## Facts

- James E. Elam was insured under his employer’s group long-term disability policy issued by First Unum Life Insurance Company.
- The policy provided disability benefits to age 65 but limited benefits “for disability due to mental illness” to 24 months.
- The policy defined “mental illness” as “mental, nervous or emotional diseases or disorders of any type.”
- Elam became disabled at age 43 and was diagnosed with bipolar affective disorder; he received psychiatric treatment.
- First Unum paid benefits for 24 months (Aug. 9, 1994 to Aug. 9, 1996) and then terminated payments based on the mental-illness limitation.
- Elam contended bipolar affective disorder has a biological/physical basis and was not unambiguously subject to the policy’s “mental illness” cap.
- Medical testimony indicated bipolar disorder is commonly classified and treated as a mental illness, while also described as having a biological or biochemical basis and lacking specific biological diagnostic markers.

## Issues

1. Whether the policy term “mental illness,” as defined, was ambiguous as applied to bipolar affective disorder.
2. Whether summary judgment for the insurer was improper because the limitation’s applicability turned on a fact issue informed by extrinsic medical evidence.

## Decision

- The Arkansas Court of Appeals reversed the trial court’s grant of summary judgment to First Unum and remanded.
- The court held the policy’s “mental illness” limitation was ambiguous as applied to bipolar affective disorder.
- The court concluded that, given the ambiguity and the competing reasonable interpretations supported by extrinsic evidence, the limitation’s application presented a fact question not suitable for summary judgment.

## Legal Principles

- Unambiguous insurance-policy language is enforced according to its plain meaning without applying construction rules.
- Ambiguous policy language (susceptible to more than one reasonable interpretation) is construed liberally in favor of the insured and strictly against the insurer.
- Ambiguity is typically a question of law, but when extrinsic evidence is used to explain a term’s meaning or application, resolution may present a question of fact.
- Summary judgment is proper only when no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law; it is improper where undisputed facts allow different reasonable conclusions about what the facts show.

## Conclusion

Because “mental illness,” even as defined, could reasonably be read either to include any psychiatrically diagnosed disorder or to exclude biologically based brain disorders, the court held the limitation’s application to bipolar affective disorder was ambiguous and required factfinding, so the insurer was not entitled to summary judgment.


Elam v. First Unum Life Ins. Co., 72 Ark. App. 54, 32 S.W.3d 486 (2000)