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Tehan v. Disability Management Services

September 7, 2000


The opinion of the court was delivered by: Cooper, District Judge



This matter comes before the Court on the application of defendants Disability Management Services, Inc. ("DMS") and Reassure America Life Insurance Company ("Reassure," collectively the "Reassure Defendants") for an order to show cause with temporary restraints seeking to stay certain injunctive relief provided to plaintiff Roberta Tehan ("Tehan") in an Order Entering Preliminary Injunctive Relief dated May 2, 2000 (the "Order"), which was entered by the Superior Court of New Jersey (the "State Court") prior to removal of this case to the United States District Court for the District of New Jersey. Among other things, the Order preliminarily enjoined DMS, Reassure, and Cybertek Corp. ("Cybertek") from: (1) canceling disability insurance policy number H 402012 (the "Policy") issued by Mutual Benefit Life Insurance Company ("MBL") to Tehan, (2) collecting premiums on the Policy, and (3) discontinuing payment of disability payments due Tehan under the Policy retroactive to January 2000 (collectively the "Restraints"). The Court denied the Reassure Defendants' request for temporary restraints and set a date for a preliminary hearing on the Reassure Defendants' request to dissolve or modify the Restraints. For the reasons expressed, the Reassure Defendants' application to dissolve or modify the Order will be denied except that Tehan will be required to provide the Reassure Defendants with security for the payment of such costs and damages as may be incurred or suffered by them should the Court ultimately find that the Reassure Defendants were wrongfully restrained.

The Court will issue an Order to Show Cause directing the parties to address the amount and form of security required by Federal Rule of Civil Procedure 65(c). In addition, the Court will continue the Restraints on a temporary basis pending resolution of the Order to Show Cause.


On July 1, 1987, MBL issued the Policy to Tehan, who was practicing as a dentist at the time. (Certif. of Mark E. Duckstein, Esq. filed 5- 12-00 ("Duckstein Certif.") Ex. 5: Certif. of Robert F. Mills ("Mills Certif.") ¶ 4 and Ex. A: the Policy.) The Policy was later assigned to MBL Life Assurance Corp. ("MBL Life") and again to defendant Reassure, which now holds the Policy. (Mills Certif. ¶ 4.)

The Policy provides a total disability benefit if the insured suffers a "total disability" as defined under the Policy. (Policy § 1.3.) The Policy states that the insured suffers a "total disability" when, due to sickness or injury, either:

(a) the insured is not able to engage in his or her former occupation; or

(b) the insured's monthly income is reduced to one-fourth or less of his or her indexed prior monthly earned income.

The insured is not totally disabled unless he or she is under the care of a licensed physician other than the insured. (Policy § 1.3.)

Tehan began receiving benefits under the Policy between April 1, 1989 and March 1, 1990, during which time she was undergoing treatment for leukemia (the "First Claim"). (Mills Certif. ¶ 6.) Tehan's disability benefits were discontinued in March 1990 because Tehan's leukemia went into remission and Tehan returned to her dental practice part-time; thus, she was no longer "totally disabled" under the Policy. (Id. ¶ 7.)

On December 3, 1993, Tehan made a second claim for benefits based upon her leukemia and a "resulting psychiatric disorder" (the "Second Claim"). (Id. Ex. B: Disability Claim dated 12-3-93.) Tehan indicated on her claim form that her condition eventually got worse and, thus, she stopped practicing dentistry on June 13, 1993, when she sold her practice. (Id.) Following a review of the Second Claim, MBL began paying disability benefits effective March 1, 1993. (Id. ¶ 9.)

In or about April 1999, DMS, the servicing agent for Reassure, began conducting a review of Tehan's Second Claim. (Id. ¶ 10 and Ex C: Letter from Joy DeSanctis to Robert Mills of 5/20/99.) Pursuant to section 5.3 of the Policy, which provides that the insurer may "at any reasonable time or times, have the insured examined at our expense by physicians of our choice," DMS had Tehan examined by David J. Gallina, M.D., P.A. (Id. ¶ 16 & Ex. D: Letter of David J. Gallina, M.D. to Robert Mills of 7/20/99, at 14.) In Dr. Gallina's July 15, 1999 report, Dr. Gallina concluded, "I cannot comment on the physical difficulties that she claims to experience in the practice of dentistry, but emotionally, she demonstrates no neuropsychiatric illness that would prevent her from adequately functioning in virtually any job capacity, including that of a dentist." (Id. Ex. D at 14.)

In a letter dated December 14, 1999 (the "Termination Letter") to David Lustbader, Esq., Tehan's attorney, Robert F. Mills, a claims consultant with DSM, indicated that a copy of Dr. Gallina's July 15, 1999 report was provided to Mr. Lustbader on August 23, 1999 and that Tehan was given an opportunity to provide medical evidence to show that Tehan continues to be "totally disabled." (Id. Ex. E: Letter from Robert F. Mills to David Lustbader, Esq. of 12/14/99.) The Termination Letter indicates that Tehan does not qualify for additional benefits under the Policy and, thus, her claim will be closed and ...

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