Schadler v. Anthem Life Ins Co ( 2000 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 99-11395
Summary Calendar
_____________________
ANITA SCHADLER,
Plaintiff-Appellee,
versus
ANTHEM LIFE INSURANCE COMPANY;
ANTHEM BENEFIT SERVICES, INC.;
ACORDIA BENEFITS OF THE SOUTH, INC.;
ALLIED SIGNAL, INC; ALLIED SIGNAL
TECHNICAL SERVICES CORPORATION;
ALLIED SIGNAL TEAM/WHITE SANDS,
Defendants-Appellants.
_______________________________________________________
Appeals from the United States District Court for
the Northern District of Texas
(U.S.D.C. No. 3:95-CV-1044-D)
_______________________________________________________
June 28, 2000
Before REAVLEY, BARKSDALE and STEWART, Circuit Judges.
PER CURIAM:*
Appealing from the judgment against it, Anthem Life Ins. Co. contends that the
district court erred in finding that the ERISA administrator abused his discretion in
denying benefits under the Accidental Death, Dismemberment, and Loss of Sight
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should
not be published and is not precedent except under the limited circumstances set
forth in 5TH CIR. R. 47.5.4.
Insurance policy to appellee Anita Schadler. We affirm.
Anthem argues that the policy’s intentionally self-inflicted injury exclusion
precludes Shadler from recovering under the policy. The exclusion provides that “[n]o
benefits will be paid for losses caused or contributed to by . . . intentionally self-inflicted
injury.” The policy defines “injury” as “injury to the body that is sustained by accident.”
The administrator denied Schadler benefits on the grounds that “Mr. Schadler died
as a result of illicit drug use, and therefore, his death was the result of a self-inflicted
injury.” The record demonstrates that Mr. Schadler’s intentional use of illicit drugs was a
but-for cause of his death. But the record also demonstrates that Mr. Shadler did not
intend his drug use to result in death.
This case therefore turns on whether the administrator abused his discretion in
determining that Mr. Schadler’s act of drug use was an “injury” under the terms of the
policy. If his drug use was, in itself, an “injury” under the policy, then such injury was
intentional and the exclusion precludes recovery because the drug use “caused or
contributed to” Shadler’s death. If, however, the “injury” suffered was death, then the
exclusion does not apply since the uncontradicted record establishes that Mr. Schadler
did not intend this injury.
We review a plan administrator’s application of a plan’s terms to the facts for
abuse of discretion, but where, as here, the administrator has an interest in denying
coverage, we may scrutinize his conclusions more closely.1
We find that the administrator’s interpretation of the act of drug use as an “injury”
in itself under the policy was an abuse of discretion. In the context of an accidental death
1
Vega v. Nat. Life. Ins. Services, Inc., 188 F.3d 287, 297 (5th Cir. 1999)(en
banc).
2
policy, the plain meaning of “injury” is not the equivalent of the physical action. Indeed,
the policy defines injury as “an injury to the body that is sustained by accident.” In
addition, the policy contains a separate exclusion for losses “caused or contributed to by .
. . the taking of drugs . . . when done on a voluntary basis” except when the drugs are
taken on “the advice of a physician.”2 If drug use can be defined as an “injury” under the
policy, then the drug use exclusion is superfluous. The self-inflicted injury
exclusion–fairly read–therefore does not bar Schadler’s claim.
But this is not the end of the inquiry. The policy only pays benefits “for losses
that . . . are caused by Injuries [sustained] in an accident.” We must therefore determine
if Mr. Shadler’s death was the result of an accident.
As we instructed the administrator when this case was previously before us on
appeal, Mr. Schadler’s death was not the result of an accident if “a reasonable person,
with background and characteristics similar to the insured, would have viewed the injury
as highly likely to occur as a result of the insured’s intentional conduct.”3 The
administrator concluded “that a reasonable person, with background and circumstances
similar to Mr. Schadler, would have viewed the injury as highly likely to occur as a result
of an intentional act.” Both the medical examiner’s report and the testimony of Herbert
Munden, M.D., however, state that Mr. Schadler’s death was accidental under this
standard, and there is no evidence in the record to the contrary. The administrator abused
his discretion in denying benefits under the policy.
2
We previously ruled that Anthem could not rely on this exclusion to deny
benefits under the policy because it was not included in the summary plan
documents. Schadler v. Anthem Life Ins. Co., 147 F.3d 388, 393 (5th Cir. 1998).
3
Schadler, 147 F.3d at 397, n. 10.
3
Finally, Schadler requests that we remand to allow the district court to determine
whether attorney’s fees are appropriate as to the appeal only. We decline to reach that
issue because the appellee has not brought up a record of the district court’s order
denying attorney’s fees and has not petitioned for attorney’s fees under 5th Cir. R.
47.8.1.
AFFIRMED.
4