Cody v. Connecticut General Life Insurance Co.

William Cody (plaintiff) worked for Sun Oil Company as a trainer of new tractor-trailer drivers. While riding with a driver trainee, the driver lost control of the truck. Cody was severely injured and became unable to work. Cody had purchased an employer-based group disability insurance plan with Connecticut General Life Insurance Company (defendant), and he contributed to the plan through payroll deductions. The plan provided that it would pay totally disabled employees 50 percent of their monthly earnings, up to $5,000 a month. This was subject to two coordination-of-benefits clauses. First, income from other benefits would reduce benefits under the plan. Specifically, benefits would be reduced by 50 percent of the employee’s Social Security benefits as well as amounts from workers’ compensation. Second, if the total amount of benefits the insured received from all benefit sources exceeded 75 percent of the employee’s base monthly earnings, benefits under the policy would be reduced until the sum of all benefits equaled 75 percent of base monthly earnings. Cody never received benefits under the plan and sued for breach of contract. A jury found that Cody was totally disabled from the time he became eligible for benefits through the date of the verdict. The parties stipulated as to the possible damages outcomes, and the damages question was not submitted to the jury. The judge calculated the benefits due to be zero because Cody was entitled to receive 50 percent of his monthly salary less 50 percent of his Social Security benefits less his workers’-compensation benefits. The trial court entered judgment for the insurer. The Massachusetts Supreme Judicial Court granted Cody’s request for direct appellate review.