Meyer v. CUNA Mutual Insurance Society, Nos. 09-4040, 09-4124 (3d Cir. May 26, 2011)
Meyer bought an insurance policy from CUNA so that his car loan payments would continue if he became disabled. CUNA made Meyer’s payments for three years after he was injured at work, but then notified Meyer that it would stop because he no longer met its definition of “Total Disability.”
Meyer sued CUNA in the District Court for the Western District of Pennsylvania. The court concluded that the policy’s definition of “Total Disability” was ambiguous and construed it in Meyer’s favor. CUNA appealed this decision to the Third Circuit.
Because contract interpretation is a question of law, the Third Circuit exercised a de novo standard of review.
The Court described this case as atypical because the disputed contract term was defined; the language within the definition was problematic, specifically, the word “or.” The insurance policy defined the term “Total Disability”:
[D]uring the first 12 consecutive months of disability means that a member is not able to perform substantially all of the duties of his occupation on the date his disability commenced because of a medically determined sickness or accidental bodily injury. After the first 12 consecutive months of disability, the definition changes and requires the member to be unable to perform any of the duties of his occupation or any occupation for which he is reasonably qualified by education, training or experience.
CUNA contended that “or” should be read conjunctively as “and.”
Pointing out that the Pennsylvania Supreme Court never interpreted “or” in this context, the Third Circuit looked to its plain meaning, dictionary definition, and statutory interpretation. It found that Meyer’s disjunctive reading of the word “or” was reasonable.
Here, if CUNA had used the word “and” instead of “or” to convey that it indeed intended a conjunctive meaning in the second clause of the definition, it would have put the matter “beyond reasonable question” in resolving ambiguity.
Affirming the district court, the Third Circuit concluded that the definition of “Total Disability” was ambiguous and construed it against CUNA:
[A] subscriber is entitled to coverage under the benefit policy after 12 months if he can show that he is (1) unable to perform any of the duties of his occupation, or alternatively is able to show that he is (2) unable to perform any of the duties of any occupation for which he is reasonably qualified by education, training or experience.