologist with an immense and lucrative practice." Langer v. Presbyterian-University of Pennsylvania Medical Center, No. 87-4000, slip op. at 1 (E.D.Pa. Aug. 1, 1988). While he had suffered a heart attack in the summer of 1983, by 1985 he had recovered from it.

In the spring of 1985, Dr. Richard H. Helfant, Chief of Medicine of the Medical Center, contacted Langer and suggested that he leave HUP to join the medical and teaching staff of the Medical Center as its Chief of Clinical Cardiology. This approach led to negotiations between Langer and the Medical Center which continued during the summer of 1985. It is apparent that the Medical Center was not merely recruiting a doctor. Rather, it anticipated that it would hire both Langer's HUP secretary and a nurse practitioner selected by him, and would reorganize its staff to provide him with additional support. Langer was expected to "have responsibility for the Cardiology Training Program including the Fellowship, House Staff and Medical Student programs as well as being responsible for matters regarding cardiac patient care." As Helfant explained in a letter of August 14, 1985, "my plan and goal is for you [Langer] to assume the key position as both magnet doctor and role model in the forefront of our plan to become a leading center of excellence."

No later than June 1985, Robert Bauer, the Medical Center's Chief Financial Officer, became involved in its recruitment of Langer. Bauer arranged for consultants from Coopers and Lybrand, a major accounting firm, to prepare projections comparing the Medical Center's offer with the terms of Langer's position at HUP.

In an attachment to an August 14, 1985, letter to Langer, the Medical Center outlined "Benefits to be Provided to Dr. Terry Langer by Presbyterian-University of Pennsylvania Medical Center." The three provisions dealing with insurance coverage stated:

1. Health Insurance

Comprehensive coverage for you and your family. All pre-existing condition clauses will be waived.

2. Disability

Double your present coverage. We understand this will result in coverage of approximately $270,000 per year.

3. Life Insurance

We would pay for an amount equal to your present coverage ($557,500) plus an additional $1,000,000.

Langer asserts that this memorandum was prepared for use at a meeting on August 15, 1985, at which the final terms of his employment by the Medical Center were drafted.

B. Contract Terms

By letter dated August 21, 1985, Helfant outlined the terms of the Medical Center's offer of employment to Langer as its Chief of Clinical Cardiology, including his salary.*fn2 The letter stated that "[in] addition to this salary, you will receive all of the benefits outlined on Attachment I."

Attachment I was entitled "Benefits to Be Provided to Dr. Terry Langer by Presbyterian-University of Pennsylvania Medical Center," and its second paragraph was captioned "Disability." It added a sentence to the preliminary terms as set forth in the August 14, 1985, letter and provided as follows:

Double your present coverage. We understand this will result in coverage of approximately $270,000 per year. We agree to 'gross-up' payments to provide you with sufficient after tax dollars to purchase this coverage (the 'gross-up' will be calculated on the basis of your ...


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