Fiffick v. Econ-O-Check Corp.

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS January 7, 2004
FOR THE FIFTH CIRCUIT
_______________________ Charles R. Fulbruge III
No. 03-30257 Clerk
_______________________
DAWNE S. FIFFICK,
Plaintiff-Appellant
v.
ECON-O-CHECK CORP., ET AL,
Defendants
AMERICAN BANKERS INSURANCE COMPANY OF FLORIDA,
Defendant-Appellee
--------------------
Appeal from the United States District Court
for the Western District of Louisiana
02-CV-395
--------------------
Before DeMOSS, DENNIS and PRADO, Circuit Judges.
EDWARD C. PRADO, Circuit Judge.*
Appellant Dawne Fiffick appeals from summary judgment
entered in favor of Appellee American Bankers Insurance Company
of Florida, the company that provided accidental death insurance
for her father, Douglas Hardesty. We affirm in part and reverse
and remand in part.
Douglas Hardesty purchased the policy, labeled “Group
*
Pursuant to 5th Cir. R. 47.5, this 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that this opinion should not be published and is not precedent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.
1
Accident Insurance,” after it was offered to him as a customer of
Hibernia Bank. By its terms, the policy provided benefits in the
event of bodily injury (including death) caused by an accident.
Additionally, the declaration section of the policy stated, “THIS
IS ACCIDENT ONLY COVERAGE – IT DOES NOT PROVIDE COVERAGE FOR LOSS
FROM SICKNESS.” Nowhere did the policy define “accident.”
The policy also contained two relevant exclusions. The
first excluded coverage for a loss caused by a sickness or a
disease. The second exclusion provided that the policy did not
cover a loss resulting from “the influence of any drug or
narcotic or any other chemical substance other than as prescribed
by a licensed physician.”
Hardesty died in a motel room in Shreveport, Louisiana, on
February 19, 2001. The coroner determined that Hardesty died
from taking a mixture of drugs, or “polypharmacy.” The coroner
found three drugs in Hardesty’s system – Xanax, methadone,1 and
hydrocodone (a prescription narcotic for which Hardesty did not
have a prescription). The Xanax levels in Hardesty’s blood were
particularly elevated, measuring almost two times the therapeutic
dose for the drug.2 This level was significantly higher than the
amount that would have been in a healthy person’s blood if only
1
Hardesty had prescriptions for both Xanax and methadone.
2
The coroner testified that this level was high enough to
have caused Hardesty’s death by itself but that he could not rule
out the other drugs having played a role.
2
the prescribed dose had been taken. But Hardesty was not a
healthy person; as a result of years of alcohol abuse, he
suffered from liver disease. Because of Hardesty’s liver
problems, the coroner could not eliminate either one of the two
possible causes of the elevated Xanax levels: either Hardesty
took an overdose, or his diseased liver was unable to process the
prescribed dose. In either event, the coroner classified
Hardesty’s death as an accident, as opposed to intentional death
or suicide.
American Bankers eventually denied coverage under the
policy. In its denial letter, the company indicated that
Hardesty’s policy had lapsed because he had only paid premiums
through January, 2001.
Fiffick originally sued American Bankers and another
defendant, Econ-o-Check Corporation, in state court. After
removal and discovery, Fiffick dismissed the other defendant from
the suit. Both Fiffick and American Bankers moved for summary
judgment. The district court granted American Bankers’ motion,
determining that the policy was health and accident insurance and
that it did not cover Hardesty’s death. Specifically, the court
concluded that Hardesty’s death was either caused by sickness
(the liver disease) or by taking more Xanax than his doctor had
prescribed. The court ruled that the policy specifically
excluded coverage for both of these possibilities. Fiffick
appeals from this ruling, which we review de novo. Hanks v.
3
Transcon. Gas Pipe Line Corp., 953 F.2d 996, 997 (5th Cir. 1992).
Did the district court properly classify the policy?
Much of the parties’ dispute centers on whether the
insurance policy is considered health and accident insurance or
life insurance under Louisiana law. Fiffick argues that the
policy is individual life insurance. As individual life
insurance, according to Fiffick, the policy cannot condition
benefits on either the insured’s cause of death or his status at
the time of his death.
Louisiana law classifies different kinds of insurance.
Under the current statute, life insurance is defined as:
Insurance on human lives and insurances appertaining
thereto or connected therewith. For the purposes of
this Code, the transacting of life insurance includes
the granting of annuities or survivorship benefits;
additional benefits, including the acceleration of life
or endowment or annuity benefits in advance of the time
they would otherwise be payable, in the event of death
by accident; additional benefits in event of the total
and permanent disability of the insured; and optional
modes of settlement of proceeds.
LA. REV. STAT. ANN. §22:6(1).
In contrast, health and accident insurance is currently
defined as:
Insurance of human beings against bodily injury,
disablement, or death by accident or accidental means,
or the expense thereof, or against disablement, or
expense resulting from sickness or old age, or against
major expenses incurred by an employee benefit plan due
to the illness or injury of a covered employee, or
against major expenses incurred by a health care
provider at financial risk for provision of health care
to persons under an agreement, and every insurance
4
appertaining thereto...
LA. REV. STAT. ANN. §22:6(2)(a).
The statute in effect when Hardesty died contained one
difference that Fiffick considers critical. Instead of defining
health and accident insurance with an “or” between the accident
and sickness provisions, the earlier statute used the conjunction
“and.” Thus, the relevant definition of health and accident
insurance read: “Insurance against bodily injury, disablement or
death by accident and against disablement resulting from sickness
and every insurance appertaining thereto.” (emphasis added).
In its summary judgment order, the district court quoted the
revised statute’s language. Both parties agree that this was
error. They disagree, however, about the significance of this
error. According to Fiffick, the legislative change from “and”
to “or” altered the meaning of the statute and the classification
of the policy, but American Bankers argues that the change did
not affect the policy’s classification.
Fiffick’s interpretation of the statute is similar to the
interpretation in a now-overruled Louisiana Supreme Court case,
Tabb v. Louisiana Health Services & Indemnity Company, 361 So. 2d
862 (La. 1978). In Tabb the court concluded, like Fiffick argues
now, that a hospital and medical care policy was not health and
accident insurance because “[i]t did not insure against injury,
disablement or death.” Id. at 863. The court determined,
5
therefore, that the policy that only covered hospitalization was
a “miscellaneous” one.3 Id.
The Louisiana Supreme Court overruled Tabb in Rudloff v.
Louisiana Health Services & Indemnity Co., 385 So. 2d 767, 770
(La. 1980) (on rehearing). In Rudloff, the court concluded that
a hospitalization and medical care policy should, in fact, be
classified as health and accident policy. Id. Although the
court did not expressly address this point, the hospitalization
policy still did not insure against injury, disablement or
death. Rudloff, while not about accidental death and
dismemberment policies, strongly indicates that a policy does not
need to provide all the coverage listed in the older “health and
accident” definition to be classified as health and accident
insurance.
As the district court noted, other cases also support
American Bankers’ position. For example, in Daigle v. Travelers
Insurance Co., 421 So. 2d 302 (La. App. 1st Cir. 1982), an
accidental death and dismemberment policy was viewed as a health
and accident policy. Also in Willis v. Willis, 287 So. 2d 642,
647 (La. App. 3d Cir. 1974) (per curiam) (on rehearing), the
3
Like health and accident insurance and life insurance,
miscellaneous insurance is another category of insurance under
Louisiana law. It covers insurance for “[a]ny other kind of
loss, damage, or liability properly the subject of insurance and
not within any other kind or kinds of insurance as defined in
this Section, if such insurance is not contrary to law or public
policy.” LA. REV. STAT. ANN. §22:6(14).
6
appeals court concluded that a policy that paid benefits for
accidental death or bodily injury was a health and accident
policy, not a life insurance policy.4
Nevertheless, Fiffick can point to one intermediate
appellate case to assist her. In American Health & Life Ins. Co.
v. Binford, 511 So. 2d 1250, 1253 (La. App. 2d Cir. 1987), the
court determined that an accidental death policy that also
provided for lump-sum payments for various accident-related
injuries was properly classified as life insurance. The court
referred to the requirement that the death be accidental as “a
limiting factor,” but then indicated that this limiting factor
did not prevent the policy from being life insurance.5 Id.
Finally, the statutory language supports American Bankers’
interpretation. The life insurance statute refers to
“additional” benefits for accidental death. LA. REV. STAT. ANN.
§22:6(1) Accidental death and dismemberment benefits, however,
were not additional to other benefits in Hardesty’s policy.
Rather, these benefits were the ones contracted for: the policy
4
Incidentally, one of the cases that Fiffick cites for
another point, distinguishes a policy for “Indemnity for Loss of
Life, Limb, Sight or Time Caused by Bodily Injuries Effected
through Accidental Means” from a life insurance policy. Duhon v.
Colonial Life & Acc. Ins. Co., 277 So. 2d 234, 235, 237 (La. App.
3d Cir. 1973).
5
Because the issue was the inheritance of the insurance
proceeds, the court did not address whether this limiting factor
was valid.
7
was “[i]nsurance against bodily injury, disablement or death by
accident.” LA. REV. STAT. ANN. §22:6(2)(a).
Further, despite American Health, the Louisiana caselaw
indicates that this policy is considered health and accident
insurance. The Louisiana Supreme Court’s opinion in Rudloff
seems to compel this result, and the other cases support this
conclusion, as well.6 The district court correctly concluded
that the policy was health and accident insurance.
Was Hardesty’s death an accident?
With the issue of policy classification resolved, the
district court ruled that Hardesty’s death was not covered by the
policy because neither of the two possible causes of death would
be covered. The district court determined that if Hardesty’s
death was caused by his diseased liver’s failure to metabolize
the drugs, then the death was caused by illness, not by an
accident. Alternatively, Hardesty’s death was caused by taking
Xanax beyond the prescribed levels. The court concluded that the
policy excluded this cause of death, too. Based on this
6
Fiffick also argues that the district court erred by
refusing to determine whether the policy was individual or group
insurance. Fiffick argues that this distinction is important
because under LA. REV. STAT. ANN. § 22:170(B), an individual life
insurance policy may not base liability on death being “caused in
a certain specified manner.” Fiffick makes no argument, however,
about individual health and accident insurance. As the district
court concluded, this distinction only matters if the policy is
life insurance under Louisiana law. Because the district court
correctly concluded that this policy was health and accident
insurance, the court did not err in not deciding whether the
policy was group or individual insurance.
8
reasoning, the district court granted American Bankers’ summary
judgment motion.
To establish coverage under the insurance policy, Fiffick
must first establish that an “accident” was the predominant cause
of Hardesty’s death.7 See Murphy v. Continental Cas. Co., 269
So. 2d 507, 518 (La. App. 1st Cir. 1972). Courts in Louisiana
have provided several definitions for the term “accident.” The
Louisiana Supreme Court held that the test for an accident “is
whether the average man, under the existing facts and
circumstances, would regard the loss so unforeseen, unexpected,
and extraordinary that he would say it was an accident.”
Schonberg v. New York Life Ins. Co., 235 La. 461, 477, 104 So. 2d
171, 177 (La. 1958) (quoting Preferred Accident Ins. Co. v.
Clark, 144 F.2d 165, 167 (10th Cir. 1944)). Louisiana courts
have also defined an accident as “an immediate or traumatic
incident inflicted upon a human body causing injury.” Fruge v.
First Continental Life & Accident Ins. Co., 430 So. 2d 1072, 1075
(La. App. 4th Cir. 1983). Examples of deaths that have been held
to be death by “accident” or “accidental means” include
anaphylactic shock from a blood transfusion,8 a ruptured
7
Although the policy limits coverage to injuries resulting
“directly and independently of all other causes” from an
accident, identical policy language has been interpreted as
requiring the accident only to be the “predominant cause” of the
death. See, e.g., Murphy v. Continental Cas. Co., 269 So. 2d
507, 518 (La. App. 1st Cir. 1972).
8
Schonberg, 235 La. at 478, 104 So.2d at 177-78.
9
esophagus from eating a plum (even though the decedent previously
had esophagus problems),9 and a spider bite through which the
decedent received a staph infection.10 Other causes of death
have not been considered accidents, however. For example, a
heart attack – even one allegedly caused by work-related stress –
was determined not to be an accident. Hebert v. Hughes Tool Co.,
539 So. 2d 789 (La. App. 3d Cir. 1989). An aneurysm, too, was not
an accident. Fruge v. First Cont’l Life & Accident Ins. Co., 430
So. 2d 1072 (La. App. 4th Cir. 1983). The U.S. District Court for
the Eastern District of Louisiana, likewise, held that a heart
attack suffered after working hard was not accident: “The
decedent weighed 300 pounds; he had a history of heart disease;
he worked 10 hours in very hot, cramped conditions, had an
infarction and died ... the result would not seem unexpected nor
unforeseen under the circumstances.” Barnewold v. Life Ins. Co.
of N. Am., 633 F. Supp. 432, 436 (E.D. La. 1986).
Fiffick describes Hardesty’s accident as the unexpected
interaction of prescription medicines. She analogizes Hardesty’s
death to that in Schonberg, placing Hardesty’s death in the line
of cases holding that unexpected reactions to medicines, or
9
Murphy, 269 So. 2d at 518.
10
Carnes v. Continental Cas. Co., 212 So. 2d 441 (La. App.
2d Cir. 1968).
10
medical procedures, are accidents.11 In particular, Fiffick
argues that, according to the coroner, the liver disease caused
an unexpected reaction to the medications and that this
unexpected reaction caused his death. Thus, Fiffick argues that
Hardesty’s death was an accident.
Fiffick further points to the coroner’s testimony that liver
disease alone did not cause Hardesty’s death. The evidence
clearly indicates that Hardesty did not die from liver failure.
According to the coroner, the liver disease only might have
contributed to Hardesty’s possible inability to metabolize Xanax.
An accident that exacerbates an underlying disease, which
then results in death is an accident. See Murphy, 269 So. 2d at
518. Courts do not appear to have addressed the situation where
a disease renders an otherwise harmless combination of medicines
toxic. Yet, this sudden toxicity is consistent with the idea of
an accident – an unexpected, unintentional result or a sudden
trauma. It is also consistent with Dodge, which holds that an
allergic reaction to a drug is an accident. Mutual Life Ins. Co.
v. Dodge, 11 F.2d 486 (4th Cir. 1926). Fiffick has presented
evidence that, without taking the medications, Hardesty would not
11
The cases she refers to for this proposition are Schonberg
and two non-Louisiana cases that Schonberg cites, American
National Insurance Co. of Galveston v. Blech, 100 F.2d 48, (4th
Cir. 1938); Mutual Life Insurance Co. of New York v. Dodge, 11
F.2d 486 (4th Cir. 1926). Dodge involves a reaction to
novocaine, and Blech involves shock from an injection. Schonberg,
104 So. 2d at 177.
11
have immediately died. We conclude that there is a genuine issue
of fact as to whether Hardesty’s taking of the combination of
drugs prior to his death constitutes an “accident” within the
meaning of the policy, which renders the summary judgment by the
trial court on this question inappropriate.
Assuming without deciding that the “polypharmacy”constitutes
an accident, the burden would shift to American Bankers to prove
that the policy excluded Hardesty’s cause of death. See
Willis,287 So.2d at 645. American Bankers points to two possible
exclusions: illness and taking medications other than as
prescribed.
To establish an illness exclusion, the insurer must prove
that illness was “the predominant cause of death.” Murphy, 269
So. 2d at 518. In other words, once the beneficiary establishes
that the death was an accident, the insurer bears the burden of
showing that “without the injury, death would have occurred when
it did due to illness or disease.” Id. American Bankers has not
produced the kind of evidence that would establish this
exclusion. In fact, the only evidence indicates that Hardesty
did not, in fact, die from liver disease.
Likewise, American Bankers cannot establish that an overdose
was the predominant cause of Hardesty’s death. The coroner
testified that he was unable to determine which cause was more
likely – the diseased liver’s inability to metabolize a normal
dose or an overdose of Xanax. The coroner’s report and deposition
12
are the only causation evidence cited by either party. It
appears that, because American Bankers only relies on the
coroner’s evidence, it has failed to establish that it is
entitled to summary judgment. Yet Fiffick, too, has failed to
establish her entitlement to summary judgment on liability.
Policy Termination
Fiffick also moved for summary judgment on American Bankers’
defense that the policy had terminated before Hardesty died. In
its pleadings, American Bankers presented two explanations for
this termination: first, that Hardesty had failed to pay the
premium and second, that Hardesty closed his account with
Hibernia Bank. The district court denied Fiffick’s motion for
summary judgment on these defenses. We decline to reverse the
district court’s ruling.
Analyzing Fiffick’s motion as if it were American Bankers’,
the district court first concluded that a fact issue prevented it
from finding that the policy terminated for nonpayment. But as
Fiffick points out, American Bankers did not move for summary
judgment on this issue. Only Fiffick’s motion addressed this
defense. Regardless, a fact issue still exists: the claims
administrator’s affidavit, attached as evidence, indicates that
Hardesty’s last payment was on December 3, 2000 and that
subsequent attempts to debit the account failed on January 3,
2001 and February 3, 2001. This evidence is sufficient to defeat
Fiffick’s summary judgment motion. Thus, although the district
13
court might have incorrectly assigned the burden, the end result
– a fact question about termination – remains the same.
Similarly, American Bankers contends that Hardesty’s closure
of his Hibernia bank account terminated his policy. Challenging
this defense, Fiffick argues that under Louisiana law, individual
life insurance policies cannot condition benefits on the
insured’s status at the time of his death. LA. REV. STAT. ANN.
§22:170(B). Based on this statute, Fiffick contends that
Hardesty’s status as an account-holder must be irrelevant.
Section 22:170(B) does not apply to health and accident
insurance, however, and thus the district court properly denied
Fiffick’s motion on this issue. The defenses of non-payment and
eligibility both remain for trial.
AFFIRMED IN PART, REVERSED AND REMANDED IN PART.
14