In a notable decision for disability insurance claimants, the Ninth Circuit Court of Appeals, in an unpublished decision, recently reversed in part a summary judgment ruling in Osborn v. The Paul Revere Life Insurance Company, No. 24-1819, finding that triable issues of fact precluded judgment as a matter of law on whether the insured was totally disabled. The case underscores that factual disputes related to complex medical issues in disability cases should be determined by a jury rather than through summary judgment.

Dr. Gordon R. Osborn (“Osborn”), a dentist specializing in oral and maxillofacial surgery, purchased both an individual disability income (“IDI”) policy and a business overhead expense (“BOE”) policy from Paul Revere Life Insurance Company. During the early months of the COVID-19 pandemic, Dr. Osborn ceased patient care due to serious health conditions that heightened his vulnerability to COVID-19 complications, ultimately closing his practice by June 2020. Paul Revere denied his claims for both policies, prompting Osborn to sue for breach of contract and insurance bad faith. The district court granted summary judgment for Pau Revere, entering judgment for Paul Revere on the breach of contract and bad faith claims, including his punitive damages claim. On appeal, the Ninth Circuit reversed in part.

The central legal issue was whether Osborn was “totally disabled” under the terms of his disability policies. The Ninth Circuit emphasized that this was a “factual question” and that the lower court improperly resolved conflicting evidence in favor of the insurer. “Courts may not resolve genuine disputes of fact in favor of the party seeking summary judgment,” the panel wrote. The Court held that “a reasonable jury could credit the testimony of Osborn’s physicians … that Osborn’s underlying conditions prevented him from safely practicing oral surgery as early as March 2020.”

In support of its holding, the Court pointed to several pieces of disputed evidence. First, it noted that Osborn’s physicians—along with certain documents maintained by Paul Revere itself—corroborated that Osborn’s medical conditions made it unsafe for him to continue practicing. This evidence alone could lead a reasonable jury to find that he met the policy’s definition of total disability. The Court was not persuaded by Paul Revere’s argument that Osborn’s inability to recall exactly what his doctors told him undermined his claim. “That Osborn could not recall what advice his physicians gave him … does not preclude a finding that Osborn was unable to perform his occupational duties because of injury or sickness as of March 2020,” the Court reasoned.

Second, the panel emphasized that a reasonable jury could find that Osborn’s inability to obtain sufficient personal protective equipment (PPE) in the early pandemic months rendered it unsafe for him to return to work—even if he otherwise wished to do so. The Court cited staff and expert testimony indicating that Osborn made diligent efforts to acquire PPE but was unable to obtain all the necessary supplies. Notably, the Court rejected the insurer’s reliance on Osborn’s own testimony that he “[a]bsolutely” would have resumed work in June 2020 had PPE been available. The panel clarified that this did not negate total disability—particularly given that Osborn suffered a pulmonary embolism in August 2020, which further exacerbated his COVID-19 risk profile.

Third, the Court noted that Osborn’s physicians testified that, even if PPE had been available, it would have been unsafe for him to resume clinical practice after the embolism. This testimony, viewed in combination with the early medical advice and the PPE shortages, presented a triable factual issue regarding whether Osborn was continuously disabled from at least March 2020 onward.

The Ninth Circuit also revived Osborn’s claim under the BOE policy, which reimbursed fixed monthly business expenses if the insured became totally disabled. While it affirmed that expenses incurred after Osborn permanently closed his practice in June 2020 were not “necessary,” the Court found there was a genuine dispute as to whether expenses incurred between March and June 2020—such as staff salaries and office costs—were “ordinary” and “necessary.” The panel concluded: “a reasonable jury could find that certain expenses that Osborn incurred during this period were ‘ordinary’ and ‘necessary’ to the operation of his business.”

In contrast, the Court affirmed the district court’s dismissal of Osborn’s claim for breach of the implied covenant of good faith and fair dealing, noting that Paul Revere had conducted a detailed investigation and that no evidence supported a finding of unreasonableness or bad faith. Likewise, the panel found that the district court properly dismissed the punitive damages claim.

This case serves as a cautionary tale for insurers relying on summary judgment in disability disputes where medical facts are contested. The Ninth Circuit made clear that when “evidence is genuinely disputed on a particular issue—such as by conflicting testimony—that issue is inappropriate for resolution on summary judgment.”

In sum, Osborn is a win for policyholders seeking to enforce their disability coverage in the face of ambiguous medical and factual circumstances. The decision reinforces the principle that juries—not judges—must resolve factual disputes regarding an insured’s ability to work, particularly where expert testimony and credibility assessments are involved. If you need expert advice from the top disability insurance attorneys in California, call McKennon Law today.