The U.S. District Court for the Western District of Pennsylvania recently held that the state statute of limitations trumps any proposed suit limitation within an insurance policy. In Sigal v. General American Life Insurance Company, the plaintiff, Michael Sigal, brought suit alleging breach of contract and bad faith for two denials of his disability claims.

Sigal, who is a surgical ophthalmologist, learned that he was suffering from cardiac disease in 2001, two years after purchasing the insurance policies for his medical practice. His cardiologist determined that discontinuing the surgical portion of his practice would drastically reduce his stress levels, and thus keep his condition in check. In 2004, he made three claims under his disability policies, but all three claims were denied in 2005 since Segal had not actually suffered from “poor health” because of his condition as noted in the policy, and discontinuing his practice was deemed a “preventative measure.”

In 2010, Sigal was required to undergo bypass surgery, and submitted additional information regarding his 2004 claim. The insurer treated this information as an entirely new claim and again denied coverage. Sigal commenced suit shortly thereafter alleging bad faith and breach of contract. The court found that the statute of limitations for bad faith claims had run for and required dismissal of his suit. Although the policy itself specified that there was a three year suit limitation (which would allow for suit in 2013), the court held that the two year statute of limitations on a bad faith claim superseded the limitation within the policy.