Full opinion text
ORDER DENYING JUDGMENT AS A MATTER OF LAW OR NEW TRIAL FINDINGS OF FACT AND CONCLUSIONS OF LAW FINDING VIOLATION OF CAL. BUS. & PROF. CODE § 17200 LARSON, United States Magistrate Judge. INTRODUCTION Defendants’ Motion for Judgment as a Matter of Law or for a New Trial came on for hearing on June 5, 2002. Appearing for Plaintiff were Ray Bourhis, Alice Wolf-son, David Lilienstein, and Daniel U. Smith. Appearing for Defendants was Horace Greene and Evan Tager, who participated by telephone from Washington, D.C. After reviewing the parties’ extensive briefs and the record in this case and hearing oral argument, the court concludes that Defendants’ motion should be denied. The jury’s verdict was based on substantial admissible evidence of Defendants’ bad faith breach of the insurance contract with Plaintiff, including evidence that Plaintiff was totally disabled under California law, that Defendants conducted a biased investigation of her claim and that her benefits were wrongfully terminated. The court committed no prejudicial error by admitting or excluding either evidence or witness testimony or in the jury instructions. The verdict reflected the weight of the evidence. The awards for compensatory and punitive damages were legally sound and not excessive. The jury awarded attorney fees after proper instruction by the court according to the California Supreme Court’s holding in Brandt. The court also hereby issues its findings of fact and conclusions of law with respect to Plaintiffs cause of action under Cal. Bus. & Prof.Code § 17200, the Unfair Competition Act. The court finds that the same actions which led to the jury verdict in this case constitute violations of § 790.03 of the California Insurance Code, the Unfair Insurance Practices Act. Further, the jury found, and this court agrees, that Defendants acted in bad faith. Consequently, Defendants have also violated § 17200 and the court enjoins Defendants from committing any further violations. BACKGROUND After eleven days of trial, on February 4, 2002, a jury of six men and one woman returned a unanimous verdict for plaintiff Joan Hangarter against Defendants Paul Revere Life Insurance Company and Un-umProvident Co. The total awarded was $7.67 million, including $5 million for punitive damages, $1,520,849 for past and future unpaid benefits, $400,000 for emotional distress and $750,000 for attorneys’ fees. Defendants filed a motion to overturn this verdict, for judgment as a matter of law (“JMOL”) or for new trial. The jury made the following findings in the Special Verdict: 1. After May 21, 1999, the date her benefits were terminated by Defendant, Plaintiff was unable to perform the substantial and material duties of her own occupation in the usual and customary way with reasonable continuity; 2. Plaintiff is entitled to recover her past benefits, up to the present day, as a result of Defendant’s breach of contract; 3. The present value of Plaintiffs past disability benefits is $320,849; 4. Defendant breached the duty of good faith and fair dealing to Plaintiff; 5. Plaintiff is entitled to recover the present value of her future policy benefits as a result of Defendant’s breach; 6. The present value of Plaintiffs future disability benefits is $1,200,000; 7. Plaintiff suffered mental and emotional damages as a result of Defendant’s unreasonable conduct; 8. The amount of damages that will fairly compensate Plaintiff for her mental and emotional distress is $400,000; 9. Plaintiff is entitled to recover her reasonable attorneys’ fees and costs incurred in obtaining the benefits due under her policy; 10. The amount the jury wishes to award in attorneys’ fees and costs is $750,000; 11. Defendant acted with oppression, fraud or malice in handling Plaintiffs claim and denying her benefits; 12.The amount the jury wishes to award in punitive damages is $5,000,000. The Special Verdict was signed by the foreperson and the jury was polled in open court and its members affirmed that their verdict was unanimous. JURY INSTRUCTIONS The jury received the following instructions prior to their deliberations: INDEX OF INSTRUCTIONS 1. Duties of Jury to Find Facts and Follow Law 2. Instructions to be Considered as a Whole 3. Jury Not to Take Cue from Judge 4. Juror Forbidden to Make Any Independent Investigation 5. Corporations and Partnership — Fan-Treatment 6. What Is Evidence 7. What Is Not Evidence 8. Statements of Counsel — Evidence Stricken Out — Insinuations of Questions 9. Direct and Circumstantial Evidence 10. Direct and Circumstantial Evidence — Inferences 11. Weighing Conflicting Testimony 12. Credibility of Witnesses 13. Deposition Testimony 14. Interrogatories 15. Requests for Admissions 16. Charts and Summaries Not Received In Evidence 17. Charts and Summaries In Evidence 18. Stipulated Testimony 19. Discrepancies In Testimony 20. Witness Willfully False 21. Impeachment— Inconsistent Statements or Conduct— Falsus In Uno Falsus In Omnibus 22. Extrajudicial Admissions— Cautionary Instruction 23. Opinion Evidence (Expert Witnesses) 24. Expert Testimony— Qualifications of Expert 25. Weighing Conflicting Expert Testimony 26. Hypothetical Questions 27. Statements Made By Patient To Physician 28. Failure to Deny or Explain Adverse Evidence 29. Burden of Proof and Preponderance of Evidence 30. Contract— A Definition 31. Insurance Policy Defined 32. Insurance' — Policy Provisions 33. Insurance — Ambiguity in Policy 34. Plaintiffs Burden to Prove Coverage 35. Breach— Essential Elements 36. Total Disability 37. Transitional Instruction 38. Covenant of Good Faith — Standard 39. Insurance Company’s Obligations — Implied Obligation of Good Faith 40. Insurance Company’s Obligations 41. Good Faith/Proper Cause 42. Duty to Investigate 43. Ongoing Nature of the Duty of Good Faith and Fair Dealing 44. Good Faith — Equal Consideration 45. Not Given 46. Good Faith — Conduct Before Denial 47. Good Faith — Genuine Dispute 48. Good Faith — Policy Coverage 49. Liability of Corporations — Scope of Authority Not In Issue 50. Act of Agent is Act of Principal— Scope of Authority Not In Issue 51. Effect of Instructions As To Damages 52.Damages/Proof 53. Pleadings or Argument — Not Evidence of Damages 54. Damages — Reasonable—Not Speculative 55. Legal Causation 56. Economic and Non-Economic Damages — Defined 57. General Damages/Breach of Contract 58. Damages/Breach of the Covenant of Good Faith and Fair Dealing 59. Emotional Distress 60. Emotional Distress — Defined 61. Susceptibility of Plaintiff 62. Damages Arising in the Future— Discount to Present Cash Value 63. Damages — Attorney’s Fees 64. Future Disability Benefits 65. Residual Disability 66. Punitive Damages — Burden of Proof 67. Punitive Damages — Conduct 68. Clear and Convincing Evidence 69. Punitive Damages — Standard 70. Amount of Punitive Damages 71. Punitive Damages — Interest 72. Chance or Quotient Verdict Prohibited 73. Duty to Deliberate 74. Communication with Court 75. Return of Verdict PLAINTIFF’S COMPLAINT Plaintiffs Amended Complaint, filed August 13, 2001, sought the following relief: [First Cause of Action for violation of Cal.Bus & Prof.Code § 17200, is discussed hereafter]. The Second Cause of Action for Breach of Contract against Paul Revere, Unum-Provident and Doe Defendants. Plaintiff sought damages of $8100 per month in unpaid benefits. The Third Cause of Action for Breach of the Covenant of Good Faith and Fair Dealing against Paul Revere, UnumProvident and Doe Defendants. Plaintiff sought damages of $8100 per month in unpaid benefits and punitive damages. The Fourth Cause of Action for Intentional Misrepresentation against Paul Revere, UnumProvident and Doe Defendants. Plaintiff sought damages of $8100 per month in unpaid benefits and punitive damages. GENERAL STATEMENT OF THE LAW Judgment as a matter of law is only appropriate when the evidence permits only one reasonable conclusion, contrary to the jury’s verdict. Gilbrook v. City of Westminster, 177 F.3d 839, 864 (9th Cir.1999), cert. denied, 528 U.S. 1061, 120 S.Ct. 614, 145 L.Ed.2d 509. If conflicting inferences may be drawn from the facts, then the case must go to the jury. Pierce v. Multnomah County, Or., 76 F.3d 1032, 1037 (9th Cir.1996). In ruling on a motion for JMOL, the court is not to make credibility determinations or weigh the evidence and should view all inferences in the light most favorable to the non-moving party. Winarto v. Toshiba America Electronics Components, Inc., 274 F.3d 1276, 1283 (9th Cir.2001). As this court said in denying summary judgment in this case, whether an insurer’s denial of a claim is unreasonable is a question of fact, unless only one inference may be drawn from the evidence, citing Carlton v. St. Paul Mercury Ins. Co., 30 Cal.App.4th 1450, 1456, 36 Cal.Rptr.2d 229 (1994). A new trial is proper only if the verdict is contrary to the clear weight of the evidence or is based upon evidence which is false, or to prevent, in the sound discretion of the trial court, a miscarriage of justice. Silver Sage Partners, Ltd. v. City of Desert Hot Springs, 251 F.3d 814, 818-819 (9th Cir.2001). A district court may not grant a new trial simply because it would have arrived at a different verdict. Defendants’ Motion Paul Revere claims that the evidence at trial was insufficient to support Plaintiff’s claims. Plaintiff Joan Hangarter is a trim woman in her forties with two children, a boy of nine and a girl of eleven. (Tr. 381:17-20, 24) When she was thirteen she was diagnosed with scoliosis and as an alternative to surgery, her father took her to a chiropractor, who treated her for two years. That experience inspired her to think about becoming a chiropractor herself. (Tr.382:3-11) Plaintiff testified as to the scientific and diagnostic training she received as part of the degree program at Los Angeles College of Chiropractic, where she obtained her Doctor of Chiropractic degree in 1979. She was licensed in California in 1980, after taking national board exams. (Tr. 382:12-383:25) She then opened her practice in Berkeley, Solano Chiropractic. (Tr. 384:3-7) The practice grew rapidly and she loved her patients, many of whom she treated for years, and who in turn brought their children to her for treatment. (Tr. 384:25-385:3) She testified about the types of adjustments she performed on patients and demonstrated on one of her counsel some typical manipulations of the neck and spine. These manipulations involved her standing over a patient who would be either seated or lying down. To perform the manipulation or adjustment, she would bend over her patient, then pull the patient’s arm, neck, spine or rib cage, and perform other maneuvers such as twisting, or pressing, to align the patient’s spine. (Tr.386:24-391:17) She described a myofascial release, a procedure to release muscle spasm, which required her to press and pull the contracted muscle and massage it to release the spasm. (Tr. 393:2-22) She also described deep tissue work, a procedure in which she applied pressure with her hands, rubbing deeply, to release painful areas on the spine, (Tr. 393:24-394:10) To obtain the leverage to exert the proper traction, she usually placed her patients on a low table and leaned over them. None of the manipulations were easy to perform. (Tr. 395:1-396:5) On a typical day, prior to her becoming disabled, she would treat between 30 and 50 patients. (396:6-10) In 1989, after almost ten years in practice and when her daughter was two years old and she was pregnant with her son, Plaintiff purchased an individual disability insurance policy from the Paul Revere Life Insurance Company, a defendant in this case. The purpose of this policy, as the insurance agent explained it to her, was to protect her should she not be able to work as a chiropractor. (Tr. 396:14-400:23, Ex. 1) The agent explained to her that even if she could still do paperwork or other work, if she could not work as a chiropractor, the policy would cover her. (Tr. 406:4-9) The policy also provided that after she had been disabled for 90 days, future premiums would be waived while she remained disabled. After Paul Revere terminated Plaintiffs benefits in this case, the company attached her bank account for the insurance premiums, until the account was drained, at which point the company can-celled her policy. Plaintiff presently has no disability insurance at all. (Tr.417:18-24; 418:1-419:4) In 1993 Plaintiff began to experience severe recurrent shoulder pain. She sought treatment from a chiropractor in her office, Dr. England, who adjusted her daily. In 1995 and 1996 she saw an orthopedist, Dr. Isono and sometimes wore a shoulder brace. (Tr. 419:5-25) She did not file any claims for disability coverage and focused on getting better and continuing to work. (Tr. 420:1-9) In 1997 she went to Dr. Linda Berry, a chiropractor, because she was having severe pain in her shoulder, arm and neck. (Tr. 420:15-421:6) She also went for physical therapy. Although she continued this treatment for six to eight weeks, it was not helpful. (Tr. 421:19-424:1) She filed a claim for benefits under her disability insurance policy in May 1997, and started receiving payments. (Tr. 424:230-23) She was in an auto accident in October 1997, which aggravated her pain. (Tr. 237:25-238:8; 424:2-5; 556:12-557:1, 562:15-20, Ex. 3) Dr. Berry treated Plaintiff from April 1997 to December 4, 2001, and eventually told her that she would probably not ever be able to work again as a chiropractor. (Tr. 563:9-17; 650:5-10) As stated above, Plaintiff had previously been making adjustments on 30-50 patients a day. Each adjustment was physically demanding. Between 1996 and 2000 Plaintiff had 3 Magnetic Resonance Imaging studies (“MRI’s”) with abnormal findings. The third MRI in May 2000 showed her condition to be growing worse, despite treatment by Dr. Berry and Dr. Isono. Dr. Berry diagnosed her with epicondylitis, cervical intervertebral disk syndrome, and tendinitis. (Tr. 631:22 — 632:1) Her medical records documented the development of severe pain in her right arm, elbow and neck. Dr. Isono offered only surgery to correct the problem, which Plaintiff rejected based on her past negative experience with post-surgery pain medication. (Tr. 434:1-11, 565:9-21). Plaintiff was also leery of cortisone injections, after experiencing heart palpitations and becoming ill from them. (Tr. 564:20-565:7) Plaintiff stopped seeing Dr. Isono and was treated by Dr. Berry, whose chiropractic manipulations gave her some pain relief and enabled her to get around. (Tr. 584:9-15). Dr. Berry treated Plaintiffs epicondyli-tis with what she described as the “RICE formula:” This involved rest, ice, compression and exercise-and-elevation. Plaintiff followed this regimen and obtained temporary relief but no permanent relief. (Tr. 645:1-23) Dr. Berry testified that she treated Plaintiff for her tendinitis as well and that Plaintiff had physical therapy. None of these treatments afforded Plaintiff permanent relief. (Tr. 646:23-648:17) Dr. Berry saw Plaintiff a total of 88 times, most often for no fee, as a professional courtesy. She was paid only for the treatments following Plaintiffs auto accident, but not for the work-related injury. (Tr. 646:6-22; 690:14-18) Dr. Berry, Dr. Katz and the Kaiser and Novato Hospital records all concurred that Plaintiff was severely impaired. At Plaintiff counsel’s request, Dr. Katz reviewed Plaintiffs medical records, including those of Dr. Isono, the reports of the MRI scans of the Plaintiffs right shoulder taken in 1997, and of the MRI of her cervical spine taken in 1997, (Ex. 8) the records and deposition of Dr. Linda Berry, the electromyogram (“EMG”) studies on March 6th and March 30th, 1998, the report of Dr. Aubrey Swartz, the IME in 1999, the MRI report of May 12th, 2000 (Ex. 19) and the report from Dr. Palatucci retained by the insurance company. (Tr. 227:2-11). Dr. Katz testified that Plaintiff suffered from lateral epicondylitis, more commonly called tennis elbow, cervical disk disease and rotator cuff tendinitis. (Tr. 227:18-228:17) He examined Plaintiff in July 2001, more than two years after Dr. Swartz saw her in March 1999 (Tr. 263:8-14) and found 75% range of motion in her neck, spasm and tenderness in the right trapezi-us muscle, and reduced grip strength in her arm. (Tr.230:1-231:21) The grip test result was consistent with her report of pain. (Tr. 231:22-23) He also employed a Spurling test, an objective test for cervical disk disease. This was positive for pain, in the right trapezius and scapular, indicating cervical disk disease at C-5 and C-6. (Tr. 232:7-23, 233:19-22) Dr. Katz also found a depressed biceps reflex on the right side, (Tr.233:1-5), a test which Dr. Swartz did not perform (Tr. 264:15-18), and numbness and tingling of the middle finger of her right hand, when given a pin test, an indicator of nerve root compression affecting the sensory portion of the nerve going down the arm. (Tr. 233:7-18). He did not see any biceps wasting. (Tr. 262:18-20) Dr. Katz attributed the spasm in Plaintiffs right trapezius muscle to spasm from the degenerative disk disease at C-5 and C-6. (Tr. 233:25-234:8). Dr. Berry testified that surgery for her neck would be partie-ularly dangerous for Plaintiff due to her stenosis (Tr. 642:22-643:14) Dr. Katz also reviewed the reports of the MRI films of Plaintiffs cervical spine taken May 30th 1997, ordered by Dr. Isono and read by Dr. Cardoza, finding mild to minimal central canal stenosis at 5-6, a narrowing of the spinal canal, which causes some compression on the spinal canal or the nerve roots (Tr. 234:9-23) The radiologist’s finding of “mild” did not mean that Plaintiffs pain would be mild; this varied from patient to patient. (Tr. 234:24-235:6). When Dr. Katz reviewed the report of the MRI of the same area taken May 12, 2000, (Ex. 19) he found more changes, including a bulging disk at C-5-6, more than in 1997, spurring into the spinal canal, narrowing and mild canal stenosis. He also found right lateral protrusion into an uncinate process at C3-4, spurring and mild right neural foraminal narrowing. At 4-5 he also found a broad-based disk bulge with uncinate spurring at C-6 and a minimal broad-based disk bulge. (Tr. 235:7-236:4). He concluded that Plaintiffs condition was worsening. (Tr. 237:9-11) Her symptoms corresponded to the findings on the MRI. (Tr. 237:14-23) There is surgery for cervical disk disease, but it carries risks, from the anesthesia and other complications. (Tr. 241:6-20) When Dr. Berry reviewed Plaintiffs MRI reports, she too concluded that Plaintiffs condition grew worse between 1997 and 2000. (Tr. 639:5-15) Dr. Katz reviewed the report of the MRI of Plaintiffs shoulder, taken in 1996, and found evidence of tendinitis or an inflammatory process. This could account for the shoulder pain she experienced. (Tr. 238:9-20) He examined her elbow and found good range of motion, no redness or swelling but lateral tenderness. In light of her subjective complaints he concluded she had epicondylitis or tennis elbow. This condition might improve with rest alone, but could require 30 days’ immobilization in a cast or sling, physical therapy, the use of ice and heat, steroid injections or anti-inflammatory medications. When all else fails surgery is necessary. Even with surgery, someone like Plaintiff, whose work involved strenuous use of her arms, hands and shoulder, would run the risk of reinju-ry. (Tr. 239:3-241:5, 275:4-19). He would not recommend that she return to the practice of chiropraetics. ( Tr. 276:16-25) Plaintiff herself described the pain in her elbow as feeling like the muscle was ripping from the bone, and the pain in her shoulder and neck as burning or stabbing. After a day of adjusting patients she would go home in agony. (Tr. 605:25-606:11) Dr. Berry confirmed Plaintiffs description of the pain as burning or stabbing. (Tr. 653:2-6) Dr. Berry also confirmed an objective basis for Plaintiffs pain when she examined Plaintiff and obtained a flinch response (Tr. 653:7-14) In October 1997, Paul Revere approved her claim for total disability benefits; thereafter her condition did not improve. While she was receiving benefits from her policy, Plaintiff attempted to continue adjusting patients, but was forced to hire Dr. Parissa Peymani to adjust patients while she ran the rest of the practice. (Tr. 440:23-442:1) Dr. Peymani testified that after she started working, Plaintiff stopped seeing all but five to seven of her patients. Peymani testified that during the year- and-a-half she worked for her, Plaintiff performed adjustments for only 5 out of over 9,000 patient visits. Plaintiff had to terminate Dr. Peymani in May 1999, because she could no longer afford to pay her. (Tr. 1087:9-13, 19-22;1088:17-21;1090:3 — 8; 1105:17-18; 1114:22-1115:23) Finally she decided to sell her practice to Dr. Sugarman, another chiropractor whom she had brought in to replace Dr. Peymani. (Tr. 447:7-23) The practice had not been profitable with Dr. Peymani, and it remained unprofitable when Plaintiff was paying Dr. Sug-arman, because the patient volume had dropped since she had stopped treating patients herself. (Tr. 447:24-448:5) Some patients were so loyal to her that she had to gradually “wean” them by continuing to treat them with certain procedures until the patients were comfortable with another doctor or left the practice. (Tr. 511:1-18, 512:8-25) When she sold the practice she did so without obtaining any legal advice and now believes she did “a stupid thing.” On cross-examination, Defendants asked Plaintiff about her deposition in this case, in which she had testified that her practice had not been doing as well in the years before she became disabled, due to managed care. She responded that after her deposition she reviewed her financial records and discovered that in fact the practice had continued to do well, despite the increased paperwork. (Tr. 600:11-25, 601:16-602:13) At the time Plaintiff sold her practice she believed she would still be receiving her disability benefits. In fact, they were terminated the day after she signed the contract with Dr. Sugarman. (Tr. 449:4-25) Before she became disabled she had been earning a net income from her practice of almost $100,000 per year. (Tr. 488: 20-23, 532:17-19, Ex. C, 533:15-19, 536:14-16) After she- became disabled, most of her draw from the business came from the business overhead insurance policy benefits paid by Defendants. For the entire time she was receiving benefits, she was unable to perform chiropractic adjustments on patients, by far the most important duty of her occupation. None of her attempts to start another business produced a profit. Defendants’ contention that Plaintiff merely wanted to change careers was rebutted by Plaintiffs own testimony that she loved her patients, it was very hard for her to give up being a chiropractor, that she would return to working as a chiropractor today if she could, that she had repeatedly tried to continue treating patients even after she became disabled, and that it was always her intention to return to work. (Tr. 440:7-9; 446:1-21, 561:4, 603:10-604:19) Dr. Berry also testified that Plaintiff loved being a chiropractor and that Dr. Berry had encouraged her to continue to try to adjust patients, even while she was being treated herself. However, the pain, especially in her elbow and arm, was too much, and they concluded that Plaintiff could not return to work adjusting patients. (Tr. 651:22-652:10) Conclusion regarding sufficiency of the evidence— The jury heard more than enough evidence to conclude that Plaintiff was totally disabled and that Defendants in bad faith terminated her benefits and caused her damages. 1) Defendant contends that Paul Revere did not breach its contract with Plaintiff. Plaintiff bought a policy in which Defendants promised to pay her benefits if she became totally disabled from working at her own occupation or gainfully employed at another occupation. Despite conclusive evidence that Plaintiff was unable to work as a chiropractor and that her other attempts to work had failed, after one and one-half years of paying benefits, Defendants subjected her to a biased medical examination, then re-characterized her occupation as a business owner, rather than a chiropractor, and claimed she was not totally disabled because she could perform bookkeeping or teach a class or see two patients per hour. (Tr. 403:10-23, 404:1-23; 405:11-19; Ex. 20) Defendants breached their contract with Plaintiff to provide an objective evaluation of her ability to perform her own occupation and to pay her benefits if she were to become totally disabled from her own occupation. Although Dr. Isono found plaintiff had no objective signs of impairment, this was contradicted by Dr. Katz, Dr. Berry, the Kaiser records and the Novato Hospital records. Dr. Katz, the orthopedic surgeon who examined Plaintiff at counsel’s request, testified that she had lateral epicondylitis, cervical disk disease, rotator cuff tendinitis and mild central canal stenosis. He also testified that a mild stenosis did not mean that she would only experience mild pain from it. He also testified that her pain from the other conditions was at a level of 8.5 on a scale of 10 and that she was also depressed as a result of the chronic pain. (Tr. 245:2-246:2) He agreed with Dr. Berry that Plaintiff would no longer be able to practice chiropractics even with surgery to her neck and elbow. (Tr. 246:12-247:4, 271:20-25) He reversed the Independent Medical Examiner (“IME”) reports of Dr. Swartz (Ex. 17) and concluded that all the objective findings were abnormal. He disagreed with Dr. Swartz’s conclusion that Plaintiff would be able to see two chiropractic patients per hour. (Tr. 241:24-244:22, Ex. 20) Plaintiff would have been eligible for benefits even with no objective findings if her pain rendered her totally disabled or eligible for residual benefits. (Tr. 767:1-768:2) Conclusion re breach of contract— Defendants breached their contract with Plaintiff to continue to pay her benefits as long as she remained disabled from working at her own occupation. 2) Defendant contends that Plaintiff failed to present sufficient evidence that Paul Revere denied her claim in bad faith. Frank Caliri, Plaintiffs expert, testified that Paul Revere had a time line for terminating claims and that by the end of 18 months of benefits, a targeted claim would be due for termination (Tr. 287:11-289:11). The kinds of resolutions on the claims time line included: “return to work, pay enclosed, denial, termination, rescission, settlement, litigation, ongoing claim approval or other referrals.” Five out of eight specific goals were negative for claimants. (Tr. 289:16-290:2) The jury heard testimony that Defendants’ claims handling personnel evaluated Plaintiff with the intent to deny her claim, that they deliberately employed a biased examiner in Dr. Swartz, and that they terminated her benefits despite the fact that she was totally disabled from performing her own occupation, her attempts to make a living by other means had failed, and she was entitled to benefits under the terms of her policy. (Tr. 213:12-214:19) Conclusion re bad faith— The jury heard ample evidence from multiple sources that Defendants set out to target claims such as Plaintiffs with termination the goal, and that Defendants evaluated her claim with the purpose of terminating her benefits. 3) Defendant contends that There was a genuine dispute as to Paul Revere’s liability for coverage. If an insurer’s investigation of a claim was biased, it bars a finding that the insurer was engaged in a genuine dispute. Chateau Chamberay Homeowners Ass’n v. Associated Intern. Ins. Co., 90 Cal.App.4th 335, 348 fn. 7, 350, 108 Cal.Rptr.2d 776 (2001). (When an insurer’s investigation or reliance on experts does not reflect a genuine dispute, the bad faith claim should go to the jury.) The following factors may indicate an insurer’s bias: 1. The insurer may have misrepresented the nature of the investigatory proceedings; 2. The insurer’s employees lied in depositions or to the insured; 3. The insurer dishonestly selected its experts; 4. The insurer’s experts were unreasonable; or 5. The insurer failed to conduct a thorough investigation; Id. Plaintiffs expert, Frank Caliri, testified that Defendants did all of the above, as follows: 1. Paul Revere misrepresented the benefits available to Plaintiff, by not informing her about recovery benefits, residual benefits or rehabilitation benefits and telling her in their denial letter that her policy was subject to ERISA, when it wasn’t. (Tr. 82:23-83:6, 84:25-85:1, 138:3-140:9, 140:21-141:19, 194:3-196:9, 198:7-199:22, see Order Denying Partial Summary Judgment, issued January 3, 2001) 2. Paul Revere exhibited bias against Plaintiff in its selection of an IME doctor with the purpose of challenging the claimant’s disability and in not providing Plaintiffs in job description in the IME letter. The examiner made his evaluation without having the claimant’s description of her work. (Tr. 85:8-89:1, 128:2-132:17, 133:12-22) 3. Paul Revere compelled the insured to litigate to obtain continued benefits. 4. Paul Revere did not settle in good faith when its liability was clear. 5. Paul Revere failed to pay as it was obligated to under the policy. (Tr. 74:2-75:17, 79:14-80:11) Defendants had a bias against claims like Dr. Hangarter’s. They planned to save money by terminating claims like hers. They sent her to be examined by Dr. Swartz, who was biased— 13 of 13 claimants whose records Plaintiff obtained were found by Dr. Swartz not to be totally disabled. (Tr. 135:12-16;136:8-24) Dr. Swartz himself was further influenced by Defendants’ employee Dr. Bianchi, who in the referral letter expressed to Dr. Swartz his opinion regarding the results of the medical diagnostic tests and advised him that Plaintiff would probably improve with conservative treatment. (Tr.90:15-91:18, 294:12-295:13, Ex. 28). Dr. Bianchi had never met Plaintiff at the time he expressed this opinion. (Tr. 474:4-12) Defendants rely on the Phelps case to bolster their claim that there was a genuine dispute over coverage. However, Phelps involved no company-wide scheme to terminate expensive disability claims to increase profits. Phelps also did not involve a challenge to the IME doctor or to the accuracy and reliability of the IME. In fact, the insurer in Phelps relied on three separate IME’s before terminating benefits. Phelps v. Provident Life & Acc. Ins. Co., 60 F.Supp.2d 1014, 1021-22 (C.D.Cal.1999). In addition, Defendants in the case at bar developed, with the expertise of Ralph Mohney, a comprehensive system for targeting and terminating expensive claims like Plaintiffs. She was a professional in California with an “own-occupation” policy. Under Defendants’ risk analysis her claim fit the profile as one with a potentially adverse financial impact on Defendants. (Tr. 98:4-16). This targeting scheme was described by Dr. Feist, who testified about the changes Ralph Mohney introduced at Provident and brought with him to Paul Revere, such as round table claims reviews and the goal of achieving a “net termination ratio” (the ratio of the value of terminated claims compared with new claims). Mohney’s goal was to increase this ratio to 84% (Ex. 35). By 1996 Provident increased the net termination ratio goal to 90% (Ex. 37). By 1997, the ratio was increased to 104% (Ex. 38). These goals provided an incentive for Provident to terminate claims with high reserves, such as Plaintiffs. (Ex. 23, 34, 36, 41, 47, 116(A)) One of the claims handling processes introduced by Ralph Mohney when he came to Paul Revere from Provident was the round table. The round tables were meetings of Paul Revere personnel, at which each adjustor brought one or more of a “Top Ten List” of claims to be targeted for intensive efforts to achieve “successful resolution.” (Ex. 47, 48) The round tables were usually held after hours, (Tr. 809:18-21) and the discussion would begin with the dollar amount of the claim (Tr. 829:24). Frank Caliri testified that the round table process fell below insurance industry standards for several reasons: the purpose was to target claims in order to meet net termination ratio targets, and the proceedings were not documented in the claims files. (Tr. 60:18-61:2) Plaintiffs notice of claim was July 8, 1997; Paul Revere received the claim form on August 12, 1997; and her case was taken to a round table on September 9, 1997. The round tables focused on claims with a high reserve— one to two million dollars, where the insured was a disabled professional who had been receiving benefits for months or years. (Tr. 829:16-24; Ex. 48). Plaintiff fit this profile. Dr. Feist also testified that Ralph Moh-ney told him that company policy was that after his taking over the claims area, doctors were no longer permitted to express their opinions regarding disability in the claims file and that such decisions were reserved for the claims handling personnel only. (Tr. 822:1-13; 824:2-6). This changed the prior procedure which had been that doctors determined whether claimants were disabled. (Tr.822:17-19). Preventing doctors such as Dr. Feist from expressing an opinion of disability in the claims file left more latitude for claims personnel to make their own decisions. (Tr. 831:15-19; 833:20-24). Dr. Feist described other new tactics as well, such as the following: (1) searching for the “right physician to do the IME because we want to get the answer we want; we don’t want to get the answer that’s detrimental to our cause;” (2) questioning financial qualifications for the initial policy; (3) questioning the attending physician’s integrity; (4) using surveillance inappropriately, and (5) accusing the insured of fraud. (Tr. 824:25-825:3; 827:17-24.) Dr. Feist concluded that the goal of the round table discussions to terminate claims was unethical. (Tr. 820:14-20). The practice of conducting round table meetings was adopted by Paul Revere from Provident after its acquisition by the parent company. (Ex. 46, 5). This is documented in the 1996 “Provident/Paul Revere Transition Plan.” Conclusion regarding existence of a genuine dispute- The evidence is overwhelming that Paul Revere intended to terminate claims such as Plaintiffs, that her claim had been taken to a round table on more than one occasion, and that the purpose of the round table reviews was to find a way to terminate benefits. (Tr. 65:14-67:10, 94:21-24, 807:13-18; 810:2) 4) Defendant contends that Paul Revere conducted a thorough and unbiased investigation of Plaintiffs claim. The court has already analyzed how the Defendants did not have a genuine dispute over their duty to provide benefits to Plaintiff, but instead deliberately set out to terminate her claim. In addition, Defendants’ employees testified repeatedly that they neither knew nor used the California definition of total disability. They attempted to apply an artificial standard to avoid the requirements of California law in their efforts to find plaintiff not disabled. They chose an examiner, Dr. Swartz, with a record of finding claimants not disabled and instructed him through Dr. Bianchi in how he should find that Plaintiffs condition with conservative treatment would improve over time. Conclusion re Paul Revere’s thorough and unbiased investigation- Most of the company’s efforts on Plaintiffs claim were directed toward the goal of terminating her benefits. (See also No. 3 above.) 5) Defendant contends that the Jury should not have awarded punitive damages. To award punitive damages, the jury had to find clear and convincing evidence that Defendants acted with malice, oppression or fraud. A defendant may only succeed in a claim that an award of punitive damages violates its due process rights if it can show it had no notice that what it was doing was wrong. A conscious disregard of the rights of insureds to know about company policies which would potentially affect a decision whether to purchase a policy creates a presumption that the insurer knew that its policies were deceptive. Notrica v. State Compensation Ins. Fund 70 Cal.App.4th 911, 949, 83 Cal.Rptr.2d 89 (1999) (Where senior management personnel knew that company policy would lead to increased premiums for insureds, conscious disregard of rights of policyholders was fair notice that company’s conduct could subject it to punitive damages.) In the case at bar, Defendants should have been on notice that targeting certain categories of claims, using biased examiners, ignoring the California definition of total disability, misinforming or failing to inform insureds regarding all of their potential benefits, and other practices which fell below industry standards could put them at risk for punitive damages. The jury was properly instructed on the elements of malice, oppression and fraud and the distinctive burden of proof imposed upon Plaintiff as follows: “Clear and convincing” evidence means evidence of such convincing force that it demonstrates, in contrast to the opposing evidence, a high probability that the facts of which it is proof are true. (Jury Instruction Number 68) In evaluating the reasonableness of an award of punitive damages, the entire record must be viewed in the light most favorable to the judgment, and reversal is appropriate only when “the award as a matter of law appears excessive, or where the recovery is so grossly disproportionate as to raise a presumption that it is the result of passion or prejudice.” Neal v. Farmers Ins. Exchange, supra, 21 Cal.3d at p. 928, 148 Cal.Rptr. 389, 582 P.2d 980 (1978) (internal quotation marks omitted.) If the conduct upon which the award is premised was fraud perpetrated by an insurer upon an insured, such conduct clearly supports an award of punitive damages. (Pistorius v. Prudential Insurance Co., supra, 123 Cal.App.3d 541, 556, 176 Cal.Rptr. 660 (1981)) Cited in Notrica v. State Compensation Ins. Fund 70 Cal.App.4th 911, 951, 83 Cal.Rptr.2d 89 (1999). With respect to requirement of a finding of malice, oppression or fraud, it is not necessary that the compensatory damages be based on a finding of fraud, only that the plaintiff meets the evidentiary burden to prove bad faith: [Defendant’s] error is in urging that the “fraud” within Civil Code section 3294 be conjoint with a finding of compensatory damages based upon a legal theory of fraud. That position is incorrect. All that is required is that the fraud must equate to the conduct which gives rise to liability — in this case bad faith. Pistorius v. Prudential Insurance Co. (1981) 123 Cal.App.3d 541, 555-556, 176 Cal.Rptr. 660, cited in Notrica. Due process prohibits only a “grossly excessive” award, leaving to the states “considerable flexibility to find” whether “the damages awarded [were] reasonably necessary to vindicate the State’s legitimate interest in punishment and deterrence.” BMW of North America, Inc. v. Gore, 517 U.S. 559, 568, 116 S.Ct. 1589, 134 L.Ed.2d 809 (1996). No “simple mathematical formula” shows what is grossly excessive because a “particularly egregious act” will support a higher award for punitive damages. Id. At 582. Conclusion re jury award of punitive damages— The jury heard ample evidence regarding Defendants’ conduct, constituting the type of malice, oppression or fraud sufficient to justify punitive damages: the round tables, the use of a biased medical examiner, failing to advise plaintiff of benefits to which she was entitled, and then terminating her benefits when she remained totally disabled. In the case at bar, the jury found sufficient egregious acts by Defendants to justify its award of punitive damages. 6) Defendant contends that the Jury should not have awarded future benefits. In a motion in limine in this case, Defendants attempted to exclude evidence of Plaintiffs eligibility for future benefits. This court denied the motion. Defendants argue again that plaintiff may not recover future disability benefits if the insurance policy provides for periodic payments and conditions payment of benefits upon continuing proof of disability. They cite the decision in Erreca to support their contention that an insurer’s refusal to pay future benefits according to a policy does not entitle the insured to treat the entire contract as repudiated and ask for future disability payments on a theory of anticipatory repudiation. Erreca v. Western States Life Ins. Co., 19 Cal.2d 388, 121 P.2d 689 (1942). However, Defendants erroneously applied the holding in Erreca to the case at bar. In Erreca, the court held that the insured had no cause of action for benefits which had not accrued. The court found that the disability benefits stopped accruing when the insured refused to submit to a physical exam as required by the insurer’s policy. However, the benefits continued to accrue for the insured up until the time he refused to submit to an exam as required by the policy, even though the insurer had stopped making payments. In contrast, in the case at bar, Defendants cannot contend that Plaintiff did not comply with the requirements of the policy. A court applying the holding in Erreca to this case would find that the Plaintiffs benefits have accrued and therefore any claim for future benefits is valid, the opposite of Defendants’ position. Defendants concede that the California Court of Appeal for the Third District has construed the court’s decision in the Egan case to allow for an award of future benefits following a finding of bad faith. See Pistorius v. Prudential Ins. Co. of Am., 123 Cal.App.3d 541, 551, 176 Cal.Rptr. 660 (1981), citing Egan v. Mutual of Omaha Ins. Co., 24 Cal.3d 809, 169 Cal.Rptr. 691, 620 P.2d 141 (1979). However, they believe that the California court erred and rely on the decision in U.S. v. Ramos, 39 F.3d 219, 222 (9th Cir.1994) (“since we are convinced the Arizona Supreme Court would interpret [Ariz.Rev.Stat. § 13-3883(B) ] differently than the [Arizona Court of Appeals], we reach our conclusion as to the subsection’s meaning despite the interpretation given it by the [Arizona Court of Appeals]”). 123 Cal.App.3d at 551, 176 Cal.Rptr. 660. This court sees no reason to look to a federal court’s interpretation of Arizona law in order to decide the proper damages for a tortious breach of contract in California, when there is good California law available. In the case at bar the court gave the following instruction to the jury on damages for bad faith: DAMAGES/BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING If you find that the defendant breached its duty of good faith and fair dealing, then you may award plaintiff an amount that will compensate her for all damages legally caused by that breach, including: 1. An amount of future contract benefits that you reasonably conclude after examination of the policy and other evidence that plaintiff would receive had the contract been honored by the insured; 2. An amount that will compensate for plaintiffs emotional distress and injury; 3. An amount that will compensate for plaintiffs economical losses, including loss of the value of time, interest expense, attorneys’ fees and any other losses you determine she sustained as a result of the breach of covenant of good faith and fair dealing. (Emphasis added). (Jury Instruction Number 58) This court finds that the jury was properly instructed and that future benefits are an appropriate form of damages for an insurance company’s breach of the covenant of good faith and fair dealing. Conclusion on future benefits: What other courts have held and what this court holds here, is that if Plaintiff has at all times complied with the terms of the policy and Defendants in bad faith breached their obligation under those terms, then Plaintiff is entitled to all benefits which have accrued, including future benefits. Why-should Dr. Hangarter have to submit to future physical examinations to prove her continued disability when the jury has already found that the insurance company cannot be trusted to deal fairly with her? It would be illogical for the court to find as a matter of law that a prevailing plaintiff in a bad faith case should have to continue to submit to the same treatment in order to receive the future benefits of a contract where she has complied with its terms and the insurance company has not. DEFENDANTS ALLEGE COURT MADE EVIDENTIARY ERRORS 7) Defendants assert that the court should not have admitted the testimony of Frank Caliri, that he lacked qualifications to testify about insurance industry claims adjustment standards, that he testified to factual matters which should have been left to jury, legal matters which should have been left to court, and that his testimony was unreliable. The court decided this issue for the first time before trial in a motion in limine and again in a detailed ruling during trial: The Ninth Circuit has held that an expert’s testimony and qualifications need not be evaluated according to Daubert if the expert is both qualified and testifying based on his own experience. Thomas v. Newton Intern. Enterprises, 42 F.3d 1266 (9th Cir.1994) (longshore worker with 29 years experience in numerous job categories and for different stevedoring companies qualified to testify as expert on working conditions of experienced longshore personnel) Id. at 1269-1270. Daubert only applies to an expert testifying based on hard science and specifically on the application to the evidence of a particular methodology. Other courts have held specifically that an insurance expert’s testimony and qualifications are not subject to the requirements of Daubert. U.S. Fidelity & Guar. Co. v. Sulco, Inc., 171 F.R.D. 305 (D.Kan., 1997). Id. at 308 (citations omitted) Furthermore, an expert in insurance bad faith may reasonably rely on the application of statutes in determining the reasonableness of a company’s actions. Kraeger v. Nationwide Mut. Ins. Company, 1997 WL 109582 (E.D.Pa.1997). It would be reasonable for experts in bad faith insurance practices to look to the relevant statutory and regulatory requirements in examining the reasonableness of an insurer’s actions. Id. at *2. The California Supreme Court has allowed expert testimony on “the conduct and motives of an insurance company in denying coverage”: We can conceive of many ways in which a lay jury, in assessing the conduct and motives of an insurance company in denying coverage under its policy, could benefit from the opinion of one who by profession and experience, was peculiarly equipped to evaluate such matters in the context of similar disputes. Neal v. Farmers Ins. Exch., 21 Cal.3d 910, 924, 148 Cal.Rptr. 389, 582 P.2d 980 (1978) Mr. Caliri has twenty-five years’ experience working for insurance companies and as an independent consultant. His experience includes marketing insurance products, evaluating them, evaluating insurance claims and assisting insureds in dealing with insurance companies to obtain payment of their claims. (Tr. 3:13-19, 6:2-17, 13:1-6). He worked for both Unum and Provident as a representative at the time many of the own-occupation disability policies like Plaintiffs were sold (Tr. 5:14-19, 10:5-14). He became familiar with the important features of the insurance contracts (Tr. 5:20-25). He has received training from the insurance companies and has educated himself on how insurance companies in general, and the Defendants in this case in particular, operate. (Tr. 13:15-15:15, 16:18-17:20). He is qualified as an expert on the basis of his experience in dealing with insurers and insureds. In arriving at his opinion whether Defendants’ handling of Plaintiffs claim comported with the standards in the insurance industry, he relied on his education, his experience and his understanding of the requirements of state law, specifically Unfair Settlement Claims Practice § 2695. In his opinion, the standards of the industry impose an obligation on insurance companies such as Defendants to be fair, objective and thorough in their evaluation and analysis of a claim; not to put their financial interests above those of their insureds, not to search for ways to deny a claim, not to misrepresent provisions of the insurance policy including coverage benefits, not to pay less on a policy than the insured is rightfully owed, and not to compel insureds to sue in order to receive benefits. He testified as well that it is standard in the industry that written records of the claim process be kept in the claim file. (Tr. 26:16-19, 26:19-20, 26:23-25, 27:1-10, 27:11-16, 27:17-23, 27:24-28:13). He testified that it was improper to set a goal to terminate a certain percentage of claims. (Tr. 50:1-13) He testified to his interpretation of internal Provident documents which in his opinion set goals for terminating whole blocks of claims without reference to the merits of individual claims for benefits, for example, a directive that each adjuster will maintain a list of ten claimants “where intensive effort will lead to successful resolution of the claim. As one drops off another name will be added.” (The “Top Ten Lists”) He referred to testimony by Ralph Mohney and Sandra Frye that “resolution” meant “termination.” In his opinion this practice fell below industry standards because it violated the principle of looking at each policy claim objectively, fairly and on a case-by-case basis. (Tr. 55:8-56:1). Conclusion re Frank Caliri: This court found him qualified by training and experience to testify as an expert on insurance industry practices and standards and whether Defendants’ policies and practices complied with those standards, but not to render an opinion on the ultimate issues in the case (Tr. 25:2-7, 40:2-8, 40:20-41:4, 41:18-22, 42:3-43:1, 43:22-44:11, 49:3-9, 102:9-16). This court finds that he was qualified, and that his testimony fell well within the parameters of his expertise without impinging on the province of either the court or the jury. 8) Defendant contends that the court should not have admitted the deposition testimony of Dr. Feist. He was improperly permitted to testify as an expert. His deposition was inadmissible hearsay. It was more prejudicial than probative and should have been excluded under FRE 403. This was also dealt with in a motion in limine in which the Defendants objected that the witness was not genuinely unavailable as required by FRCP Rule 32(a)(3), that they had no opportunity to cross-examine pursuant to 804(b)(1), that Dr. Feist had never worked for Paul Revere itself and that he left Provident prior to the merger of Paul Revere and the Provident Companies. Defendants also objected to Dr. Feist’s testimony as prejudicial to Defendants. Fed.R.Evid. 804(b)(1) permits introduction of former testimony which was given under oath and subject to cross-examination by the party against whom the testimony is offered: “Former testimony ... in a deposition [where] the party against whom the testimony is now offered, or, in a civil action or proceeding, a predecessor in interest, had an opportunity and similar motive to develop the testimony by direct, cross, or redirect examination.” Fed.R.Evid. 804(b)(1). The court denied Defendants’ motion to exclude Dr. Feist’s deposition from evidence at trial. The court held that his deposition in the case of United Policyholders, et al., v. Provident Life and Accident Insurance Co., UnumProvident Corp., and Bay Brook Medical Group (Alameda County Super. Ct. No. 815688-2) was relevant to the case at bar. Dr. Feist had participated as Medical Director of Provident in roundtables where termination of own-occupation policies was discussed. He testified at his deposition about Defendant’s business practices which resulted in the termination of claims which were targeted as Plaintiffs was. The United Policyholders case was also a suit for wrongful termination of disability benefits for an own-occupation policy. (Tr. 110) Dr. Feist lives in Alabama, outside the court’s subpoena power under FRCP Rule 45, and was thus unavailable pursuant to Rule 32(a)(3). The court also held that the Defendants in the case at bar have had an opportunity to cross examine him with similar motive. (FRE 804(b)(1)) Defendants’ counsel was notified that Dr. Feist’s deposition was being taken in the United Policyholders’ case, the witness was on the witness list in this case (Tr. 116:1-5), and counsel’s partner, representing Provident Life & Accident Insurance Co. and UnumProvident, participated energetically in the deposition, objecting to virtually every one of Plaintiffs questions. (Tr. 110:9-24) In fact, UnumProvident was a co-defendant in the United Policyholders case, just as it is in this case, and therefore the same defendant was represented at the deposition in the United Policyholders case. (Tr. 741:1-21, 742:14-743:25). The court had previously ordered that deposition testimony from other cases could not be introduced at trial. The court distinguished Dr. Feist’s deposition from the depositions excluded by its prior ruling. The other depositions were offered with respect to the final determination of whether or not the individual was disabled and whether benefits would be continued. Dr. Feist’s testimony, by contrast, deals with claims handling procedures which a jury could reasonably infer were carried over from Provident to Paul Revere as a subsidiary of UnumProvident after Unum and Provident combined under the name of UnumProvident. (Tr. 745:2-17). See Murray v. Toyota Motor Distributors, Inc., 664 F.2d 1377, 1379-1380 (9th Cir.1982) (deposition testimony of unavailable former employee of affiliated company admissible against affiliate with similar motive where both controlled by same parent company). Conclusion regarding deposition of Dr. Feist: This deposition was subject to the hearsay exception since the witness was unavailable and had been subject to cross-examination by the Defendants’ counsel in another action. He was not offered as an expert so much as a percipient witness to Defendants’ claims handling practices. Defendants had notice that Dr. Feist was a potential witness. His name was on Plaintiffs amended witness list filed with this court on September 6, 2001 (Decl. of Alice Wolfson in Support of Motion to Amend at Ex. 2) The court finds once again that the admission of Dr. Feist’s deposition was proper. He was unavailable, he was offered as a percipient witness and he was examined by counsel for co-defendant Un-umProvident with the same motive as in this case. 9) Defendants contend that the court erred in admitting the documents produced by Provident in another lawsuit. In its December 13, 2001 PreTrial Order, the court ruled: “With regard to Plaintiffs Exhibit Nos. 115-155, the so-called ‘Provident Documents,’ Defendants’ motion to exclude these documents from evidence is granted, without prejudice. If, in the course of trial, a nexus is established between these documents and Plaintiffs claim, the court will re-consider the issue.” At trial, Defendants admitted that the documents were business records of Provident. (Tr. 48:8-12). Many of the documents were read to the jury by Ralph Mohney. (Tr. 837-863). The documents confirmed that Provident claims handling practices were adopted by Paul Revere. Exhibit 153, 155 — “Bring Wooster (Paul Revere) reporting into conformance with Chattanooga (Provident) standards.” (Ex. 81 — Provident to Paul Revere Transition Plan). Frank Caliri also testified that he read depositions of Provident employees which led him to conclude that employees of Provident and Paul Revere together worked out the transition of Provident claims handling practices to Paul Revere. (Tr. 51:16-52:2, 145:1-152:2, 152:14-154:3) The plan was to take an aggressive approach to claims handling, and using round tables, independent medical examiners, and surveillance to achieve the desired net termination ratios. (Tr. 52:18-23) This court reviewed the documents and the deposition of Mr. Parks, the Provident employee who authenticated the documents. The court observed that the documents were created before Plaintiff filed her claim for benefits but after she bought her policy from Defendants. At that time Paul Revere had not yet been acquired by Provident. (Tr. 528:7-11) The court at trial listed a number of ways in which the documents could be authenticated: 1) They were admitted by Judge Conti in a similar case, Schneider v. Provident Life & Accident Ins. Co. (C-97-4646 SC, N.D.Cal.); (Tr. 748:15-16, 19-21, 750:4-11,22-751:21). 2) They were produced by defense counsel for companies which ultimately became UnumProvident; (Tr. 750:25-751:3) 3) Frank Caliri was familiar with the documents and could attest to their genuineness; 4) UnumProvident is a successor in interest to Paul Revere and Provident; (Tr. 741: 1-15) 5) Ralph Mohney was present throughout the time the documents were being created; (Tr.751:8-11) 6) The documents were authenticated by Mr. Parks in his deposition. (Tr. 751:11-14) The court permitted Frank Caliri testify about the implications of many of the documents in determining the reasonableness of Defendants’ claims handling policies. (Tr.102:9-16). An expert may rely on hearsay in forming an opinion. Evid.Code, § 801, subd. (b), 802; Mosesian v. Pennwalt Corp., 191 Cal.App.3d 851, 860, 236 Cal.Rptr. 778, (1987); Notrica v. State Compensation Ins. Fund 70 Cal.App.4th 911, 933, 83 Cal.Rptr.2d 89 (1999) Conclusion re Provident documents: The documents were relevant to the claims handling policies introduced by Ralph Mohney at Provident and taken with him to Paul Revere and applied to the handling of Plaintiffs claim. The documents were properly authenticated as business records and were in fact used at trial by Defendants. 10) Defendants contend that the court improperly excluded evidence: testimony of Stephen Rutledge, Andrew O’Brien. Defendants offered Stephen Rutledge to testify that both the percentage of monthly individual disability claims that Paul Revere paid and Paul Revere’s pay-outs for the individual disability line of business increased during the relevant time period. The court rejected his testimony on the grounds that it was too general, because statistics were for all individual disability claims, not just own-occupation individual disability claims. (Tr. 1584.) Andrew O’Brien is a rehabilitation counselor and life care planner who would have testified regarding Plaintiffs ability to continue to work as a chiropractor with modifications to her practice. Plaintiff testified at trial that she primarily used manipulations, deep tissue massage and traction to treat her patients. Mr. O’Brien would have testified that Plaintiff could use a device called an activator to treat her patients instead. The court excluded his testimony on the basis that he was not qualified to offer an expert opinion based on conversations with three chiropractors, and that his testimony was not relevant in light of the evidence in the record as to the usual and customary manner in which Plaintiff conducted her practice and that his testimony was more prejudicial than probative. (Tr. 1568-70). 11) Defendants contend that the court’s jury instruction and Plaintiffs argument and evidence for the definition of total disability were improper under California law. Total disability- — Defendants claim that this court erred in instructing that a claimant must be unable to perform the important duties of her occupation in the usual and customary way with reasonable continuity. Defendants claim the court further erred in declining to instruct the jury that, to be totally disabled, an insured must be unable to perform all the important duties of her occupation. The instruction given to the jury