If an Samsung Note 4 fails because of a product defect, is the leasor entitled to a new phone?

[AC Question]

Leased Samsung Galaxy Note 4 in August 2015. Signed up for AT&T insurance program. Last week in September home button failed. AT&T service department could not fix it. Requested a replacement phone. However the replacement phone I received is a "remanufactured" Galaxy Note 4, not a new phone. Since the phone failed because of a manufacturing defect (not because it was damaged physically or abused.), why is a repaired phone considered an acceptable replacement for a new phone. Note that I am obligated to pay for leasing this phone for at least 2 years.