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Goldberg v. National Life Insurance Co.

October 1, 1985


Following judgment for disability insurer in suit by insured, the United States District Court for the Eastern District of New York, Mark A. Costantino, Judge, entered judgment on the insurer's counterclaims for benefits paid. Held, not erroneous to preclude rebuttal medical testimony that would have changed insured's theory of what constituted disability and proper to issue judgment on counterclaim. Affirmed.

Author: Oakes

Before: LUMBARD, OAKES and CARDAMONE, Circuit Judges

OAKES, Circuit Judge:

In this weird, if not to say bizarre, case an insured under a disability policy appeals an adverse judgment after a jury verdict in his suit against the disability insurer and also appeals the granting of the insurer's counterclaim for $33,628.24 in disability benefits paid the insured before discovery of his lack of supposed psychiatric disability. Appeal of the judgment is on the basis that the court erred in excluding some psychiatric testimony proffered as rebuttal. Appeal of the judgment on the counterclaim is on the basis that even though the policy required the insured to be under the care and attendance of a licensed physician and the parties had stipulated that the insured was "not under the care of a licensed doctor for psychiatric treatment of therapy," on one occasion he did see one doctor, a family practitioner, who prescribed an anti-arthritic drug and a muscle relaxant. We affirm the judgment of the United States District Court for the Eastern District of New York, Mark A. Costantino, Judge.

In 1977 Stephen Goldberg, a designer, owned Steve Gee, Ltd., a garment manufacturer that had lost money in the fiscal year ended July 31, 1977, and lost over $200,000 in the fiscal year ended July 31, 1978, before it ceased doing business in fiscal year 1979. In late 1977 Goldberg took out two disability insurance policies, each providing benefits of $2,000 a month, one with National Life Insurance Company of Vermont ("National Life"), the appellee here, and the other with the Equitable Life Assurance Society of the United States. His application to National Life, where he was asked to list "all disability insurance in force," identified $1,000 per month coverage with Guardian Life Insurance Company, but failed to reveal similar $1,000 policies with three other insurers. It also listed his earned income as $90,000 whereas the total income reported on his federal tax return was just under $36,000. he also said that there were not pending any "other negotiations for disability of life insurance." On questioning by the National Life medical examiner in December, 1977, he denied previously receiving disability compensation. He had, in fact, however, filed a claim in 1973 for disability involving vertigo, trauma to head, nervousness and depression, some three months following an automobile accident, a claim which was ultimately paid by his insurer. Goldberg also denied receiving professional treatment or advice for nervous or mental trouble although he had seen numerous psychiatrists and psychologists over a period of time. His application to Equitable Life-made the day after he was examined by the National Life medical examiner-contained similar misrepresentations as to his income, other insurance, and prior receipt of disability payments, and denied having any other application pending.

As a result of the issuance of these policies, in the event of his total disability, Goldberg's income, together with his Social Security, would have given him in excess of $100,000 a year tax-free, and his insurance premiums would have been waived. In February, 1979, he converted a $600,00 term life insurance policy he had with another insurer to two endowment policies, making the benefit payable to Goldberg himself at age 65, providing for premiums of $22,000 a year, but with waiver of premium in the event of disability.

In 1978 Goldberg's income was only $25,195 and his annual insurance premium obligations as of February, 1979, exceeded that amount, unless of course he became disabled. In June, 1979, his business failed and his adjusted gross income for 1979 was $12,200.

In January, 1980, Goldberg telephoned National Life to make certain that his premiums were fully paid and he asked that the call be confirmed in writing. In an interesting coincidence, on February 9, 1980, the day after the Equitable disability policy had become no longer contestable for fraud in the inception, Goldberg claimed that while he was driving in Manhattan his car was hit from behind and that when he got out of his car two black muggers hit him twice with a gun, once on the head and once across the bridge of his nose, causing his glasses to be broken. There were no witnesses to the "mugging" or evidence before the jury (other than Goldberg's own testimony) that a mugging in fact occurred. Goldberg did, however, go to the police department to report the mugging and he drove himself there. Then he was taken to St. Vincent's Hospital in Manhattan for a medical examination, but the hospital found "no evidence of trauma" to his head and x-ray films of his skull and cervical spine were negative for fracture. His condition on discharge was "good." A registered nurse's notes indicated that there were "no obvious signs of trauma noted," and that he "remembers events of assault but does not remember events of yesterday." He was given some Gelusil for his stomach. Two days later he saw an old friend, Dr. Irving Leonard Graff, who, after examining Goldberg, concluded "there was nothing medically wrong with him at that time, at least just from the fact that he was mugged." Dr. Graff did not see Goldberg between April 7, 1980, and April, 1982. Cross-examination established that Dr. Graff had several years earlier certified Goldberg to be disabled by the 1972 automobile accident in which he claimed to have suffered a trauma to his head. Dr. Graff had advised at least two disability insurance carriers that Goldberg was disabled and had been treated by him on twenty-three separate occasions, though in fact his records showed that he had only treated Goldberg once in connection with that accident.

On Monday, February 11, 1980, the first business day after the alleging mugging, Goldberg telephoned National Life and each of the other companies with which he had disability policies and requested that they send disability claim forms to him. On March 4, he filed a claim with National Life, identifying Dr. Renatus Hartogs as his "attending physician" and again naming Guardian Life as the company with which he had other disability insurance. National Life began making payments of $2,000 a month to him, and waived the premiums that otherwise would have been due on this policy.

In late August, 1980, Goldberg filed another claim form with National Life stating that "I will not be able to do any type of work again. I will not be returning to work again," and attached a statement from Dr. Hartogs who said that Goldberg "is incapable to do any type of work again" and that his sickness or injury was "post-traumatic stress disorder, chronic type." The doctor apparently certified Goldberg's claims with the various other insurance companies, but when asked by National Life whether Goldberg had any "other health coverage" only identified Guardian Life and Social Security. At this time National Life became a little suspicious and arranged for an examination by an independent doctor, Dr. Robert Meineker.

Dr. Meineker's examination was informative, to say the least. On interview, Goldberg "was an extremely disheveled man looking slightly younger than his 39 years of age. He appeared harassed [sic] with deep circles under his eyes and seemed to be haunted." He had not shaven for several days, "his hair was totally uncombed." He wore a rumpled lavender shirt and extremely dirty dungarees several sizes too large for him. The doctor's report indicated that Goldberg

rushed into the office and opened all the doors asking if there were any black people hiding behind them. He had two plastic straws sticking out of his mouth which he was chewing on and claimed that he required these to keep his airway open. About every thirty seconds he gave an expiratory grunt which he claimed was involuntary. He had a handful of aerosol breath sweeteners and kept squirting peppermint into his mouth

whenever he was not talking and had another device which "looked somewhat like mace" which he indicated he would use on anyone who tried to attach him. He seemed to feel that there was a general conspiracy by blacks to destroy him and spoke of blind spots, nausea, blackouts, trouble sleeping, and nightmares. It was noted that Goldberg, at the age of 39, had "slept with his mother since the accident." However, he was oriented and seemed to have no difficulties with memory and was of higher than average intelligence, but was perplexed by feelings of violence against his mother and felt suicidal. In the end, he did convince Dr. Meineker that "most of his behavior and reported thinking was probably genuine." The doctor concluded that he had great feelings of guilt because he was going to a discotheque, against his mother's wishes, when he was attacked, and that those feelings exaggerated his dependency on his mother brought on what appeared to be paranoid delusions, depression, failure to work, and marked disturbances of behavior. The doctor concluded that the man was "currently totally disabled psychiatrically," noted that Goldberg "consults Dr. Hartogs three times a week but refuses all treatments except psychotherapy," and that prognosis was impossible.

Outside the doctor's office, Goldberg's life was not quite as dismal as he made it out to be. In November, 1980, for example, he wrote checks to Diners Club, Barney's, Columbia Tour, and the Concord Hotel. In January, 1981, he opened a Cash Management Account with Merrill, Lynch, listing his occupation as "retired," and by Spring of 1981 was writing checks to four different securities brokers. Some time after receipt of Dr. Meineker's report, National Life learned that Goldberg had disability insurance with a number of other companies and that "Dr." Hartogs had been forced to surrender his license some years earlier. The insurance companies retained an independent investigator who put Goldberg under surveillance. He was observed driving his car, walking a dog, going to restaurants, attending an Overeaters Anonymous meeting, was evidently clean-shaven and well-groomed whenever he ...

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