John Hancock Mutual Life Insurance Co. v. Banerji

Summary

The Massachusetts Supreme Judicial Court held that an insurer could not rely on statements in an application for future earnings protection benefits because the application was not attached to the issued endorsement as required by G. L. c. 175, § 108 (5) (a). The court characterized the FEP benefit as new and additional insurance rather than a reinstatement or mere supplement to the original disability policy. It affirmed the judgment for Banerji, rejected his claims for certain additional damages and attorney’s fees, and remanded for calculation of past-due benefits and interest.

Holdings

1. An application for future earnings protection (FEP) benefits constitutes an 'application for a policy' under G.L. c. 175, § 108(5)(a), and the insurer may not rely on statements in that application to rescind coverage unless the application was attached to or endorsed on the FEP endorsement when issued.
2. The insured is not entitled to lump-sum present value of all future FEP payments because the FEP policy remains an enforceable contract and the insurer is able to pay according to the contractually agreed-on timetable.
3. The insured is not entitled to damages for emotional distress in tort or contract because the insurer's conduct was not extreme and outrageous, and emotional distress damages are generally not recoverable in contract actions absent physical harm or intentional/reckless extreme conduct.
4. The insured is not entitled to attorney's fees and costs because each party in an insurance coverage dispute is responsible for its own attorney's fees under the traditional rule.

Questions Presented

1. Whether G.L. c. 175, § 108(5)(a) prohibits an insurer from rescinding a future earnings protection (FEP) benefit based on statements in the insured's FEP application when the insurer failed to attach that application to the FEP endorsement when issued
2. Whether the insured is entitled to lump-sum present value of future FEP payments
3. Whether the insured is entitled to emotional distress damages
4. Whether the insured is entitled to attorney's fees and costs

Disposition

affirmed