The issue of whether accidental death benefits are payable to the survivors of drunken drivers has been the subject of numerous reported decisions over the past 20 years. Surprisingly, despite insurers’ efforts to exclude coverage under accidental death insurance policies under such circumstances, policies still exist that lack an explicit exclusion for deaths occurring where intoxication is a contributing cause. LaAsmar v. Phelps Dodge Corporation Life, Accidental Death & Dismemberment and Dependent Life Insurance Plan, 2010 U.S.App.LEXIS 9345 (10th Cir. May 6, 2010) is a recent ruling on this issue; and in LaAsmar, the court determined that despite the decedent’s intoxication, in the absence of an explicit policy exclusion, the death was “accidental” and therefore compensable. In this case, Mark LaAsmar, whose blood alcohol level was three times the legal limit in Colorado, died in a one-vehicle crash when his car rolled over while traveling at 20 miles per hour in excess of the posted speed limit on a rural road. When his beneficiaries, Ronald and Sandra LaAsmer, the decedent’s parents, made a claim for benefits under an accidental death and dismemberment policy issued by Metropolitan Life Insurance Company, the insurer denied the claim.
The policy provided that the accident had to be “the sole cause of the injury,” “the sole cause of the covered loss,” and “[t]he covered loss [had to] occur not more than one year after the date of the accident.” Despite the fact that the death certificate attributed the cause of death to “[h]ead and internal injuries” which were due to “[b]lunt force trauma” as a consequence of an “MVA,” or motor vehicle accident, MetLife refused to pay indemnity because the police and toxicology reports indicated a blood alcohol content of .227g/100 ml., which is nearly three times the Colorado legal limit of .08.
MetLife articulated three reasons for refusing to pay the claim: 1) that intoxication contributed to the crash, hence the motor vehicle accident was not the sole cause of death; 2) that the crash was a reasonably foreseeable consequence of drunken driving and therefore not an “accident;” and 3) that the loss was excluded under provisions denying benefits for a “loss caused by or contributed to by … [i]njuring oneself on purpose.” The lower court rejected those arguments, and the court of appeals affirmed.
Because the claim arose under ERISA since it involved a benefit provided by the decedent’s employer, Phelps Dodge, the first question addressed by the court was the standard of review to be applied. The court determined that although the policy contained language arguably granting discretionary authority to the insurer (although there was some question as to whether the authority was properly delegated from the employer to the insurer), the court found the de novo standard applied due to MetLife’s failure to timely process the claim. The ERISA regulations allowed MetLife 60 days to decide the LaAsmars’ appeal from the initial denial of benefits; however, MetLife’s determination was issued 170 days after review had been sought. Consequently, based on Gilbertson v. Allied Signal, Inc., 328 F.3d 625, 631 (10th Cir. 2003) and its progeny, the court ruled that the failure to issue a timely claim decision forfeited the plan administrator’s discretionary authority since the discretion was not exercised within the permissible time limits. The court concluded, “Although MetLife eventually denied the LaAsmars’ claim on administrative review, it did so substantially outside the time period within which the Plan vested it with discretion to interpret and apply the Plan. Thus, it was not acting within the discretion provided by the Plan.” *15. Accordingly, the de novo standard of adjudication applied both as to interpretation of the terms of the plan as well as the court’s adjudication of the factual issues presented.
The court then addressed each of the reasons advanced by MetLife. First, the court rejected MetLife’s contention that the crash was not the sole cause of Mark LaAsmar’s death. The court pointed to a prior ruling, Kellogg v. Metropolitan Life Ins.Co., 549 F.3d 818 (10th Cir. 2008), which also involved a death claim. In Kellogg, the insurer contended the decedent had a seizure while driving and that an underlying medical condition was a contributing cause of Kellogg’s death. Rejecting that argument, the court explained, “Here, the loss (Brad Kellogg’s death) was caused by a skull fracture resulting from the car accident, not by physical or mental illness. … While the seizure may have been the cause of the crash, it was not the cause of Brad Kellogg’s death.” 549 F.3d at 832-33. Applying that reasoning here, the court found: “Mark LaAsmar died, not of alcohol intoxication, but as a result of head and internal injuries suffered in a motor vehicle crash. The sole cause of the loss, Mark LaAsmar’s death, was the crash.” *25.
The court also rejected MetLife’s contention that the crash did not constitute an “accident” because driving while intoxicated made it reasonably foreseeable that serious injury or death could occur. First, the court cited rulings from around the country flatly rejecting a per se rule that all alcohol related deaths are non-accidental. The court was careful to note, though, that it was not condoning drunken driving – the court was merely construing an insurance policy. Although MetLife took the position that LaAsmar’s death was not an “accident,” notably absent from the policy was a definition of the term “accident.” The court determined that in the absence of an explicit policy definition, the term “accident” was ambiguous. The court cited a host of rulings that had come to the conclusion that there is no generally accepted legal definition of the meaning of the term “accident.” Therefore, the court applied the doctrine of contra proferentem, which construes ambiguities in contracts against the drafter, which it found particularly consistent with ERISA’s fiduciary duties owed by plan fiduciaries to beneficiaries of employee benefit plans. Citing a prior ruling, the court plainly pointed out: “It is not too much to ask of ERISA insurers to set forth explicitly what is and is not an accident covered by their AD&D policy, and to state unambiguously whether death and disability caused by the insured’s drunk driving is an accident and, if not, to include a workable definition of drunkenness and of causation attributed to such drunkenness.” *37 (citation omitted).
The court further determined that even though driving drunk would make a crash more likely, that there are many circumstances that would ordinarily be understood as “accidental” if a crash resulted: driving when sleepy, eating while driving, talking on the cell phone, reaching for a compact disk, or turning to speak to a child. Focusing on the insured’s specific conduct, the court held that the circumstances of LaAsmar’s death would reasonably be viewed as an accident. The court likewise rejected MetLife’s efforts to deem the occurrence as non-accidental because it was “reasonably foreseeable.” As the court pointed out, “The fact that driving drunk may increase the chances of being killed in an accident does not necessarily make that accident expected.” *57. Statistically, there is a 99.99 percent chance of survival while driving drunk. Hence, the court concluded the decedent died in an “accident,” and chastised the insurer by noting: “If MetLife wants to exclude from its AD&D coverage vehicle wrecks caused by its insured’s drunk driving, it can certainly do so by drafting the language of its Plan clearly to say so.” *62. On that issue, the court quoted from a leading treatise on insurance:
If the language employed in these [accident insurance] contracts is so inherently ambiguous that no policy can be sufficiently clear to avoid the disputes [as to what is and is not a covered “accident”], would it not benefit us all – insurers, insureds, and society at large – to abandon the fight and either provide coverage for the types of injuries and deaths that produce the bulk of disputes, with premiums adjusted accordingly, or develop a standard list of clear exclusions from coverage that avoids the need to determine whether these circumstances fall within the definition of an accident? The use of specific exclusions, either from the definition of accident or without tying them to a specific concept, could avoid many of these definitional and conceptual dilemmas although such an approach would concededly shift much of the proof burden in accident cases from insureds to insurers.
10 Couch on Insurance ‘§ 139:10.
Finally, the court disposed of MetLife’s argument that LaAsmar’s death fell within the policy exclusion for “injuring oneself on purpose.” The court explained that the burden of proving the applicability of the exclusion fell on MetLife, and there was no evidence in the record indicating that Mark LaAsmar intended to injure himself on purpose. Chief Judge Mary Beck Briscoe dissented.
Although the court applied a de novo rather than a deferential standard of review, the grounds on which it did so may be a bit shaky based on the Supreme Court’s recent ruling in Conkright v. Frommert, No. 08-810, 2010 U.S. LEXIS 3479 (April 21, 2010), which held that a faulty plan interpretation that results in a court remand does not result in a forfeiture of discretionary authority if the matter comes before the court a second time. That ruling could potentially extend to the 10th Circuit’s decision finding that MetLife was not entitled to discretion because of non-compliance with regulatory deadlines. However, it is not at all clear the court’s reasoning would have resulted in a different ruling here had the review standard been deferential, even though the court pointed out in a footnote (18) that other rulings denying accidental death benefits appear to have reached that result based on the court giving deference to the insurers’ conclusions.
The reason the standard of review may be immaterial is the importance of the insurer’s financial self-interest as a factor as noted in Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008). Another consideration is found in one of the accidental death cases that ruled for the insurer, Cozzie v. Metropolitan Life Ins.Co., 140 F.3d 1104 (7th Cir. 1998). While the facts and circumstances presented in Cozzie are similar to LaAsmar, in both situations the term “accident” was undefined in the policy. That led the court to remark, “The absence of an explicit exclusion must be given significant weight in any review of the reasonableness of a decision by the fiduciary to deny coverage.” 140 F.3d at 1111. The court then added, “we caution that plan drafters would be well advised to demonstrate significant circumspection in attempting to require these general plan terms to bear too much weight.” Despite that warning, and the passage of more than 10 years since the issuance of Cozzie, insurers such as MetLife have done nothing to amend their policies to define the key term “accident,” or to exclude deaths involving intoxication or even deaths associated with other activities now considered illegal such as texting while driving. See, 625 ILCS 5/12-610.2. Thus, the point made by rulings such as this and a very similar case Kovach v. Zurich American Ins.Co., 587 F.3d 323 (6th Cir. 2009), is that if insurers wish to avoid the payment of benefits for particular causes, they need to draft their policies to disclose what is and what is not covered. That is the philosophy behind the insurance law doctrine of “reasonable expectations of the insured,” and is also a major emphasis of ERISA which requires that all plan participants and beneficiaries be furnished with summary plan descriptions that, among other things, informs them of “circumstances which may result in disqualification, ineligibility, or denial or loss of benefits.” 29 U.S.C. §1022(b). MetLife’s failure to meet those standards was fatal to its efforts to avoid liability.
This article was initially published in the Chicago Daily Law Bulletin.