Causation is always a key issue in accidental death insurance claims as a recent 1st U.S. Circuit Court of Appeals decision teaches.

In Arruda v. Zurich American Insurance Co., 2020 WL 880548 (1st Cir., Feb. 24), the 1st Circuit overturned a judgment in favor of the plaintiff, Denise Arruda, in relation to an accidental death insurance claim relating to the death of her husband, Joseph Arruda. The insurer maintained that Joseph’s death was caused or contributed to by Joseph’s pre-existing health conditions. The 1st Circuit agreed.

The accident occurred in May 2014 when Joseph Arruda lost control of his car while driving to a work-related meeting, crossed the center line, hit an oncoming car and flipped over. He died at the scene of the accident.

The policy provides for payment of benefits if the insured dies as the result of a “covered injury,” a term defined to mean “an injury directly caused by accidental means which is independent of all other causes.” The policy also excludes death caused by pre-existing illnesses, the primary basis asserted for the claim denial.

The record showed at the time of his death Arruda suffered from a number of medical conditions, including cardiac impairments. After a fainting incident in January 2014, Arruda received an implantable cardioverter defibrillator, or ICD, which monitored his heart rate and rhythm, and was designed to administer shocks to restore normal heart rate.

The medical examiner performed an autopsy and concluded the manner of Arruda’s death was accidental but the cause of death was listed as hypertensive heart disease and a broken neck due to blunt impact.

There was no indication that Joseph suffered an acute cardiac event, however; and a post-mortem interrogation of the ICD showed it did not activate prior to the accident. Nonetheless, Zurich maintained that Arruda’s death was due to a cardiac event.

Denise Arruda challenged Zurich’s determination and provided a report from an independent forensic pathologist, who concluded that the death was due to blunt force trauma. The pathologist maintained the ICD ruled out a coronary event. Although the pathologist was unable to explain why Arruda drove into oncoming traffic, the plaintiff maintained it could have been due to distraction or inattention.

Zurich responded by retaining its own expert, who reported that Arruda’s death was due to “several possible pre-existing illnesses or diseases, singly or in combination.” The consultant could not account for Arruda losing control of his car, though, and posited an undiagnosed sleep apnea caused him to fall asleep. Zurich then upheld its denial.

The appeals court began its decision by sidestepping the question of who had the burden of proof on the issue of whether the death was due to natural causes rather than an accident, even though the court cited Glista v. Unum Life Insurance Co., 378 F.3d 113, 131 (1st Cir. 2004), which found the burden of proof in establishing a policy exclusion is traditionally placed on the insurer. Instead, applying the arbitrary and capricious standard of judicial review, the court remarked, “the issue is only whether there is substantial evidence in the record to support the administrator’s determination.”

Applying that standard, the court determined Arruda’s death was “caused, at least in part” by his underlying medical condition. The court conceded that the exact medical causation mechanism could not be identified; however, it upheld Zurich’s determination.

A dissent contended the “mere existence” of pre-existing conditions does not prove Arruda died from natural causes and criticized the majority for producing “an unjust result.” The dissent emphasized that the autopsy showed no evidence Arruda had suffered a heart attack or heart failure and questioned the speculation that Arruda had an undiagnosed sleep apnea, asserting: “The inescapable fact is that many healthy people fall asleep at the wheel while driving, and many sick people fall asleep at the wheel while driving for reasons that have nothing to do with their illness.”

The theme of the dissent is the same as the observation made by Judge Richard Posner in Prather v. Sun Life and Health Insurance Co., 843 F.3d 733 (7th Cir. 2016) — “Post hoc is not propter hoc.” The Prather case involved an accidental death insurance claim where the decedent died following surgery to treat a leg injury incurred while playing recreational basketball. The court found the accident, not the surgery, was causative. Here, too, just because there were prior illnesses, there was no proof that any of Arruda’s medical conditions resulted in his death. While Zurich’s conclusion was obviously more than speculation in view of Arruda’s medical history, it was not definitive.

And that is where the burden of proof becomes critical. If Zurich had the burden of proving the applicability of the exclusion, at the very least, the burden of proof could have been a tie-breaker favoring the plaintiff. The dissent argued that in matters such as this, a court cannot accept equivocal and speculative medical opinions as determinative.

The court also recognized that its decision was in tension with the approach taken by other circuits on the causation issue that was at the center of this dispute. Since Joseph Arruda’s broken neck suffered in the collision and rollover was the immediate cause of his sudden death, the lack of definitive proof that Arruda’s pre-existing medical conditions caused the crash, benefits should have been payable.

Finally, the dissent maintained that the arbitrary and capricious standard is not an invitation for courts to rubber stamp insurers’ findings. Instead, under Metropolitan Life v. Glenn, 553 U.S. 105 (2008), the court’s citation of Universal Camera Corp. v. NLRB, 340 U.S. 474, 490 (1951), should guide how courts review fact-finding. There, the Supreme Court held that under administrative review “courts must now assume more responsibility for the reasonableness and fairness of [administrative] decisions than some courts have shown in the past. Reviewing courts must be influenced by a feeling that they are not to abdicate the conventional judicial function.” The dissent argued the majority was too lenient in upholding Zurich’s denial.

— I represented the plaintiff in the Prather v. Sun Life case cited in this article.

Published by the Chicago Daily Law Bulletin on March 26, 2020

Mark D. DeBofsky is a name partner of DeBofsky Law.  He handles civil and appellate litigation involving employee benefits, disability insurance and other insurance claims and coverage issues. He can be reached at [email protected].

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