    Case: 16-60831     Document: 00514289762       Page: 1   Date Filed: 12/29/2017




         IN THE UNITED STATES COURT OF APPEALS
                  FOR THE FIFTH CIRCUIT
                                                                    United States Court of Appeals
                                                                             Fifth Circuit

                                  No. 16-60831                             FILED
                                                                   December 29, 2017
                                                                      Lyle W. Cayce
                                                                           Clerk
DAVID M. COX,

                                            Plaintiff–Appellant,
versus

PROVIDENT LIFE & ACCIDENT INSURANCE COMPANY,

                                            Defendant–Appellee.



                 Appeal from the United States District Court
                   for the Southern District of Mississippi




Before JONES, SMITH, and PRADO, Circuit Judges.
JERRY E. SMITH, Circuit Judge:

      David Cox challenges a summary judgment in favor of Provident Life &
Accident Insurance Company (“Provident”) on breach-of-contract and tortious-
breach-of-contract claims stemming from two disability insurance policies that
Provident issued to Cox. Under the policies, Cox is entitled to receive disability
benefits for life if, and only if, his disability resulted from injury rather sick-
ness. The district court held that Cox had failed to introduce evidence raising
a question of material fact as to the cause of his injury. We disagree and
reverse as to the breach-of-contract claim only.
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                                       No. 16-60831
                                               I.
       In 1975 and 1987, Cox purchased two separate individual disability
income insurance policies from Provident (“the Policies”). The Policies pro-
vided coverage for disability caused by injury or sickness and contain provi-
sions tying the period of benefit payments to the cause of the insured’s disa-
bility. If the insured is rendered disabled at the age of 60 as a result of an
accident or injury, the Policies provide for lifetime benefit payments. By con-
trast, if the insured is rendered disabled at the age of 60 as a result of sickness,
the Policies provide that benefit payments will be paid only until age 65. The
greater of the two applicable benefits periods applies when the disability
results from a combination of the two. 1

       In 2010, Cox, then 60 years old, injured his left knee when he fell into a
hole while walking his dog. Two days later, he saw Dr. Massie Headley, who
ordered an MRI of the knee. The MRI revealed joint effusion, a peripheral tear
of the medial meniscus, a medial collateral ligament (“MCL”) sprain, and
degenerative thinning of the articular cartilage.               Headley referred Cox to
Dr. James O’Mara, who performed arthroscopic surgery to repair the meniscus
tear in January 2011.

       In February 2011, Cox filed a claim with Provident for disability benefits
under the Policies. Provident approved the claim and paid total disability ben-
efits until O’Mara indicated that Cox could return to work without restrictions
in March 2011. Provident closed Cox’s claim with no further benefits payable.
In July 2011, O’Mara performed a second arthroscopic surgery on Cox’s left



       1One policy provides that “[t]he fact that a disability is caused by more than one Injury
or Sickness or from both will not matter. [Provident] will pay benefits for the disability which
provides the greater benefit.” The other policy contains no such provision, but Provident does
not dispute that, if the insured’s disability is caused in whole or in part by injury, benefits
are payable for life under both Policies.
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                                 No. 16-60831
knee to repair a recurrent medial meniscus tear. Following the surgery, Provi-
dent agreed to reopen the disability-benefits claim.

      In August 2011, Dr. Walter Shelton took over Cox’s care. He noted some
improvement to the knee in August and September 2011, though Shelton re-
quested an MRI scan in October 2011 to rule out any other underlying pathol-
ogy. A subsequent MRI revealed “severe” arthritis in his patellofemoral joint.
Shelton performed a diagnostic arthroscopy that revealed that Cox’s knee was
shedding articular cartilage from his patella, which was causing synovitis and
inflammation.   Shelton also found extensive grade four chondromalacia of
Cox’s patella, the most severe and painful form of osteoarthritis or degenera-
tive joint disease. Over the next few years, Shelton performed a range of exam-
inations and procedures on the left knee. In July 2013, after Cox complained
to Shelton of pain in his right knee, an MRI revealed grade four chondromal-
acia or osteoarthritis in that knee similar to his left. Meanwhile, Provident
continued to pay Cox total disability benefits under the Policies.

      In March 2014, relying on a claim review performed by orthopaedic
surgeon Dr. Philip Lahey, Provident advised Cox that his ongoing claim for
disability was being administered under the “sickness” provision of the Policies
because it considered degenerative arthritis, not the December 2010 injury, to
be the cause of Cox’s total disability. Cox disagreed and spent the next few
months communicating back and forth with Provident about the issue. He
ultimately appealed their determination to Provident’s in-house appeals unit—
they similarly found his disability was a result of degenerative arthritis.

      In June 2015, Cox filed this diversity suit, alleging breach of contract
and tortious breach of contract against Provident for ceasing to pay benefits.
He sought damages, including punitives, in excess of $541,000. The Court
granted Provident’s motion for summary judgment, concluding that Cox had

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                                         No. 16-60831
failed to raise a genuine issue of material fact as to (1) whether his disability-
causing arthritis was caused by an injury rather than a sickness and
(2) whether Provident had breached the Policies or acted in bad faith when it
terminated Cox’s benefits at the age of 65.

                                               II.
       Cox challenges the summary judgment on two accounts: First, he con-
tends the court disregarded unequivocal deposition testimony from Shelton
that the injury contributed to his disability; second, he asserts with little argu-
ment that his claim for tortious breach of contract should have been submitted
to a jury. Only Cox’s first claim has merit, and it shows that summary judg-
ment was improvidently granted.

                                                A.
       Cox presented sufficient evidence to raise a genuine dispute of material
fact as to whether his disability resulted from injury and arthritis, in which
case he would be entitled to lifelong benefits. Shelton, the treating physician,
gave deposition testimony that, “to a reasonable degree of medical probability,”
“the trauma to [Cox’s] left knee when he fell in the hole on December 26, 2010,
caused or contributed to the cause of his disability.” In the same deposition,
Shelton reaffirmed that “[e]ven though [Cox] may have had some pre-existing
arthritis or chondromalacia,” the injury “contributed to and caused part of
[Cox’s] disability.” The district court never grappled with these unequivocal
statements, instead embracing contrary evidence presented by Provident sug-
gesting Cox’s injury did not accelerate his arthritis. That was error. This is a
classic “battle of the experts,” the winner of which must be decided by a jury. 2


       2 Pittman v. Gilmore, 556 F.2d 1259, 1261 (5th Cir. 1977) (“In the ultimate analysis,
the trier of fact is the final arbiter as between experts whose opinions may differ as to precise
causes.”); Hill v. Mills, 26 So. 3d 322, 330 (Miss. 2010) (“[T]he winner in a battle of the experts
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                                         No. 16-60831
Shelton’s opinion, if believed, would permit a reasonable jury to find that Prov-
ident breached its Policies when it stopped paying Cox benefits under the Poli-
cies’ sickness provisions. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248 (1986). In short, Cox presented competent evidence of breach to survive
summary judgment.

                                                B.
       Cox additionally argued that he was entitled to punitive damages
because Provident tortiously breached the contract. 3 To prevail on such a claim
in Mississippi, a plaintiff must prove breach and an “intentional wrong, insult,
abuse, or negligence so gross as to constitute an independent tort.” 4 The second
element requires proof “that the insurer acted with (1) malice, or (2) gross
negligence or reckless disregard for the rights of others.” Universal Life Ins.
Co. v. Veasley, 610 So. 2d 290, 293 (Miss. 1992) (citations omitted). “[T]he
presence of an arguable reason for failure to pay a claim establishes a defense
to the insurer and insulates it from a bad faith refusal tort judgment.” 5 An
insurer has “an arguable reason for acting if there is some credible evidence
that supports the conclusions on the basis of which [it] acts.” 6




is to be decided by a jury.” (citation omitted)).
       3 See Caldwell v. Alfa Ins. Co., 686 So. 2d 1092, 1095 (Miss. 1996); Eselin–Bullock &
Assocs. Ins. Agency, Inc. v. Nat’l Gen. Ins. Co., 604 So. 2d 236, 241 (Miss. 1992).
       4Eselin–Bullock, 604 So. 2d at 241 (citing S. Nat. Gas Co. v. Fritz, 523 So. 2d 12, 19–
20 (Miss. 1987)).
       5 Blue Cross & Blue Shield of Miss., Inc. v. Maas, 516 So. 2d 495, 497 (Miss. 1987)
(quoting Scott v. Transp. Indem. Co., 513 So. 2d 889, 896 (Miss. 1987)); State Farm Fire &
Cas. Co. v. Simpson, 477 So. 2d 242, 250 (Miss. 1985) (“[P]unitive damages will not lie if the
carrier has an arguable reason for denying the claim.”).
       6 Guy v. Commonwealth Life Ins. Co., 894 F.2d 1407, 1411 (5th Cir. 1990) (internal
quotation marks and citation omitted). Whether an insurer had an arguable reason to deny
a claim is an issue of law. See Broussard v. State Farm Fire & Cas. Co., 523 F.3d 618, 628
(5th Cir. 2008).
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                                       No. 16-60831
       Cox likely waived argument on this issue by failing to address it in his
opening brief. 7     But regardless, his position is indefensible. He suggests the
district court erred in its determination that no genuine dispute of material
fact exists as to whether Provident acted in bad faith, but he presents no evi-
dence to support that view.

       In denying Cox’s disability claim, Provident relied on Lahey’s opinion
that Cox’s disability was the result of sickness rather than injury. Lahey
reviewed the relevant medical records, consulted with Cox’s treating physi-
cians, completed a written report, and concluded that Cox’s difficulties were “a
result of a degenerative process involving the patella femoral joint and sub-
sequent effusion and swelling and not a result of accident or trauma.” In a
follow-up review and report, Lahey concluded that there was “no medical evi-
dence that [Cox’s] fall caused the arthritis that is present now and is the source
of [Cox’s restrictions and limitations].” Provident ultimately upheld its deter-
mination on this well-documented basis. Because Cox offers no evidence that
Provident lacked an arguable reason for administering his claim under the
sickness provisions, “the trial court as a matter of law [was] under a duty to
remove [the] punitive damages claim . . . from consideration by the jury.” 8
Summary judgment was proper on the tortious-breach claim.

       Though Cox presented no evidence of bad faith, he raised a genuine dis-
pute of material fact as to the cause of his disability. The summary judgment
is thus AFFIRMED IN PART and REVERSED IN PART and REMANDED.



       7 See Tradewinds Envtl. Restoration, Inc. v. St. Tammany Park, LLC, 578 F.3d 255,
260 n.3 (5th Cir. 2009) (declining to consider an argument raised “[f]or the first time in [a]
reply brief”).
       8 Blue Cross & Blue Shield of Miss., Inc. v. Campbell, 466 So. 2d 833, 844 (Miss. 1984);
see also Dunn v. State Farm Fire & Cas. Co., 927 F.2d 869, 873–75 (5th Cir. 1991) (affirming
summary judgment on the basis that the insurer had justifiable reasons to deny the claim).
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