Breach of Contract, Bad Faith – Published Settlement

May 28, 1999
Bad Faith
Breach of Contract
  Case I.D. Confidential.
  American Arbitration Association / February 2, 1999.
  Deborah Rothman, American Arbitration Association.
  Plaintiff – Jeffrey L. Malek, Bruce J. Quilligan (Malek & Malek, Torrance).
Defendant – Marty Rosen (Barger & Wolen, Los Angeles).
  In 1990, the plaintiff, a dentist, purchased a disability insurance policy paying lifetime benefits of $7,500 per month in the event of total disability. When the plaintiff made a claim in 1995 for total disability based on cervical osteoarthritis and radiculitis, resulting in weakness in his right hand, the defendant insurance carrier proceeded to pay benefits. After 1 1/2 years, the defendant insurance carrier ceased payments.
The plaintiff brought this action against the defendant based on bad faith and breach of contract.
  The plaintiff contended that he enjoyed the practice of dentistry and was successful at his practice, but that the onset of neck pain and radiating numbness and resulting weakness in his hands made the practice of his profession impossible. The plaintiff also contended that an MRI and his family had a history of degenerative osteoarthritis, which substantiated his doctor’s diagnosis.
  The defendant contended that the plaintiff had been only moderately successful in his practice and had expressed a desire to leave his profession. The defendant doctor contended that the plaintiff had no objective findings supporting his doctor’s diagnosis; and had a prior history of weakness and hand problem, which would constitute a pre-existing condition, justifying the defendant’s denial of benefits.
  The plaintiff sought $150,000 in past due disability benefits and $1,135,000 as the defendant insurance carrier’s buy-out of the balance of his policy. The defendant had not countered prior to the mediation. The defendant initially offered $100,000 at the mediation.
  A mediation was held on December 22, 1998, before mediator Deborah Rothman of the American Arbitration Association, resulting in the reported settlement.
  The settlement was reached approximately one year and three months after the case was filed. The plaintiff’s claim for punitive damages for bad faith had been dismissed on motion for summary judgment. At the time of the mediation, only the breach of contract claimed remained.
Copyright 1999 Daily Journal Corp. Reprinted with Permission.