Seeking Disability After Losing a Medical License

A medical practitioner who loses his or her license to practice loses not only a career, but also the income that came from it. The chances of obtaining a license in another state (despite some notorious publicity to the contrary) can be very problematic. What state's licensing board will welcome the doctor whose license was revoked due to egregious medical malpractice? The financial consequences of the loss can be devastating, and alternative sources of income may be hard to pin down.

For some physicians in this position there may be an alternative to financial ruin. If the doctor carried disability insurance and can show that the malpractice that led to the loss of the license resulted from a mental or physical impairment, he or she may be able to collect payments from the insurer.

Certainly the doctor who suffers a physical or mental impairment and makes a disability claim before his license is pulled has a good chance of obtaining compensation. However, insurers faced with a claim from physician whose right to practice medicine has already been lost are likely to protest. Still, depending upon the circumstances, all may not be lost. Case in point: an ex-physician in New York recently won the right to pursue a claim against his insurer despite the fact that he did not make a claim for disability benefits until after his license to practice medicine had been revoked because of his repeated medical mistakes. Jacobs v. Northwestern Mutual Life Ins. Co., 021913/08, NYLJ 1202477828014, at *1 (Sup, NA, Decided Dec. 23, 2010).

Was This a Longstanding Disability?

In June 2007 the plaintiff, Brad Jacobs, had nine disability insurance policies with the defendant, The Northwestern Mutual Life Insurance Company (Northwestern). The policies provided that he would receive benefits for total or partial disability if he became disabled while the policies were in force, the disability resulted from an accident or sickness and he was under the care of a licensed physician during his disability.

On June 18, 2007, New York's Committee on Professional Medical Conduct of the State Board for Professional Medical Conduct issued a Statement of Charges calling for a hearing into Jacobs' fitness to practice medicine. It was based on 29 alleged incidents of substandard performance, and included an order that Jacobs cease practicing medicine in New York from that time forward. On Sept. 12, 2007, Jacobs formally requested permission of the State Board of Medical Conduct to surrender his license as a physician on the grounds that he could not “successfully defend against acts of misconduct alleged in the Statement of Charges.” The following day, the State Board of Medical Conduct issued a Surrender Order, as requested.

In January 2008, Jacobs submitted a claim for disability benefits to Northwestern. His claim stated that he could no longer perform his duties as a plastic surgeon because he suffered from Bipolar II Disorder, and that as a result of his disability he no longer performed any duties in connection with his occupation. He indicated that he stopped practicing on June 18, 2007. Dr. Jacobs also stated in his claim that he had voluntarily surrendered his New York State Medical License.

Northwestern denied Jacobs' disability benefits claim, determining that his inability to perform his work did not result from a physical or mental disability, but from the fact that he had been ordered to cease the practice of medicine.

Taking the Issue to Court

Jacobs brought an action against Northwestern for, inter alia, breach of contract and unjust enrichment. Northwestern moved for summary judgment, arguing that the disability that kept Jacob from pursuing his occupation was a legal disability (caused by the order that he cease to practice medicine and Jacobs' subsequent surrender of his license), rather than a factual disability (caused by a mental or physical incapacity). Therefore, Dr. Jacobs was not “disabled” according to the terms of the insurance policies. In addition, the insurer pointed to the plaintiff's own deposition testimony as evidence that, although he may not have been performing his surgical duties in an optimum manner for several years, he was nevertheless performing them up until June 18, 2007. This, the insurer claimed, was evidence that Dr. Jacobs did not have a disability that prevented him from performing his work.

Dr. Jacobs opposed Northwestern's motion and cross-moved for summary judgment, claiming that he had been disabled for at least four years prior to the suspension of his medical license, as evidenced by his drug abuse and engagement in sexually compulsive behaviors. Plaintiff's counsel asserted that at the time of his license suspension, Dr. Jacobs was abusing crystal methamphetamine, as well as self-medicating his addiction with Xanax and Fentanyl. These addictive behaviors rendered him incompetent to perform his job, as evidenced by the 29 separate violations of medical standards between 2001 and 2005 that led to the suspension of his license. Jacobs also offered the testimony of his treating psychologist, Dr. Deborah Porter, PhD, whom he first began seeing on Aug. 31, 2007. She stated that when she first saw Dr. Jacobs he showed symptoms consistent with a diagnosis of Bipolar-II Disorder and that he had “undoubtedly suffered from Bipolar -II Disorder for many years prior to [their] initial consultation in August of 2007, most significantly prior to the initial suspension of his medical license in June of 2007.” Dr. Porter opined that, due to the effects of the disorder, Dr. Jacobs had been rendered “unable to perform the principal duties of his occupation as a plastic surgeon, let alone safely and competently.” Three other psychiatrists who began treating Dr. Jacobs in the months soon thereafter all offered nearly identical opinions concerning Dr. Jacobs' illness and its long-term duration.

More to Learn

Dr. Jacobs had adequately alleged that he was disabled, according to the court. Once he had jumped that hurdle, it became the insurer's burden to prove that the plaintiff's disability was clearly excluded under the terms of the policy. Continental Casualty Co. v. Rapid-American Corp., 80 NY2d 640 (1993). “In the instant matter,” the court stated, “Northwestern contends that it was a legal disability, in the form of the suspension of his medical license, which prevented Dr. Jacobs from engaging in his occupation [,] thereby precluding coverage under the policies.” A legal disability, the court observed, “includes all circumstances in which the law does not permit a person to engage in his or her profession, even though he or she may be physically and mentally able to do so.” 44 Am Jur 2d Insurance ' 1466 citing Massachusetts Mut. Life Ins. Co. v. Jefferson, 104 S.W.3d 13 (Tenn. Ct. App. 2002); Gassler v. Monarch Life Ins. Co., 276 AD2d 575 (2d Dept. 2000). Among the possible legal disabilities is the revocation of a professional license. Gassler v. Monach Life Ins. Co., 276 AD2d 585 (2nd Dept. 2000); Massachusetts Mut. Life Ins. Co. v. Millstein, 129 F.3d 688 (2d Cir. 1997).

The court was not persuaded by Northwestern's contention that Dr. Jacobs was fully capable of performing his job until the day his license was suspended simply because he was performing that job. “[To] adopt the position urged by Northwestern,” stated the court, “would be to conclude that a physician, diagnosed with Bipolar Disorder two months after his license was suspended and who testified that between January and June of 2007, was 'self-medicated with crystal meth almost on a daily basis,' was nonetheless unquestionably capable of performing the principal duties of a medical doctor. This Court finds such a conclusion untenable given the evidence presented herein.”

Thus, two types of disability ' factual and legal ' had been alleged. Neither party's showing was adequate to support a grant of summary judgment, as questions remained.

Did Dr. Jacobs suffer from a mental illness? Did he develop the mental illness before he lost his license to practice medicine? And if this factual disability predated the legal disability, did the mental illness actually interfere with Dr. Jacobs' ability to perform his work?

Conclusion

When a doctor, nurse or other medical care practitioner ' especially one whose previous career had been relatively unblemished ' begins repeatedly making medical mistakes, questions of mental or physical capacity to perform the job should be asked. Unfortunately, as may have been the case with the plaintiff in Jacobs, such inquiries may not be made until the situation becomes so bad that licensing and privileging bodies have already been prompted to act. After this has happened, occupational disability insurers will probably object to paying on the medical practitioner's claim.

It's something of a Catch-22: The physician may not be cognizant of a developing problem until it is too late, possibly because his disability ' be it a mental disorder, Alzheimer's disease or any other number of conditions ' renders him less self-aware. The Jacobs case points to a possible reprieve for those who carry disability insurance and lose their ability to continue practicing medicine, yet fail to make a claim before their medical licenses are suspended or lost.

Janice G. Inman is Editor-in-Chief of this newsletter.

A medical practitioner who loses his or her license to practice loses not only a career, but also the income that came from it. The chances of obtaining a license in another state (despite some notorious publicity to the contrary) can be very problematic. What state's licensing board will welcome the doctor whose license was revoked due to egregious medical malpractice? The financial consequences of the loss can be devastating, and alternative sources of income may be hard to pin down.

For some physicians in this position there may be an alternative to financial ruin. If the doctor carried disability insurance and can show that the malpractice that led to the loss of the license resulted from a mental or physical impairment, he or she may be able to collect payments from the insurer.

Certainly the doctor who suffers a physical or mental impairment and makes a disability claim before his license is pulled has a good chance of obtaining compensation. However, insurers faced with a claim from physician whose right to practice medicine has already been lost are likely to protest. Still, depending upon the circumstances, all may not be lost. Case in point: an ex-physician in New York recently won the right to pursue a claim against his insurer despite the fact that he did not make a claim for disability benefits until after his license to practice medicine had been revoked because of his repeated medical mistakes. Jacobs v. Northwestern Mutual Life Ins. Co., 021913/08, NYLJ 1202477828014, at *1 (Sup, NA, Decided Dec. 23, 2010).

Was This a Longstanding Disability?

In June 2007 the plaintiff, Brad Jacobs, had nine disability insurance policies with the defendant, The Northwestern Mutual Life Insurance Company (Northwestern). The policies provided that he would receive benefits for total or partial disability if he became disabled while the policies were in force, the disability resulted from an accident or sickness and he was under the care of a licensed physician during his disability.

On June 18, 2007, New York's Committee on Professional Medical Conduct of the State Board for Professional Medical Conduct issued a Statement of Charges calling for a hearing into Jacobs' fitness to practice medicine. It was based on 29 alleged incidents of substandard performance, and included an order that Jacobs cease practicing medicine in New York from that time forward. On Sept. 12, 2007, Jacobs formally requested permission of the State Board of Medical Conduct to surrender his license as a physician on the grounds that he could not “successfully defend against acts of misconduct alleged in the Statement of Charges.” The following day, the State Board of Medical Conduct issued a Surrender Order, as requested.

In January 2008, Jacobs submitted a claim for disability benefits to Northwestern. His claim stated that he could no longer perform his duties as a plastic surgeon because he suffered from Bipolar II Disorder, and that as a result of his disability he no longer performed any duties in connection with his occupation. He indicated that he stopped practicing on June 18, 2007. Dr. Jacobs also stated in his claim that he had voluntarily surrendered his New York State Medical License.

Northwestern denied Jacobs' disability benefits claim, determining that his inability to perform his work did not result from a physical or mental disability, but from the fact that he had been ordered to cease the practice of medicine.

Taking the Issue to Court

Jacobs brought an action against Northwestern for, inter alia, breach of contract and unjust enrichment. Northwestern moved for summary judgment, arguing that the disability that kept Jacob from pursuing his occupation was a legal disability (caused by the order that he cease to practice medicine and Jacobs' subsequent surrender of his license), rather than a factual disability (caused by a mental or physical incapacity). Therefore, Dr. Jacobs was not “disabled” according to the terms of the insurance policies. In addition, the insurer pointed to the plaintiff's own deposition testimony as evidence that, although he may not have been performing his surgical duties in an optimum manner for several years, he was nevertheless performing them up until June 18, 2007. This, the insurer claimed, was evidence that Dr. Jacobs did not have a disability that prevented him from performing his work.

Dr. Jacobs opposed Northwestern's motion and cross-moved for summary judgment, claiming that he had been disabled for at least four years prior to the suspension of his medical license, as evidenced by his drug abuse and engagement in sexually compulsive behaviors. Plaintiff's counsel asserted that at the time of his license suspension, Dr. Jacobs was abusing crystal methamphetamine, as well as self-medicating his addiction with Xanax and Fentanyl. These addictive behaviors rendered him incompetent to perform his job, as evidenced by the 29 separate violations of medical standards between 2001 and 2005 that led to the suspension of his license. Jacobs also offered the testimony of his treating psychologist, Dr. Deborah Porter, PhD, whom he first began seeing on Aug. 31, 2007. She stated that when she first saw Dr. Jacobs he showed symptoms consistent with a diagnosis of Bipolar-II Disorder and that he had “undoubtedly suffered from Bipolar -II Disorder for many years prior to [their] initial consultation in August of 2007, most significantly prior to the initial suspension of his medical license in June of 2007.” Dr. Porter opined that, due to the effects of the disorder, Dr. Jacobs had been rendered “unable to perform the principal duties of his occupation as a plastic surgeon, let alone safely and competently.” Three other psychiatrists who began treating Dr. Jacobs in the months soon thereafter all offered nearly identical opinions concerning Dr. Jacobs' illness and its long-term duration.

More to Learn

Dr. Jacobs had adequately alleged that he was disabled, according to the court. Once he had jumped that hurdle, it became the insurer's burden to prove that the plaintiff's disability was clearly excluded under the terms of the policy. Continental Casualty Co. v. Rapid-American Corp. , 80 NY2d 640 (1993). “In the instant matter,” the court stated, “Northwestern contends that it was a legal disability, in the form of the suspension of his medical license, which prevented Dr. Jacobs from engaging in his occupation [,] thereby precluding coverage under the policies.” A legal disability, the court observed, “includes all circumstances in which the law does not permit a person to engage in his or her profession, even though he or she may be physically and mentally able to do so.” 44 Am Jur 2d Insurance ' 1466 citing Massachusetts Mut. Life Ins. Co. v. Jefferson , 104 S.W.3d 13 (Tenn. Ct. App. 2002); Gassler v. Monarch Life Ins. Co. , 276 AD2d 575 (2d Dept. 2000). Among the possible legal disabilities is the revocation of a professional license. Gassler v. Monach Life Ins. Co. , 276 AD2d 585 (2nd Dept. 2000); Massachusetts Mut. Life Ins. Co. v. Millstein , 129 F.3d 688 (2d Cir. 1997).

The court was not persuaded by Northwestern's contention that Dr. Jacobs was fully capable of performing his job until the day his license was suspended simply because he was performing that job. “[To] adopt the position urged by Northwestern,” stated the court, “would be to conclude that a physician, diagnosed with Bipolar Disorder two months after his license was suspended and who testified that between January and June of 2007, was 'self-medicated with crystal meth almost on a daily basis,' was nonetheless unquestionably capable of performing the principal duties of a medical doctor. This Court finds such a conclusion untenable given the evidence presented herein.”

Thus, two types of disability ' factual and legal ' had been alleged. Neither party's showing was adequate to support a grant of summary judgment, as questions remained.

Did Dr. Jacobs suffer from a mental illness? Did he develop the mental illness before he lost his license to practice medicine? And if this factual disability predated the legal disability, did the mental illness actually interfere with Dr. Jacobs' ability to perform his work?

Conclusion

When a doctor, nurse or other medical care practitioner ' especially one whose previous career had been relatively unblemished ' begins repeatedly making medical mistakes, questions of mental or physical capacity to perform the job should be asked. Unfortunately, as may have been the case with the plaintiff in Jacobs, such inquiries may not be made until the situation becomes so bad that licensing and privileging bodies have already been prompted to act. After this has happened, occupational disability insurers will probably object to paying on the medical practitioner's claim.

It's something of a Catch-22: The physician may not be cognizant of a developing problem until it is too late, possibly because his disability ' be it a mental disorder, Alzheimer's disease or any other number of conditions ' renders him less self-aware. The Jacobs case points to a possible reprieve for those who carry disability insurance and lose their ability to continue practicing medicine, yet fail to make a claim before their medical licenses are suspended or lost.

Janice G. Inman is Editor-in-Chief of this newsletter.