It is not uncommon to find provisions in disability and accidental death insurance policies that exclude coverage in situations where alcohol or drug ingestion causes the injury or death. It is not enough, though, to merely show the insured was intoxicated.
According to cases such as Holloway v. J.C. Penney Life Insurance Co., 190 F.3d 838 (7th Cir. 1999), a “status intoxication” exclusion violates Illinois public policy. Instead, the exclusion is only applicable if the intoxication is proven by the insurer to be related to the loss; i.e., a causative factor.
A recent ruling issued by a federal court in Georgia is illustrative. In Prelutsky v. Greater Georgia Life Insurance Co., 2016 WL 4177469 (N.D. Ga. Aug. 8, 2016), Steven Prelutsky, a 55-year-old partner in a law firm, became disabled as a result of brain injuries suffered when he fell down a flight of stairs while on a skiing vacation in Colorado.
Prelutsky’s ensuing claim for disability insurance benefits was denied based on an intoxication exclusion in the policy, which reads:
“The [p]olicy does not cover any disabilities or loss caused by, resulting from, or related to any of the following …
“7. Any accident, [i]njury or [i]llness caused by, resulting from or related to your being under the voluntary influence of any drug, narcotic, intoxicant or chemical, unless administered by or taken according to the advice of a [p]hysician.”
Despite the presence of discretionary language in the policy requiring the court to defer to the insurer’s decision, the court found in favor of the plaintiff even though Prelutsky’s medical records revealed the presence of a significant amount of alcohol in his bloodstream.
There were no witnesses to Prelutsky’s fall, though. However, the owner of the home where the accident occurred suggested that Prelutsky had tripped over his ski pants after he had removed his ski boots.
The court noted that since the insurer was invoking a policy exclusion, it bore the burden of establishing the applicability of the exclusion (citing Horton v. Reliance Standard Life Insurance Co., 141 F.3d 1038, 1040 (11th Cir. 1998)).
Utilizing a decisional framework for deciding Employee Retirement Income Security Act cases that is unique to the 11th U.S. Circuit Court of Appeals, the court first conducted a de novo review of the claim decision.
The court was heavily guided by the 11th Circuit’s decision in Capone v. Aetna Life Insurance Co., 592 F.3d 1189 (11th Cir. 2010), which also involved an intoxication exclusion in an insurance policy.
The insured in Capone was paralyzed on account of a diving injury that occurred after he had consumed a significant amount of alcohol. The court rejected the intoxication defense, pointing out that just because toxicology tests show intoxication, it may not be inferred from the tests alone that intoxication caused or contributed to an injury. 592 F.3d at 1200.
Because Aetna failed to conduct any other investigation to determine whether Capone’s intoxication was the cause of the accident, the court found it failed to meet its burden of proof in establishing the exclusion’s applicability.
Just as inCapone, the court in Prelutsky also found the insurer did not perform a reasonable investigation, explaining:
“The blood test and a list of physical symptoms expected at a certain blood alcohol level are the type of evidence the th Circuit concluded was required to be supplemented by a further investigation by the insurer to determine if the plaintiff’s intoxication resulted in a degradation of his physical and cognitive abilities such that the causal link can reasonably be drawn between the injury and intoxication.
“The [c]ourt concludes that [d]efendant failed to conduct a sufficient investigation that would allow the administrator to reasonably find a causal link between [p]laintiff’s alcohol consumption and his fall.”
The court rejected the insurer’s assertion that it fulfilled its obligation to investigate by engaging a physician to review the records and conduct an analysis. The court found the analysis deficient since it suffered from the same defect as Aetna’s investigation in Capone.
The court pointed out that just because treatises may suggest certain physical symptoms could occur as a result of alcohol intoxication does not mean they did. The court was also unsympathetic to the insurer’s argument that since the accident was unwitnessed, it was precluded from conducting an investigation.
The court remarked: “Defendant still is required to develop sufficient facts to show some causal link between [p]laintiff’s intoxication and his injury, in order to show the injury was ‘related to’ the intoxication.”
The court buttressed its conclusion with decisions from other jurisdictions that similarly found that causation may not be proven solely by establishing findings of blood alcohol levels along with providing a generic list of alcohol’s effects.
The court observed that the defendant in this case produced nothing more than the same, while the plaintiff presented an alternate, plausible theory as to the cause of the fall. Hence, the court found the insurer’s rejection of the claim de novo wrong.
The court then reached the same conclusion under a deferential standard based onCapone as well since the insufficient investigation failed to show the cause of Prelutsky’s fall. Hence, the court determined the defendant’s conclusion was arbitrary and capricious.
The court’s ruling was generous to the plaintiff, but reasonable as well since the defendant failed to produce proof establishing a relationship between Prelutsky’s apparent alcohol consumption and his accident. The court gave numerous examples from other cases where courts had determined that there was no showing that intoxication caused the accidents in question.
Without any witnesses to show that the plaintiff’s movements and balance were affected by alcohol, the court gave Prelutsky the benefit of the doubt that his fall could just as easily have been due to tripping over his ski pants. And without any evidence rebutting that reasonable alternative explanation, the insurance company failed to meet its burden of proving the applicability of the exclusion.
It also goes to show that while discretionary authority in adjudicating ERISA benefit claims is broad, such authority does not grant the power to speculate as to causation.
This article was initially published in the Chicago Daily Law Bulletin.