Donaldson v. National Union Fire Insurance Co. of Pittsburgh ( 2017 )

United States Court of Appeals
For the Eighth Circuit
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No. 16-2229
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Michele Donaldson, Individually and as Special Administratrix of the Estate of
Phillip Donaldson, Deceased
lllllllllllllllllllll Plaintiff - Appellant
v.
National Union Fire Insurance Company of Pittsburgh, PA
lllllllllllllllllllll Defendant - Appellee
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Appeal from United States District Court
for the Eastern District of Arkansas - Batesville
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Submitted: January 13, 2017
Filed: July 24, 2017
[Published]
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Before COLLOTON, GRUENDER, and KELLY, Circuit Judges.
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KELLY, Circuit Judge.
While on his delivery route, Phillip Donaldson’s truck was struck by an
oncoming vehicle that crossed the center divider. Mr. Donaldson died on impact. His
wife, Michele Donaldson, filed a claim for accidental death and spousal benefits
under a Blanket Accident Insurance Policy (the Policy) issued to Mr. Donaldson’s
employer, Schwan’s Shared Services, LLC (Schwan’s), by National Union Fire
Insurance Company of Pittsburgh, Pennsylvania (National Union). National Union
denied the claim, concluding coverage was excluded under the Policy. On a
stipulated record, the district court1 upheld National Union’s denial of benefits and
dismissed the complaint. Ms. Donaldson appeals that decision, and we affirm.
I. Background
Mr. Donaldson’s accident occurred on December 11, 2013. At the time of the
accident, he was driving a Schwan’s truck on his delivery route and was undisputedly
within the scope of his employment with Schwan’s. Mr. Donaldson’s truck was
struck by an oncoming vehicle that was operated by a woman who was not employed
by Schwan’s. She was also killed in the accident.
The Donaldsons were insured under the Policy at the time of the accident. The
Policy is an employee-benefit plan governed by the Employee Retirement Income
Security Act (ERISA) that provides insureds with “needed financial security in the
event of an accidental death or accidental injury” “when traveling on business.” As
relevant, the Policy provides coverage for injuries sustained as a result of an accident
that “occurs under the circumstances described in a Hazard applicable to that person.”
After Mr. Donaldson’s death, Ms. Donaldson filed a claim under Hazard H-12,
entitled “24-Hour Accident Protection While On A Trip (Business Only).” National
Union denied the claim on the ground that coverage was excluded under Hazard H-12
because at the time of his death, Mr. Donaldson “was operating a conveyance he had
been hired to operate.” Following the denial, Ms. Donaldson exhausted her
administrative remedies and then filed suit in state court. The complaint seeks an
1
The Honorable James M. Moody, Jr., United States District Judge for the
Eastern District of Arkansas.
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accidental death benefit on behalf of Mr. Donaldson’s estate equal to ten times his
annual base earnings, or $286,000, and a spousal benefit of $50,000. National Union
removed the action to federal court. The parties filed a stipulated record and briefing
regarding the denial of coverage. The district court found National Union reasonably
interpreted the Policy language and did not abuse its discretion in denying coverage.
The court dismissed the compliant with prejudice, and Ms. Donaldson appealed.
II. Discussion
The parties agree that the abuse of discretion standard applies to National
Union’s denial of benefits because the Policy “grants the plan administrator . . .
discretion to interpret the plan and to determine eligibility for benefits.” Hampton v.
Reliance Standard Life Ins. Co., 769 F.3d 597, 600 (8th Cir. 2014). “Under this
standard of review, we must uphold [National Union]’s decision so long as it is based
on a reasonable interpretation of the [Policy] and is supported by substantial
evidence.” Id. Where, as here, “a plan administrator holds the dual role of evaluating
and paying benefits claims,” this conflict of interest should be considered “as a factor
in determining whether the plan administrator has abused its discretion.” Manning
v. Am. Republic Ins. Co., 604 F.3d 1030, 1038 (8th Cir. 2010). Because the record
in this case contains no evidence about National Union’s “claims administration
history or its efforts to ensure that claims assessment is not affected by the conflict,”
we only “give[] the conflict some weight.” Darvell v. Life Ins. Co. of N. Am., 597
F.3d 929, 934 (8th Cir. 2010).
The central issue on appeal is National Union’s interpretation of the language
in Hazard H-12. To determine if a plan administrator’s interpretation of policy terms
is reasonable, the court examines:
[1] whether their interpretation is consistent with the goals
of the Plan, [2] whether their interpretation renders any
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language of the Plan meaningless or internally inconsistent,
[3] whether their interpretation conflicts with the
substantive or procedural requirements of the ERISA
statute, [4] whether they have interpreted the words at issue
consistently, and [5] whether their interpretation is contrary
to the clear language of the Plan.
King v. Hartford Life & Accident Ins. Co., 414 F.3d 994, 999 (8th Cir. 2005) (en
banc) (quoting Finley v. Special Agents Mut. Benefit Assoc., Inc., 957 F.2d 617, 621
(8th Cir. 1992)). Though these factors “inform our analysis,” id., “[t]he dispositive
principle remains . . . that where plan fiduciaries have offered a reasonable
interpretation of disputed provisions, courts may not replace [it] with an interpretation
of their own—and therefore cannot disturb as an abuse of discretion the challenged
benefits determination.” Id. (alterations in original) (internal quotation omitted).
Hazard H-12 applies to an injury sustained by a person “1. While on the
Business of the Policyholder;2 and 2. during the course of any Trip3 . . . made by such
person.” A subsection of Hazard H-12 specifically addresses its applicability to a
person traveling on a conveyance. It states:
With respect to any period of time such Insured Person is
traveling on a conveyance during the course of any such
2
As relevant here, the Policy defines “While on the Business of the
Policyholder” as “while on assignment by or at the direction of the Policyholder for
the purpose of furthering the business of the Policyholder, but does not include any
period of time . . . while the insured is working at his or her regular place of
employment.”
3
As relevant here, the Policy defines “Trip” as “a trip taken by an Insured
which begins when the Insured leaves his or her residence or place of regular
employment for the purpose of going on the trip (whichever occurs last), and is
deemed to end when the Insured returns from the trip to his or her residence or place
of regular employment (whichever occurs first).”
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trip, Hazard H-12 applies only with respect to Injury
sustained by the person:
1. while operating or riding in or on (including getting
in or out of, or on or off of), or by being struck or
run down by any conveyance being used as a means
of land or water transportation, except:
a. any such conveyance the Insured Person has
been hired to operate or for which the Insured
Person has been hired as a crew member and
while the Insured Person is performing as an
operator or crew member on any such
conveyance; or
b. any such conveyance the Insured Person is
operating, or for which the Insured Person is
performing as a crew member, (including
getting in or out of, or on or off of) for the
transportation of passengers or property for
hire, profit or gain[.]
National Union argues that because Mr. Donaldson was hired to operate the
conveyance he was driving and was operating it at the time of the accident, the
exception in Hazard H-12(1)(a) applies and there is no coverage. Ms. Donaldson
argues that coverage is required under Hazard H-12(1) because Mr. Donaldson died
as a result of being struck by a conveyance that he had not been hired to operate and
was not operating at the time of the accident. At the time of the accident, Mr.
Donaldson was both operating a conveyance and was struck by another one. Thus,
as applied to the facts of this case, the issue is whether the language “any such
conveyance” means the exception applies if Mr. Donaldson was hired to operate any
of the conveyances involved in the accident, or whether it applies only if he was hired
to operate the conveyance that caused his injury.
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We conclude that the disputed language in Hazard H-12—“any such
conveyance”—is ambiguous as applied to Mr. Donaldson’s accident. While “any”
implies that all applicable uses of the conveyance are subject to the exception, “such”
implies a specific conveyance, namely the one that is associated with the “Injury
sustained by the person.” Therefore, it is not clear whether the exception applies to
the conveyance operated by Mr. Donaldson or the conveyance he was struck by.4
Where, as here, the terms of a plan are susceptible to multiple, reasonable
interpretations, an administrator’s choice among the reasonable interpretations is not
an abuse of discretion. See Ingram v. Terminal R.R. Ass’n of St. Louis Pension Plan
for Nonschedule Emps., 812 F.3d 628, 637 (8th Cir. 2016); Darvell, 597 F.3d at 936;
West v. Local 710, Int’l Bro. of Teamsters Pension Plan, 528 F.3d 1082, 1085–86
(8th Cir. 2008). Although Ms. Donaldson’s interpretation of Hazard H-12 is a
reasonable one, National Union’s interpretation is equally reasonable. In such
circumstances, “this Court defers to [National Union]’s interpretation of the disputed
phrase,” “even if the court would interpret the language differently as an original
matter.” Darvell, 597 F.3d at 935–36.
The remaining factors support the conclusion that National Union’s application
of the exception in Hazard H-12 was not an abuse of discretion. See Finley, 957 F.2d
at 621. As to the first factor, National Union’s interpretation accords with the goal
of the Policy to cover accidents that occur while an insured is on a business trip.
Hazard H-12 does not cover accidents that occur “while the Insured is working at his
or her regular place of employment.” It is undisputed that at the time of the accident
Mr. Donaldson was driving a Schwan’s truck as part of his regular duties delivering
products to customers. Because Mr. Donaldson was not on a business trip, but
4
Although the court can look to extrinsic evidence to determine the meaning
of ambiguous language in an ERISA plan, see Maytag Corp. v. Int’l Union, United
Auto., Aerospace & Agric. Implement Workers of Am., 687 F.3d 1076, 1084 (8th Cir.
2012), the parties here have provided no such evidence.
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instead was at his regular place of employment at the time of the accident, National
Union’s interpretation of Hazard H-12 is consistent with the goals of the Policy. Ms.
Donaldson argues, under factor two, that National Union’s interpretation renders the
language “struck . . . by” in Hazard H-12(1) meaningless. Rather than render the
language meaningless, National Union merely relies on a separate provision of
Hazard H-12(1) equally applicable to the facts of Mr. Donaldson’s accident. As to
the remaining factors three and four, we have no indication that National Union’s
interpretation contravenes ERISA’s requirements or that National Union has taken
inconsistent positions in the past.
Ms. Donaldson’s textual arguments have some force, but they do not persuade
us that the phrase “any such conveyance” is susceptible of only one reasonable
interpretation. Because the Policy gives National Union “full discretionary authority
to interpret [its] terms,” we cannot find that National Union’s interpretation of the
exception in Hazard H-12 was unreasonable. Accordingly, National Union did not
abuse its discretion in denying Ms. Donaldson’s claims for accidental death and
spousal benefits.
III. Conclusion
For the foregoing reasons, we affirm the decision of the district court.
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