Kole, J.A.D., Retired and Temporarily Assigned on Recall.
The opinion of the court was delivered by: Kole
KOLE, J.A.D., Retired and Temporarily Assigned on Recall
Julia Schajer (Julia or plaintiff) sues to recover total disability benefits under a disability policy issued by Northwestern Mutual Life Insurance Company (NML or defendant). NML defends, claiming that there is in fact no total disability; that plaintiff's claim is fraudulent; that she made fraudulent misstatements, material omissions of fact or concealments which bar her claim; and that the policy's incontestability and exclusionary provisions bar the claim. NML also counterclaims for benefits paid under a reservation of rights, as well as other sums claimed to be due it from plaintiff. Plaintiff further seeks compensatory and punitive damages from defendant for the latter's breach of duty of good faith and fair dealing, as well as its wanton, reckless and malicious wrongful acts.
This case is governed by New York law. On matters relating to the credibility of witnesses and other trial matters, New Jersey law may also apply.
After considering the credible proofs and reasonable inferences therefrom, including the demeanor of the witnesses, as well as the extensive arguments of counsel, I make the findings of fact and Conclusions of law that follow.
I. Total Disability Under the Policy
Plaintiff has the burden of establishing her claim for disability benefits by a preponderance of the credible evidence. She must show that her claim is more likely true than not. See Flexmir, Inc. v. Lindeman & Company, 4 N.J. 509, 514, 73 A.2d 243 (1950); Dalton v. Gesser, 72 N.J. Super. 100, 111-112, 178 A.2d 64 (App. Div. 1962); see also Daniel v. Allstate Life Insurance Co., 71 A.D.2d 872, 419 N.Y.S.2d 662 (App. Div. 1979).
Despite defendant's argument that plaintiff's proofs are rife with contradiction, I am satisfied that plaintiff presented essentially trustworthy proofs in support of her claim. The claimed contradictions as to dates, including the date the total disability commenced, are understandable in light of an endeavor to recall events that occurred some eight years before trial. I do not find any intent to deceive as to such dates or as to any material matter testified to by Julia or her husband, Morris Schajer, or any of plaintiff's other witnesses, including Dr. Rafii. At best, the differences are the result of confusion and a reasonable failure of recollection. Indeed, Julia's testimony is corroborated in significant respects by the evidence of others, including defendant's witnesses.
In short, I find that the claimed discrepancies in testimony in no wise impugn the essential credibility of the evidence presented by plaintiff. See De Rienzo v. Morristown Airport Corp., 28 N.J. 231, 239-240, 146 A.2d 127 (1958). Cf. County of Middlesex v. Clearwater Village, Inc., 163 N.J. Super. 166, 174, 394 A.2d 390 (App. Div. 1978); State v. Fleckenstein, 60 N.J. Super. 399, 408, 159 A.2d 411 (App. Div.), certif. denied, 33 N.J. 109 (1960).
In early 1987, Julia was a highly successful preferred stock trader-broker, earning in excess of $500,000 a year. In 1980, she was hired by Mabon Nugent to create a preferred stock department. By 1987, she was the head of her desk and a partner of the firm, with four or five people under her. Julia's business was extremely hectic and high pressured. She kept up with the fast pace, barely having enough time to use the restroom during the work day.
In early 1987, during a busy work day at Mabon Nugent, Julia was approached by Stephen Meszkat, an agent of defendant, NML. He had already sold several life insurance policies to Julia. He suggested that she buy a disability benefits insurance policy to insure her substantial income in case she should become disabled. She did so.
While Julia was in Vietnam visiting her soldier husband, in 1972, she contracted genital herpes (herpes simplex) from him, and had a single severe outbreak. She was treated at an Army hospital, and as far as she knew, she had been cured. Since then she had had no indication that she had genital herpes or any other venereal disease.
The NML disability income benefits insurance policy (the policy, which she acquired), was issued on March 4, 1987. The benefits for total disability were $15,000 per month. The premiums payable were substantial.
Sometime in April 1989, Julia began having recurrent genital herpes outbreaks. The pain of these outbreaks was excruciatingly severe. It significantly interfered with her concentration and memory, two essential requirements of her position. The pain stemming from herpetic episodes made it impossible for her to function at her desk. It was totally debilitating. She had extreme difficulty sitting and concentrating on her business.
Upon experiencing these problems in April 1989, Julia sought medical treatment from her gynecologist, Dr. Joseph Finkelstein. Dr. Finkelstein prescribed a medication called zovirax, the generic name of which is acyclovir. Julia suffered unfortunate side effects from this medication: dizziness, drowsiness, irritability, muscle aches in her lower back and shoulder, persistent sore throat and severe nausea. Dr. Finkelstein finally advised her not to take it.
In July, 1989, Julia left work, crying, and made an unannounced visit to Dr. Finkelstein in order to secure relief from her pain. Nothing that she tried could make the pain stop. Finally, in an effort to relieve her pain and after consultation with Dr. Finkelstein, she saw a plastic surgeon, Dr. Robert Jetter, who removed a portion of her labia in August 1989.
The surgery succeeded in alleviating the pain for six months. Julia continued to work at her job. Unfortunately, by early 1990, she again began to experience recurring and unrelenting episodes of herpes simplex. These same episodes continue to date. For the remainder of 1990, until October 14, 1990, Julia functioned as best she could at her high stress job.
Hoping that a short leave of absence would help her condition, she left her job at Mabon Nugent on October 14, 1990. Unfortunately, her condition never improved. At the insistence of Mabon Nugent, since she gave no indication of returning, she finally resigned from her position in April 1991, and never returned. She cannot perform in the profession that she loved and in which she was so well compensated, because she cannot think, cannot concentrate and cannot work steadily as is required of a successful preferred stock broker. Despite her disability, Julia did attempt to earn a living after she left Mabon Nugent. However, her condition prevented her from working.
Her claim under the policy was filed with NML in December 1990.
Julia suffers from chronic genital herpes simplex resulting from a virus infection. It is a permanent and incurable condition, although it may go into remission for periods of time. The herpes simplex virus lives in the nerves and travels along the nerves causing pain. The severe nerve pain, "causalgia," suffered by Julia is a burning pain caused by the virus located in the nerve or its cell. The effect of the pain on Julia is so severe that she can only concentrate on the pain and very little else, and thus, is unable to concentrate on and handle her stressful job as stock broker while such pain exists. The stress inherent in her work worsens the pain from the herpes. *fn1
Although patients severely disabled by vaginal herpes simplex are rare and zovirax is rarely not tolerated by them, the credible evidence establishes that Julia is an unusual case in both respects. She is unable to tolerate the drug's side effects. Hers may or may not be a unique or idiosyncratic case in both areas, but the unusual nature of her extreme disability and reaction to the medication does not mean that she was not so adversely affected and totally disabled. After all, it is the individual insured, not the reasonable person, whose condition is involved in a disability benefits insurance claim. See Nickolopulos v. The Equitable, U.S., 113 N.J.L. 450, 454, 174 A. 759 (E. & A. 1934), citing the New York case of Ursaner v. Metropolitan Life Insurance Co., 146 N.Y. Misc. 121, [262 N.Y.S. 462 (N.Y. Sup. Ct. 1933)]. See also Fannick v. Metropolitan Life Ins. Co., 34 N.J. Super. 556, 564, 113 A.2d 28 (App. Div. 1955).
There was ample corroborative testimony at trial demonstrating Julia's inability to function as a preferred stock broker. [The court's Discussion of most of the testimony is omitted].
Several doctors, including her gynecologist, Dr. Joseph Finkelstein, testifying for Julia, supported her claim that she is disabled as a result of her genital herpes.
Support for the existence of Julia's disability from herpes simplex, including her pain and inability to work at her stockbroker's job as a result thereof, is also to be found in defendant's evidence and documents. [The court's Discussion of such evidence is omitted].
The subjective nature of pain alone does not in any wise militate against its existence here. As to "pain credibility," the Second Circuit Court of Appeals, in a case involving disability benefits under the Social Security Act, has held that pain itself may be so great as to merit a Conclusion of disability where a medically ascertained impairment (such as, here, vaginal herpes) is found, even if the pain itself is not corroborated by objective medical findings. Claims of disability pain must be determined in the light of all the evidence regarding the extent of the pain. Rivera v. Schweiker, 717 F.2d 719, 724-725 (2d Cir. 1983); Marcus v. Califano, 615 F.2d 23, 28 (2d Cir. 1979).
The credible evidence, including that which was produced by defendant, supports the Conclusion as to Julia's substantial degree of pain and that she was and is totally disabled from performing the principal duties of her occupation of preferred stock broker. All of the physicians agree that herpes is incurable and permanent. There is no credible evidence adduced by defendant that this condition will end any time soon, if at all.
NML contends that plaintiff's refusal to take zovirax or other presently available drugs (valtrex and famvir) should militate against finding her totally disabled. Plaintiff's physician eventually advised Julia not to take zovirax (the generic name of which is acyclovir), because of the side effects. Apart from defendant's expert witness, the medical testimony reasonably supports the Conclusion that Julia should not take zovirax, valtrex or famvir.
A disability will not be considered total if there is available plainly effective treatment that would relieve the disability and pose no danger to the insured's life or health. As to whether or not the treatment is effective in this respect, however, is a matter of fact for determination by the fact finder. See Papas v. Equitable Life Assur. Co., 265 A.D. 128, 37 N.Y.S.2d 811, 813 (App. Div. 1942); Peasley v. Wendling Iron Works, 277 A.D. 622, 102 N.Y.S.2d 219, 220 (App. Div. 1951) (worker's compensation). Unjustified fear of the medications or remedial procedure alone is no ground for the insured's refusal to take any such drug or undergo such procedure. Palloni v. Brooklyn-Manhattan Transit Corp., 215 A.D. 634, 214 N.Y.S. 430 (App. Div. 1926); Peasley, supra, 102 N.Y.S.2d at 220.
The use of zovirax has not restored plaintiff to a state where she can perform her job. The credible evidence supports the Conclusion that zovirax is generally effective in the treatment of herpes with no serious side effects. But NML's expert, Dr. Berman also testified that different people react differently to this medication. The only relevant question is whether or not Julia falls within that small minority who experience side effects. See Nickolopulus v. The Equitable, U.S., supra, 113 N.J.L. at 454 (E. & A. 1934). She does. Even were this court to find that zovirax effectively inhibited plaintiff's symptoms from herpes, zovirax, with its attendant side effects, significantly interfered with Julia's ability to concentrate on the task of trading preferred stocks.
Moreover, there is credible evidence to show that other drugs offered plaintiff by NML's expert would have produced the same side effects. The PDR on valtrex confirms that "VALTREX is contraindicated in patients with known hypersensitivity or intolerance to . . . acyclovir, or any component of the formulation." The product information also notes the existence of nausea, headaches, dizziness and other adverse reactions to valtrex in clinical trials.
Julia's refusal to take any of the three medications, thus, was entirely reasonable. Under these circumstances, plaintiff is under no obligation to use any of the three mentioned ...