Deborah Firman v. Beacon Construction Co., Inc.

Case: 11-20451 Document: 00511887863 Page: 1 Date Filed: 06/15/2012
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
June 15, 2012
No. 11-20451 Lyle W. Cayce
Clerk
DEBORAH FIRMAN,
Plaintiff - Appellee
v.
LIFE INSURANCE COMPANY OF NORTH AMERICA,
Defendant - Appellant
Appeal from the United States District Court
for the Southern District of Texas
Before JOLLY, DeMOSS, and STEWART, Circuit Judges.
PER CURIAM:
In this ERISA case, the Life Insurance Company of North America (LINA)
appeals the decision of the district court holding that LINA abused its discretion
in its denial of benefits to the appellee, Deborah Firman. We have carefully
reviewed the district court’s opinion, heard oral arguments, and considered the
arguments in the parties’ briefs; and we are convinced that the district court
correctly applied the law to the relevant facts and reached the appropriate legal
conclusions. We emphasize the district court’s holding that the common law
definition of “accident” adopted in Todd v. AIG Life Insurance Co., 47 F.3d 1448,
1456 (5th Cir. 1995), is controlling in all ERISA accidental death and
dismemberment plans where the term “accident” is undefined, irrespective of
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No. 11-20451
whether the plan administrator is given discretion to interpret the plan. See
generally, Stamp v. Metro. Life Ins. Co., 531 F.3d 84, 89 (1st Cir. 2008) (applying
an ERISA common law definition to the term “accident,” when the plan
administrator is given discretion to interpret the plan). We therefore adopt the
clear and well-reasoned opinion of the district court, a copy of which we attach
hereto, as the opinion of this Court.
AFFIRMED.
2
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No. 11-20451
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
DEBORAH FIRMAN, §
§
Plaintiff, §
§
v. § CIVIL ACTION NO. H-09-3785
§
BECON CONSTRUCTION COMPANY, §
INC., BECON PERSONAL ACCIDENT §
INSURANCE PLAN/502,1 and §
LIFE INSURANCE COMPANY OF §
NORTH AMERICA, §
§
Defendants. §
MEMORANDUM AND ORDER
Pending are Defendants’ Motion for Summary Judgment (Document
No. 23) and the Cross Motion for Summary Judgment of Plaintiff
Deborah Firman (Document No. 53). After having considered the
motions, responses, the applicable law, and the administrative
record, the Court concludes as follows.
I. Background
1
Plaintiff originally named Becon Group Life and Insurance Plans
054 & 052, and the correct name is hereby substituted. See Footnote 3
below.
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Plaintiff Deborah Firman claims, pursuant to ERISA
§ 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), that Defendant Life
Insurance Company of North America (“LINA”)2 wrongly denied her the
benefits of her common-law husband’s ERISA-governed Group Accident
Policies. Her husband, Gilberto Espinoza, an employee of Houston-
based Defendant Becon Construction Company, Inc. (“Becon”),
participated in two accidental death and dismemberment policies
under the Becon Personal Accident Insurance Plan/502 (the “Plan”)3:
Group Accident Policy OK 826455 issued to Becon by LINA and LINA
Voluntary Personal Accident Insurance Group Policy OK 822833
(together, the “Policies”),4 both of which named Plaintiff as the
beneficiary.5 Becon was the ERISA Plan sponsor and administrator
under the plan,6 but designated LINA as the claims administrator,7
2
LINA is a CIGNA company; hence, some portions of the
administrative record refer to LINA as CIGNA, or contain CIGNA headers.
See Document No. 23 at 8, Document No. 48 at 7. Because the parties do
not treat CIGNA as separate from LINA, the Court for simplicity will use
only the initials LINA.
3
Defendants assert, and Plaintiff does not contest, that the
defendant Plan was improperly named in the Complaint as “Becon Group Life
Insurance Plan 052” and that Becon Group Life Insurance Plan 054 was
named in error. See Document No. 23 at 1.
4
Document No. 1 at 3 (Orig. Cmplt.); Document No. 23, ex. A at 55,
71, 246-296 [hereinafter “Admin. Record”].
5
Admin. Record at 172-73.
6
Id. at 55, 71.
7
Id. at 40, 68.
4
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and both policies conferred upon LINA “full discretionary authority
to administer and interpret” both policies.8
Both Policies state that benefits will be paid for “loss from
bodily injuries . . . caused by an accident which happens while an
insured is covered by this policy.”9 Neither policy, however,
contains a definition of the term “accident.”
A. Insured’s Death
Espinoza died in a single-vehicle crash in Kentucky on
September 20, 2008. His blood and urine alcohol content were 0.20
percent and 0.35 percent, respectively, at the time of his death,10
and the investigating officer reported a “strong odor of alcohol”
and “an open container of cold Budlight Beer inside the vehicle”
upon his arrival.11 According to the officer’s report, Espinoza’s
truck veered off the roadway to the right upon entering a left
curve; Espinoza overcorrected, sending the truck over the road onto
the left shoulder, where it rolled over.12 Espinoza was not wearing
a seat belt, and he was partially ejected out of the passenger-side
8
Id. at 54, 71. It is uncontested that the Plan’s Summary Plan
Description confers discretion upon LINA. See Document No. 1 at 7 (Orig.
Cmplt.); Document No. 23 at 4 (LINA).
9
Admin. Record at 242, 279.
10
Id. at 181, 222.
11
Id. at 217.
12
Id.5
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window and crushed by the vehicle.13 The crash occurred shortly
after noon in clear weather and dry road conditions.14 The medical
examiner who performed Espinoza’s autopsy opined that the cause of
death was “[m]ultiple blunt force injuries,” and marked the death
as an “Accident,”15 which was also reflected on Espinoza’s death
certificate.16
B. LINA’s Investigation and Denial of Benefits
Plaintiff made a claim for benefits under the Policies, which
LINA received on December 4, 2008.17 It reviewed Plaintiff’s claim,
Espinoza’s death certificate, the police report, the toxicology
report, the medical report, and the Policies, then on December 23,
2008, informed Plaintiff that the claim was not covered because it
was not an “accident.”18 LINA interpreted “accident” in the
Policies to mean “a sudden, unforeseeable event,”19 and stated that
Espinoza “would have been aware of the risks involved in operating
his vehicle while under the influence” because “every state in the
13
Id. at 115, 217.
14
Id. at 216.
15
Id. at 229.
16
Id. at 232.
17
Id. at 230.
18
Id. at 207-08
19
Id. at 208.
6
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nation has criminalized drunk driving,” and therefore “[a]ll
licensed motorists throughout the United States are on notice, by
operation of law, of the state-declared prohibitions against drunk
driving and its consequences.”20 The letter stated that Espinoza
had an “alcohol level of 0.35%,” which it asserted was “more than
four times the maximum level of alcohol in which it is legal to
operate a motor vehicle in the state of Kentucky.”21 Because
Espinoza “would have been aware of the risks involved in operating
his vehicle while under the influence, his death was a foreseeable
result of his actions and thus not an accident.”22
LINA also relied upon the “self-inflicted injury” exclusion in
the Policies as a reason for denial. It noted that, by drinking
and driving, Espinoza “placed his life and the lives of others in
jeopardy” because “[i]t is commonly known that driving while
intoxicated may result in death or bodily harm, as intoxication can
lead to impaired judgment and decreased reflexes.”23 His death was
20
Id. at 208-09.
21
Id. at 208. The toxicology report reviewed at this stage
apparently contained only Espinoza’s urine alcohol content, 0.35 percent,
but not his blood alcohol content, which was 0.20. See id. at 222; cf.
id. at 181. LINA therefore erroneously compared Espinoza’s urine alcohol
content to Kentucky’s blood alcohol limit.
22
Id. at 209.
23
Id.7
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therefore “a result of intentionally self-inflicted injuries,” and
was excluded by the Policies.24
C. Plaintiff’s Appeal
Plaintiff retained counsel and appealed LINA’s decision in
January 2009.25 Her letter of appeal also advised LINA to consider
it “as notice of her claim to pursue litigation, damages, statutory
penalties, and attorney fees if this claim is not immediately
resolved.”26 Her counsel pointed out that LINA’s denial letter
improperly compared Espinoza’s urine alcohol content to Kentucky’s
legal blood alcohol limit for driving under the influence,27 and
subsequently submitted additional information consisting of
affidavits of the investigating officer and medical examiner.28
The investigating officer asserted that he believed the curve
on the road was dangerous for someone not familiar with the area,
noting that he had investigated numerous accidents at the site.29
He further stated that, based on his investigation, there was no
evidence that Espinoza intentionally caused the accident, knew it
24
Id.25
Id. at 160.
26
Id. at 161.
27
Id.28
Id. at 112-115, 122-23.
29
Id. at 114-115.
8
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would occur, or reasonably could have anticipated his death.30 The
medical examiner similarly found no evidence that Espinoza intended
his death, nor that he reasonably could have anticipated it,
because “‘driving under the influence’ does not naturally and
probably lead to the type of injuries” that resulted in his death.31
Plaintiff’s counsel also submitted Texas and Kentucky state
case law interpreting accidental death insurance policies in the
context of alcohol-related automobile crashes, concluding that
under the law of either state, Espinoza’s crash would be considered
an “accident” under the Policies.32
In response to these submissions, LINA informed Plaintiff that
it was conducting a “home office review,” which was “needed in
order to interpret the documents we have received as they relate to
the provision of this policy.”33 The claims administrator assigned
to the appeal forwarded Plaintiff’s contentions to LINA’s in-house
counsel,34 who responded with a five-page memo labeled “PRIVILEGED
& CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION.”35 The memo opined
that Plaintiff’s relied-upon state law would be inapplicable to the
30
Id. at 115.
31
Id. at 122.
32
Id. at 103-06.
33
Id. at 101.
34
Id. at 75-76.
35
Id. at 300 (emphasis in original).
9
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interpretation of an ERISA policy governed exclusively by federal
law: “The standard that claimant advances - one of natural and
probable consequences - is not the standard utilized by federal
courts applying the common law of ERISA.”36 It then noted the
absence of Fifth Circuit authority regarding “whether an ERISA
insured’s death that occurs while driving when intoxicated is an
accident in the context of [an] accidental death benefit plan,” and
looked to decisions by the Fourth, Sixth, and Seventh Circuit
Courts of Appeal as authority that, if LINA had discretion to make
determinations under the Plan, it would not abuse that discretion
by concluding that Espinoza’s death was not an “accident” because
“a reasonable person would foresee the likelihood of death or
serious injury as a result of driving while intoxicated.”37 The
memo also stated that the officer’s and medical examiner’s
affidavits were not persuasive, because they were based not “on the
facts of the incident, but on their personal view of whether it was
natural and probable that Mr. Espinoza could not reasonably have
foreseen his death.”38
LINA issued a letter to Plaintiff denying her appeal because:
36
Id. at 302.
37
Id. at 302-04 (citing and discussing Lennon v. Metro. Life Ins.
Co., 504 F.3d 617 (6th Cir. 2007); Eckelberry v. ReliaStar Life Ins. Co.,
469 F.3d 340 (4th Cir. 2006); Cozzie v. Metro. Life Ins. Co., 140 F.3d
1104 (7th Cir. 1998)).
38
Admin. Record at 302.
10
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Injury or death resulting from driving under the
influence of alcohol is considered foreseeable and is not
covered by the provisions of [the Policies]. Driving
when intoxicated precludes a finding that a death is
Accidental. As mentioned previously, the policy defini-
tion of a Covered Accident requires that a loss not be
foreseeable.39
In the letter, LINA again erroneously stated that Espinoza’s “blood
alcohol concentration was 0.35%,” which it again asserted was “more
than four times the threshold for presumed intoxication while
driving in the state of Kentucky.”40 Finally, the letter advised
Plaintiff that she had exhausted all levels of administrative
appeal.41
Pending are cross-motions for summary judgment. Plaintiff
asserts that LINA abused its discretion in denying her benefits,
and further asserts that its denial was procedurally improper due
to LINA’s failure to disclose its in-house counsel’s memo sooner.
Defendants seek dismissal of all claims.
II. Legal Standards
A. Summary Judgment Standard
39
Id. at 98.
40
Id.41
Id. at 99.
11
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Rule 56(c) provides that summary judgment “should be rendered
if the pleadings, the discovery and disclosure materials on file,
and any affidavits show that there is no genuine issue as to any
material fact and that the movant is entitled to judgment as a
matter of law.” FED. R. CIV. P. 56(c).42 The moving party must
“demonstrate the absence of a genuine issue of material fact.”
Celotex Corp. v. Catrett, 106 S. Ct. 2548, 2553 (1986).
Once the movant carries this burden, the burden shifts to the
nonmovant to show that summary judgment should not be granted.
Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th
Cir. 1998). A party opposing a properly supported motion for
summary judgment may not rest upon mere allegations or denials in
a pleading, and unsubstantiated assertions that a fact issue exists
will not suffice. Id. “[T]he nonmoving party must set forth
specific facts showing the existence of a ‘genuine’ issue
concerning every essential component of its case.” Id.In considering a motion for summary judgment, the district
court must view the evidence “through the prism of the substantive
evidentiary burden.” Anderson v. Liberty Lobby, Inc., 106 S. Ct.
42Rule 56 was amended effective December 1, 2010 to state, in
relevant part, that “[t]he court shall grant summary judgment if the
movant shows that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.” FED. R. CIV. P.
56(c) (effective Dec. 1, 2010). While Defendants’ motion was filed prior
to the effective date of the new Rule 56, Plaintiff filed her motion
after the amendments. Nonetheless, the amendments are meant only to
“make the procedures more consistent with those already used in many
courts,” and “[t]he standard for granting summary judgment remains
unchanged.” Id., cmt. 2010 Amendments.
12
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2505, 2513 (1986). All justifiable inferences to be drawn from the
underlying facts must be viewed in the light most favorable to the
nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 106 S. Ct. 1348, 1356 (1986). “If the record, viewed in
this light, could not lead a rational trier of fact to find” for
the nonmovant, then summary judgment is proper. Kelley v. Price-
Macemon, Inc., 992 F.2d 1408, 1413 (5th Cir. 1993). On the other
hand, if “the factfinder could reasonably find in [the nonmovant’s]
favor, then summary judgment is improper.” Id. Even if the stan-
dards of Rule 56 are met, a court has discretion to deny a motion
for summary judgment if it believes that “the better course would
be to proceed to a full trial.” Anderson, 106 S. Ct. at 2513.
B. ERISA Standard of Review
ERISA confers jurisdiction on federal courts to review benefit
determinations by fiduciaries or plan administrators. See 29
U.S.C. § 1132(a)(1)(B). A plan claims administrator makes two
general decisions when deciding whether to pay benefits:
(1) finding the facts underlying the claim and (2) determining
“whether those facts constitute a claim to be honored under the
terms of the plan.” Schadler v. Anthem Life Ins. Co., 147 F.3d
388, 394 (5th Cir. 1998) (quoting Pierre v. Conn. Gen. Life Ins.
Co./Life Ins. Co. of N. Am., 932 F.2d 1552, 1557 (5th Cir. 1991))
(emphasis in original). The administrator’s first decision, its
13
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fact finding, is always reviewed for abuse of discretion. Wade v.
Hewlett-Packard Dev. Co. LP Short Term Disability Plan, 493 F.3d
533, 537 (5th Cir. 2007). The second determination, the
administrator’s interpretation of the plan, is typically reviewed
de novo, “[b]ut where, as here, a plan expressly confers discretion
on the plan administrator to construe the plan’s terms, the
administrator’s construction is reviewed for abuse of discretion.”
Id. at 537-38 (internal footnote omitted); see also Firestone Tire
& Rubber Co. v. Bruch, 109 S. Ct. 948, 956-57 (1989). Because the
parties agree that the Plan’s Summary Plan Description conferred
discretionary authority upon LINA,43 both of its determinations are
appropriately reviewed for an abuse of discretion.
When reviewing the administrator’s second decision--
interpretation and application of the plan language--for an abuse
of discretion, the Fifth Circuit applies a two-step inquiry. Stone
v. UNOCAL Termination Allowance Plan, 570 F.3d 252, 257 (5th Cir.
2009). First, the court examines whether the determination was
legally correct; if so, there can be no abuse of discretion. Id.If not legally correct, then the court proceeds to step two to
decide whether the determination was an abuse of discretion. Id.An abuse of discretion occurs when “the decision is not based
on evidence, even if disputable, that clearly supports the basis
for its denial.” Holland v. Int’l Paper Co. Retirement Plan, 576
43
See supra n.7.
14
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F.3d 240, 246 (5th Cir. 2009) (internal quotation marks and
citation omitted). Such an abuse occurs “only where the plan
administrator acted arbitrarily or capriciously,” and a decision is
arbitrary when it is made “without a rational connection between
the known facts and the decision or between the found facts and the
evidence.” Id. (citing Meditrust Fin. Servs. Corp. v. Sterling
Chems., Inc., 168 F.3d 211, 214-15 (5th Cir. 1999)) (internal
quotation marks omitted). The decision need only “fall somewhere
on a continuum of reasonableness--even if on the low end.” Corry
v. Liberty Life Assur. Co. of Boston, 499 F.3d 389, 398 (5th Cir.
2007) (quoting Vega v. Nat’l Life Ins. Servs., Inc., 188 F.3d 287,
297 (5th Cir. 1999) (en banc), abrogated on other grounds by Metro.
Life Ins. Co. v. Glenn, 128 S. Ct. 2343 (2008)). “Although we
generally decide abuse of discretion based upon the information
known to the administrator at the time he made the decision, the
administrator can abuse his discretion if he fails to obtain the
necessary information.” Salley v. E.I. DuPont de Nemours & Co.,
966 F.2d 1011, 1015 (5th Cir. 1992).
In this case LINA operates under a conflict of interest; it is
uncontested both that LINA has discretionary authority to make
claims decisions and that it is responsible for paying benefits
under the Plan.44 See Glenn, 128 S. Ct. at 2348 (2008). Although
the presence of a conflict is not determinative, and does not
44
See Document No. 48 at 5.
15
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permit converting the “abuse of discretion” review into a more
onerous standard of review, it is properly considered as a factor
in the overall analysis of LINA’s denial of benefits. See Glenn,
128 S. Ct. at 2350-52 (2008); Holland, 576 F.3d at 247-48 n.3.45
III. Discussion
For support of LINA’s denial of benefits, Defendants rely on
Sanchez v. Life Insurance Co. of North America and Davis v. Life
Insurance Co. of North America, two unpublished Fifth Circuit
decisions upholding LINA’s denial of benefits where the insureds
died in single-car crashes when driving while intoxicated.
Sanchez, 393 F. App’x 229 (5th Cir. 2010) (unpublished op.); Davis,
379 F. App’x 393 (5th Cir. 2010) (unpublished op.). In both of
those cases, however, LINA’s policies each defined “accident” as
“[a] sudden, unforeseeable, external event.” Sanchez, 393 F. App’x
at 233; Davis, 379 F. App’x at 395-96. In sharp contrast to those
cases, neither of the Policies nor the Plan in this case contains
either that definition or any other definition of “accident.”
Thus, this case requires consideration of a similar but distinctly
different question, namely, whether LINA abused its discretion in
determining that Espinoza’s death was not an “accident” under a
45
Plaintiff points to eight other cases where LINA has denied
benefits, and asserts that it has obtained a potential gain of $2,867,000
from those denials and the denial presently at issue. Plaintiff,
however, fails to point to any evidence that LINA’s conflicts in the
prior cases influenced LINA’s benefit decisions.
16
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policy written by LINA without inclusion of any definition of the
term “accident.”
While neither Accident Policy defines “accident,” the Policies
do exclude coverage for injuries from certain activities. These
include:
• Intentionally self-inflicted injuries
• Travel or flight if the insured is a pilot or crew
member
• Hang-gliding
• Parachuting (except for self-preservation), and
• Commission of a felony by the insured.46
Neither Policy excludes coverage for injury when driving an
automobile while intoxicated.47
LINA in its claim administration used essentially the same
definition for “accident” that is written into some of its
accidental death policies--such as those in Sanchez and Davis--but
which is not found in Espinoza’s Policies, namely “a sudden,
46
Admin. Record at 244, 281.
47
The Sixth Circuit in a case similar to this stated the obvious:
The solution for insurance companies . . . is simple:
add an express exclusion in policies covering accidental
injuries for driving while under the influence of
alcohol, or for any other risky activity that the
company wishes to exclude. Policyholders would thus be
able to form reasonable expectations about what type of
coverage they are purchasing without having to make
sense of conflicting bodies of caselaw that deal with
obscure issues of contractual interpretation.
Kovach v. Zurich American Ins. Co., 587 F.3d 323, 338 (6th Cir. 2009).
17
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unforeseeable event.”48 Because Espinoza “would have been aware of
the risks involved in operating his vehicle while under the
influence, his death was a foreseeable result of his actions and
thus not an accident.”49 LINA denied Plaintiff’s appeal for the
same reason, and further because “[d]riving when intoxicated
precludes a finding that a death is Accidental.”50 In making that
decision, LINA gave a legally incorrect definition to the term
“accident” and, moreover, abused its discretion by applying a per
se rule that death resulting from driving while intoxicated is
never an accident, despite the absence of a policy exclusion so
stating.
A. Legally Incorrect Interpretation
Three factors bear upon whether an interpretation is legally
correct: “(1) whether the administrator has given the plan a
uniform construction, (2) whether the interpretation is consistent
with a fair reading of the plan, and (3) any unanticipated costs
resulting from different interpretations of the plan.” Stone, 570
F.3d at 258 (quoting Crowell v. Shell Oil Co., 541 F.3d 295, 312
48
Admin. Record at 208.
49
Id. at 209.
50
Id. at 98.
18
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(5th Cir. 2008)).51 The “most important” of these factors “is
whether the administrator’s interpretation was consistent with a
fair reading of the plan.” Id. (citing Crowell, 541 F.3d at 313).
Although LINA has consistently interpreted its accident
policies--whether or not they define “accident”--to exclude from
coverage drunk driving deaths,52 its consistency does not save its
interpretation in this case because it is not a fair reading of
Espinoza’s Policies in which “accident” is not a defined term.
LINA’s interpretation of the term “accident,” in fact, is wholly
inconsistent with the definition given that term by federal common
law in the Fifth Circuit.
Writing for the Fifth Circuit in Todd v. AIG Life Insurance
Co., Justice Byron White held that it was appropriate for the
district court to conclude that:
[F]or death under an accidental death policy to be deemed
an accident, it must be determined (1) that the deceased
had a subjective expectation of survival, and (2) that
such expectation was objectively reasonable, which it is
if death is not substantially certain to result from the
insured’s conduct.
51
As neither party presents substantive argument on the third
factor, it will not be addressed. See id. at 258 n.4.
52
See, e.g., Sanchez, 393 F. App’x at 230-31; Davis, 379 F. App’x
at 394-95; Moore v. Life Ins. Co. of N. Am., 708 F. Supp. 2d 597, 609-10
(N.D.W. Va. 2010); Danouvong ex rel. Estate of Danouvong v. Life Ins. Co.
of N. Am., 659 F. Supp. 2d 318, 324-25 (D. Conn. 2009); McGillivray v.
Life Ins. Co. of N. Am., 519 F. Supp. 2d 157, 162-63 (D. Mass. 2007).
19
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47 F.3d 1448, 1456 (5th Cir. 1995). The Fifth Circuit has also
phrased the test in an alternative manner: “whether 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.” Schadler v. Anthem Life
Ins. Co. 147 F.3d 388, 397 n.10 (5th Cir. 1998) (quoting Wickman v.
Nw. Nat’l Ins. Co., 908 F.2d 1077, 1088 (1st Cir. 1990)). Both
cases demonstrate the Fifth Circuit’s acceptance of the Wickman
standard, as Judge Sarah Vance observed in her analysis of the
circuit’s precedents in Carter v. Sun Life Assur. Co., No. 05-2214,
2006 WL 1328821, at *6, *5-6 (E.D. La. May 11, 2006) (“[W]hile the
Fifth Circuit has never squarely applied all three Wickman
determinations to the same case, the Wickman approach is followed
in this circuit and is the standard by which an administrator’s
determination is to be measured.”).
The Wickman analysis requires that for a death to be
considered “accidental,” the insured must have had the subjective
expectation of survival, and that expectation must have been
objectively reasonable “from the perspective of the insured,
allowing the insured a great deal of latitude and taking into
account the insured’s personal characteristics and experiences.”
908 F.2d at 1088. In the more typical case where there is
insufficient evidence of the insured’s actual expectations, a
purely objective analysis is undertaken as “a good proxy for actual
20
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expectation”: the death is not 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.” Id.LINA’s interpretation eschews the Wickman approach to defining
accident, and is therefore legally incorrect. In Wickman, the
starting point was the actual expectation of the insured, limited
only by excluding “patently unreasonable” expectations from the
definition of “accident,” which equates to situations where death
or serious injury is “highly likely.” This compares favorably to
the dictionary definition of “accident”: “an unforeseen and
unplanned event or circumstance,” or “lack of intention or
necessity.” WEBSTER’S NINTH NEW COLLEGIATE DICTIONARY at 49 (1990).
LINA’s interpretation, on the other hand, does not focus the
inquiry on what is actually expected or foreseen by the insured,
tempered only by patently unreasonable expectations, but rather, on
what is foreseeable--that is, capable of being foreseen. Further,
it does not ground this interpretation in the alternative objective
analysis of Wickman, asking from the perspective of the insured
whether death or serious injury is “highly likely” to occur, not
merely asking whether death or serious injury is “foreseeable.” In
short, LINA’s interpretation of “accident” excludes from its bounds
not just the “patently unreasonable” expectation, Wickman, 908 F.2d
at 1087, but anything that is merely “foreseeable.” This goes well
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beyond the limited exception to an insured’s actual expectations
(or a “proxy” thereof) established by Wickman and followed by the
Fifth Circuit in Todd and Schadler.53 Indeed, there is much
persuasive authority pointing to a variety of examples that are
commonly considered “accidents” but which would be excluded from
53
See Todd, 47 F.3d at 1456 (noting the inapplicability of cases
cited by the plan administrator to support its interpretation of
“accident,” because “[u]nder those cases, however, it need be only
foreseeable that death ‘could’ result, not that death was ‘highly
likely.’”); see also LaAsmar v. Phelps Dodge Corp. Life, Accidental Death
& Dismemberment and Dependent Life Ins. Plan, 605 F.3d 789, 809 (10th
Cir. 2010) (under de novo review, rejecting the plan administrator’s
proposed interpretation of “accident” as excluding a “reasonably
foreseeable” injury because, in part, Wickman “did not apply a reasonable
foreseeability test, but instead asked whether the injuries or loss at
issue was ‘highly likely to occur’”); Kovach v. Zurich Am. Ins. Co., 587
F.3d 323, 336-37 (6th Cir. 2009) (noting “the varying interpretations of
the word ‘accidental’” adopted by district courts in the Sixth Circuit
alternately referencing the “reasonably foreseeable” and “highly likely”
standards, and adopting the “key holding” in Wickman--requiring an
inquiry into “whether 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”
to determine whether or not the injury was an “accident”); King v.
Hartford Life and Accident Ins. Co., 414 F.3d 994, 1002, 1003-04 (8th
Cir. 2005) (en banc) (remanding benefits decision to administrator
because the “reasonably foreseeable” standard applied in its denial
letter was not the same as the Wickman standard that it “consistently
. . . maintained in litigation” was the proper way to interpret
“accident”); see also Loberg v. Cigna Group Ins., No. 8:09CV280, 2011 WL
612059, at *6 (D. Neb. Feb. 10, 2011) (noting that King “makes clear that
a distinction between the two standards (at least in the Eighth Circuit)
exists”); McGillivray, 519 F. Supp. 2d at 165 (same); Carter, 2006 WL
1328821, at *6 (finding “unreasonable and legally incorrect” the plan
administrator’s interpretation of “accident” to exclude coverage when
injury or death is “reasonably foreseeable and . . . the natural and
probable result” of the insured’s conduct, because the difference between
that standard and Wickman “is material”).
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being so regarded if events that are merely “foreseeable” or
“reasonably foreseeable” were not considered “accidents.”54
Furthermore, LINA’s interpretation runs contrary to the
provisions of the Policies, which specifically pay an additional
10 percent of the insured’s benefits if he or she “dies as a
result of an automobile accident while wearing a properly fastened,
original, factory-installed seatbelt.”55 It is certainly
“foreseeable” that one not wearing a seatbelt--such as
Espinoza--may die in a car crash, which, by LINA’s definition,
would by itself render that person’s death not an “accident.” Yet,
the Policies specifically provide for additional coverage for an
insured who dies while wearing a seatbelt, implying that one who
does not wear a seatbelt is covered at the basic amount. See
LaAsmar, 605 F.3d at 807 (“To some degree, the language of the Plan
at issue here providing for the possibility of additional benefits
if the insured chose to wear a seat belt suggests that an insured’s
54
See, e.g., Kovach, 587 F.3d at 335-36 (crash resulting from
driving while text messaging or driving while fatigued); Lennon v. Metro.
Life Ins. Co., 504 F.3d 617, 630 (6th Cir. 2007) (Clay, J., dissenting)
(crash after driving “another hour” on a cross-country trip “after an 18
hour day behind the wheel,” or while driving 89 miles per hour in a 70
mph zone, or death or serious injury when bungee jumping); King, 414 F.3d
at 1008 (Bright, J., concurring) (falling after standing on a shaky stool
to reach something on a high shelf, electrocution of a lineman working
atop an electricity pole, a car crash resulting from speeding one’s
pregnant wife to the hospital); Sanchez v. Life Ins. Co. of N. Am., 704
F. Supp. 2d 587, 596 n.18 (W.D. Tex. 2009) (injuries resulting from
standing on a ladder, driving an automobile, playing basketball);
Danouvong, 659 F. Supp. 2d at 328 & n.6 (crash when driving a car).
55
Admin. Record at 37, 66.
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failure to take precautions against obvious dangers would not
preclude AD & D benefits under this policy.”).
In sum, LINA made a legally incorrect determination of the
undefined term “accident” as it is used in the Accident Policies
and Plan that covered Espinoza.
B. Abuse of Discretion
LINA also abused its discretion in denying benefits under the
Accident Policies without sufficient evidence in the administrative
record to support its determination and by its application of what
effectively is a per se rule that drunk driving deaths can never be
an “accident” under a policy that contains no exclusion for drunk
driving.
Unlike the instant case, Sanchez and Davis involved evidence
supporting LINA’s decision in addition to the insured’s blood
alcohol content. In Davis, the administrative record contained a
toxicologist’s findings; the Fifth Circuit therefore held that
LINA’s determination was reasonable “[c]onsidering the
toxicologist’s findings as to the effects of such severe
intoxication.” Davis, 379 F. App’x at 396. Similarly, in Sanchez,
the administrative record contained eyewitness accounts that the
insured’s vehicle “swerved sharply in the road” before rolling
over; a forensic consultant’s opinion that a person with the
insured’s blood alcohol content would have “‘poor judgment,
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increased reaction time, muscle incoordination, loss of visual
acuity, [ ] increased risk taking’ and be unable to drive safely”;
and the consultant’s citation to “volumes of references regarding
the effects of alcohol producing impairment regardless of
tolerance.” Sanchez, 393 F. App’x at 233.56
Here, on the other hand, the administrative record is entirely
devoid of any evidence--other than Espinoza’s blood alcohol content
as compared to the legal limit in Kentucky--regarding whether the
crash was foreseeable.57 In fact, LINA erroneously garbled even
this single piece of evidence: rather than comparing Espinoza’s
blood alcohol content to Kentucky’s legal limit, LINA cited his
urine alcohol concentration and compared it to Kentucky’s legal
56
Even this evidence offered only weak support of LINA’s case in
Sanchez. The Fifth Circuit noted that this constituted a “lesser amount”
of evidence “on the issue of whether or not a crash in these
circumstances was an ‘unforeseeable’ event” relative to the evidence on
causation of the crash, and also stated that “[a]dditional evidence
regarding the foreseeability of a fatal crash resulting from driving
under the influence would have strengthened LINA’s decision.” Id. at 233
& n.3.
57
Defendants request that the Court take judicial notice of a
“‘Kentucky Safety Facts” tip sheet promulgated by the Kentucky Office of
Highway Safety on its official website,” which is a “public record.”
Document No. 44 at 7. The “Safety Facts” tip sheet on a web site is not
a part of the administrative record, and does not fall within the limited
exceptions for evidence not within the administrative record that may be
considered when reviewing a plan administrator’s denial of benefits. See
Vega v. Nat’l Life Ins. Servs., Inc., 188 F.3d 287, 299 (5th Cir. 1999)
(en banc), abrogated on other grounds by Metropolitan Life Ins. Co. v.
Glenn, 128 S. Ct. 2343 (2008) (noting the limited exceptions permitting
evidence outside the administrative record: evidence “related to either
interpreting the plan,” such as “how an administrator has interpreted the
terms of the plan in other instances,” and evidence “explaining medical
terms and procedures relating to the claim”).
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limit for blood alcohol concentration. LINA repeated this error in
its appeal denial letter, after Plaintiff’s attorney had
specifically pointed out LINA’s error in its first denial letter.
Moreover, instead of considering any other facts specific to the
case, LINA effectively adopted a stance that a crash resulting from
any blood alcohol content over the legal limit is per se
foreseeable, and therefore per se not an “accident.” For instance,
its internal notes reveal that LINA presumed Espinoza’s awareness
of the dangers of drunk driving (and therefore the foreseeability
of his own death resulting therefrom) unless something in the
administrative record indicated otherwise:
There is nothing in file to support fact that Mr.
Espinoza was not aware of the risks involved in operating
his vehicle while intoxicated. Therefore, his death was
a foreseeable result of his actions and thus not an
accident.58
As already observed, LINA’s initial denial letter cited only to
Espinoza’s urine alcohol content, and otherwise asserted that
“every state in the nation has criminalized drunk driving,” which
therefore put “[a]ll licensed motorists throughout the United
States . . . on notice, by operation of law, of the state-declared
prohibitions against drunk driving and its consequences.”59
58
Admin. Record at 76.
59
Id. at 209.
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Finally, LINA’s denial of Plaintiff’s appeal flatly states the per
se rule it applied in this case:
Having reviewed the available record, indications are
that Mr. Espinoza was driving under the influence of
alcohol at the time of this motor vehicle crash. This
resulted in his death. Injury or death resulting from
driving under the influence of alcohol is considered
foreseeable and is not covered by the provisions of [the
Policies]. Driving when intoxicated precludes a finding
that a death is Accidental.60
No circuit court considering drunk driving crashes has
approved a claims administrator’s use of a per se rule in the
context of ERISA accidental death policies. To the contrary, the
courts consistently have expressed disapprobation for the use of
such a rule. See LaAsmar v. Phelps Dodge Corp. Life, Accidental
Death & Dismemberment and Dependent Life Ins. Plan, 605 F.3d 789,
802 (10th Cir. 2010) (noting that “[c]ourts have consistently
rejected such a per se rule, as would we,” and collecting cases);
see also Stamp v. Metro. Life Ins. Co., 531 F.3d 84, 91 & n.9 (1st
Cir.), cert. denied, 129 S. Ct. 636 (2008) (rejecting “categorical
determination that all alcohol-related deaths are per se accidental
or nonaccidental” by noting that “we have been careful to explain
that the proper approach is fact-specific and that the decedent’s
degree of intoxication is particularly probative,” and further
reviewing the evidence relied upon by the administrator--including
60
Id. at 98 (emphasis added).
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an internal medical department report, online resources, and a
university police handbook--that constituted a “well-developed
record of the severe impairment that would be expected from Mr.
Stamp’s level of intoxication”); Lennon v. Metro. Life Ins. Co.,
504 F.3d 617, 619, 622, 624 (6th Cir. 2007) (noting that under the
particular facts, including the insured’s “extremely high blood-
alcohol content” of 0.321, the administrator reasonably determined
that the insured’s death was not an accident, but declining to
reach “the question of whether a fiduciary can reasonably deny
‘accidental’ benefits for injury that results from any negligent or
any illegal behavior, or from driving while only somewhat
impaired”);61 accord Eckelberry v. Reliastar Life Ins. Co., 469 F.3d
340, 345 (4th Cir. 2006); Cozzie v. Metro. Life Ins. Co., 140 F.3d
1104, 1106, 1110 (7th Cir. 1998).62
61
In a later case, the Sixth Circuit characterized the Lennon
majority as refusing “to impose a blanket standard allowing insurers to
consider injuries resulting from any wreck in which the driver is
intoxicated as nonaccidental.” Kovach v. Zurich Am. Ins. Co., 587 F.3d
323, 331 (6th Cir. 2009). Indeed, Kovach distinguished Lennon on its
facts, including the “most obvious disparity” between the degree of
intoxication (0.321 versus 0.148 blood alcohol content), and concluded
that the administrator abused its discretion. Id. at 331, 338.
62
District courts have followed the same reasoning. See, e.g.,
Danouvong, 659 F. Supp. 2d at 326 (holding that the plan administrator
abused its discretion where it “concluded that the crash was foreseeable
from the fact that Mr. Danouvong’s BAC was 0.26 percent and its ipse
dixit pronouncements, without citation either to the record or to
authority, that ‘[t]he hazards of driving while intoxicated are widely
known and publicized’ and that ‘[i]t is also well-known in the general
public that driving while intoxicated could result in bodily harm or
death’”); Loberg v. Cigna Group Ins., No. 8:09CV280, 2011 WL 612059, at
*7 (D. Neb. Feb. 10, 2011) (“Plan administrators may not utilize a
categorical rule that alcohol-related crashes are not accidents.”).
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The above cases are persuasive, particularly in light of the
Fifth Circuit’s instructions that “the administrator can abuse his
discretion if he fails to obtain the necessary information,”
Salley, 966 F.2d at 1015, and that an administrator abuses its
discretion if its “decision is not based on evidence, even if
disputable, that clearly supports the basis for its denial.”
Holland, 576 F.3d at 246 (internal quotation marks and citation
omitted). Accordingly, LINA abused its discretion in determining
that Espinoza’s death was not an “accident.”
C. Award
For the foregoing reasons, Plaintiff is entitled to an award
of the Policies’ benefits due under the Plan, plus interest.63
Defendants have asked for remand to LINA for further review if the
Court “determines the claims decision was not procedurally
correct.”64 That is not the Court’s decision; to the contrary, this
decision is based on LINA’s abuse of its discretion, not on
63
Although ERISA does not expressly provide for an award of
prejudgment interest to prevailing beneficiaries, it is within the
Court’s discretion to award prejudgment interest here because that remedy
is not precluded by ERISA and in fact furthers “the congressional
policies embodied in the act.” Hansen v. Cont’l Ins. Co., 940 F.2d 971,
984 n.11 (5th Cir. 1991); see also Roig v. Ltd. Long Term Disability
Program, No. CIV.A.99-2460, 2000 WL 1146522, at *15 (E.D. La. Aug. 4,
2000) (Vance, J.). An award of prejudgment interest is appropriate due
to Plaintiff’s loss of use of insurance proceeds to which she was
entitled, and also to encourage plan administrators to resolve disputes
quickly and fairly without recourse to litigation. See Roig, 2000 WL
1146522, at *15 (holding same).
64
Document No. 54 at 15.
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a procedural defect. “If an administrator has made a decision
denying benefits when the record does not support such a denial,
the court may, upon finding an abuse of discretion on the part of
the administrator, award the amount due on the claim and attorneys’
fees.” Vega v. Nat’l Life Ins. Servs., Inc., 188 F.3d 287, 302
(5th Cir. 1999) (en banc), abrogated on other grounds by Metro.
Life Ins. Co. v. Glenn, 128 S. Ct. 2343 (2008). While remand may
be justified in “some special circumstances,” the Fifth Circuit in
Vega “decline[d] to remand to the administrator to allow him to
make a more complete record” on whether the insured’s misrepre-
sentation in seeking coverage was “material,” where the record
already developed contained insufficient evidence to support a
conclusion of materiality. Id. at 302 n.13. The court sought “to
encourage each of the parties to make its record before the case
comes to federal court,” and also noted that “it would be unfair to
allow the administrator greater opportunity at making a record than
the claimant enjoys.” Id.Because LINA twice had the opportunity directly to address the
only question at issue--whether Espinoza’s death was an “accident”
under the Policies--and because both times it applied a legally
incorrect definition to the undefined term “accident,” and further
made decisions without sufficient evidence to support its
determination, remand is not appropriate. Cf. Schadler v. Anthem
Life Ins., 147 F.3d 388, 398 (5th Cir. 1998) (holding that remand
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was appropriate where the plan administrator’s denial was based
only upon the erroneous conclusion that the plaintiff was not
eligible for policy coverage; the administrator thus “never had
occasion to exercise any discretion to interpret the terms of the
Plan,” or to make a full development of relevant facts and a
decision thereon).
However, Plaintiff has established entitlement to an award
only from the Plan, not from all named Defendants. See 29 U.S.C.
§ 1132(d)(2) (“Any money judgment under this subchapter against an
employee benefit plan shall be enforceable only against the plan as
an entity and shall not be enforceable against any other person
unless liability against such person is established in his
individual capacity under this subchapter.”). Plaintiff’s motion
will therefore be granted with respect to the Plan, but denied as
to all other defendants.65
65
See Williams v. Cent. Cartage Co., 149 F.3d 1173, 1998 WL 412984,
at *1 (5th Cir. 1998) (unpublished op.) (“In the absence of evidence of
a breach of fiduciary duty, a judgment for the amount of benefits denied
is against an employee benefit plan . . . .” (internal footnote
omitted)). Although Plaintiff alludes to LINA’s alleged breach of
fiduciary duty in the context of arguing for greater weight to be given
to consideration of its conflict of interest, see Document No. 1 at 8,
Document No. 48 at 19, she has made no showing or argument regarding a
breach of fiduciary duty claim under ERISA, and indeed cannot in light
of her clear request for recovery of benefits wrongfully denied, a claim
under 29 U.S.C. § 1132(a)(1)(B). Document No. 1 at 8; see Rhorer v.
Raytheon Eng’rs and Constructors, Inc., 181 F.3d 634, 639 (5th Cir. 1999)
(“Accordingly, because § 1132(a)(1)(B) affords Rhorer an avenue for legal
redress, she may not simultaneously maintain her claim for breach of
fiduciary duty.” (citing and discussing Varity Corp. v. Howe, 116 S. Ct.
1065, 1077-79 (1996); Tolson v. Avondale Indus., Inc., 141 F.3d 604, 610-
11 (5th Cir. 1998))).
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Remaining to be determined are whether attorney’s fees should
be awarded to Plaintiff under 29 U.S.C. § 1132(g)(1) and whatever
remaining cause of action, if any, Plaintiff may have against the
other Defendants Becon and LINA.
IV. Order
Based on the foregoing, it is
ORDERED that Defendants’ Motion for Summary Judgment (Document
No. 23) is DENIED. It is further
ORDERED that Plaintiff Debra Firman’s Cross-Motion for Summary
Judgment (Document No. 53) is GRANTED in part, and Plaintiff Debra
Firman shall have and recover of and from Defendant Becon Personal
Accident Insurance Plan/502 the benefits payable for the accidental
death of Gilberto Espinoza under LINA Group Accident Policy
OK 826455 and LINA Voluntary Personal Accident Insurance Group
Policy OK 822833, which accidental death benefits the Court
Further, although the Fifth Circuit has held that an employer was
properly named as a defendant (thereby implying the possibility of
recovery), it did so under the specific facts where the plan had “no
meaningful existence separate from [the employer] because the Voucher
Plan is funded by the general assets of the partnership,” and where “it
was indisputably [the employer’s] decision” to deny the plaintiffs’
benefits. Musmeci v. Schwegmann Giant Super Mkts., Inc., 332 F.3d 339,
350 (5th Cir. 2003). Plaintiff has made no such showing of intertwining
between any other defendant and the Plan, and therefore has failed to
show her entitlement to summary judgment against those other defendants.
Cf. Walker v. Kimberly-Clark Corp., No. 1:08CV146-SA-JAD, 2010 WL 611007,
at *7 (N.D. Miss. Feb. 17, 2010) (dismissing a defendant upon its motion
where the plaintiff “failed to bring forth any evidence that these
entities are so intertwined that the employer is the true party in
interest”).
32
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understands from the pleadings total $210,000, plus pre-judgment
interest on these benefits from the dates they were due to be paid
until the date of Final Judgment. Plaintiff’s Cross-Motion for
Summary Judgment is otherwise DENIED with respect to Defendants
Becon Construction Company, Inc., and Life Insurance Company of
North America. It is further
ORDERED that within fourteen (14) days after the entry of this
Order the parties shall jointly provide to the Court an agreed
calculation setting forth the amount of the benefits and the pre-
judgment interest due under this Order for inclusion in the Court’s
Final Judgment. It is further
ORDERED that within fourteen (14) days after the entry of this
Order the parties’ counsel shall personally confer in a good faith
attempt to reach agreement on whether Plaintiff is entitled to
recover attorney’s fees and expenses and, if so, to reach an
agreement upon the amount of reasonable and necessary attorney’s
fees and expenses that Plaintiff is entitled to recover, if any.
The parties shall promptly advise the Court of that agreement. If
good faith efforts to reach agreement on attorney’s fees should
fail, then Plaintiff’s attorney may file his affidavit for
attorney’s fees and expenses and supporting material within twenty-
one (21) days after the date of this Order, together with a brief
showing entitlement to the same, and Defendant may file a
controverting affidavit and supporting materials, and a brief
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No. 11-20451
setting forth Defendant’s position, within ten (10) days after
having been served with Plaintiff’s affidavit and supporting
materials.
It is SO ORDERED.
The Clerk will enter this Order, providing a correct copy to
all counsel of record.
SIGNED in Houston, Texas, on this 15th day of April, 2011.
____________________________________
EWING WERLEIN, JR.
UNITED STATES DISTRICT JUDGE
34