Kehoe v. 1st Source Bank Healthcare Benefits Plan
Adam V. Russo | July 9, 2010
In Kehoe v. 1st Source Bank Healthcare Benefits Plan,190 the court affirmed an ERISA plan administrator’s denial of health coverage where claimant had a blood alcohol level of 0.128, as tested at the treating hospital, and the plan excluded “[c]harges resulting from an illness or injury incurred while under the influence of alcohol or illegal drugs as evidenced by a blood alcohol level equal to or in excess of the legal amount allowed in the state where injury occurs or any other drug or alcohol screening test.”191 The court rejected claimant’s contention that de novo review applied because the administrator’s decision “was so unusual that [it] went beyond simply interpreting the Plan and, instead, modified the Plan’s terms and conditions.”192 The court held that the administrator’s interpretation of the exclusion did not modify the plan’s language, which did not require illegal consumption of alcohol to trigger the exclusion but rather than an injury incurred while “under the influence,” an objective standard based on state law.193 The court further held that the administrator’s claim decision was not arbitrary and capricious because it was not unreasonable to incorporate the Indiana motor vehicle intoxication statue, defining 0.08 as the minimum BAC for legal intoxication.
Shelby County Health Care Corp. v. Majestic Star Casino, LLC
Adam V. Russo | July 9, 2010
This year, while the Sixth Circuit held that an illegal act exclusion could not be applied because of a lack of causation between the illegal act and the injuries for which benefits were sought, an Indiana district court found that an administrator’s decision to deny health benefits based on a plan exclusion was “not reasonable” even though it did not require the injury for which benefits are sought to be caused by the insured’s intoxicated state. In Shelby County Health Care Corp. v. Majestic Star Casino, LLC,184 plaintiff, acting pursuant to an assignment from its patient, challenged the ERISA plan administrator’s decision to deny the patient health insurance benefits. Plaintiff claimed that defendant improperly denied benefits for medical charges incurred by this patient, a plan insured, after he sustained injuries in a single-car accident while driving without a driver’s license or proof of insurance.185 Defendant denied benefits under the plan’s “illegal-act provision,” which excluded benefits for “any loss caused by, incurred for, or resulting from…[c]harges for or in connection with any injury or illness arising out of…the commission or attempted commission of an illegal or criminal act.”186 After rejecting the defendant’s attempt to assert a different basis for denial of benefits than that asserted by the claims administrator, the Sixth Circuit agreed with the district court that the term “illegal act” was ambiguous since it was undefined in the policy.187 It then found that a reasonable interpretation of “illegal act” might not include driving without insurance or driving without a license.188 Ultimately, since the record provided “no support for the assertion that driving without a license or driving without insurance ‘caused’ [the] accident and resulting injuries,” the Sixth Circuit upheld the finding that plaintiff erred in denying the claim for benefits.
Nally v. Life Insurance Co. of North America
Adam V. Russo | July 9, 2010
In considering the administrative record in ERISA benefits cases, courts this year addressed both what must be included in the administrative record and the admissibility of its contents. In Nally v. Life Insurance Co. of North America, plaintiff argued her deceased husband’s employee benefit plan impermissibly relied on evidence such as police and expert reports that would not be admissible under the Federal Rules of Evidence or the Supreme Court’s decision in Daubert v. Merrell Dow Pharmaceuticals. The Third Circuit held that when the plan gives the plan administrator discretion to construe and interpret the plan, evidence in the administrative record is admissible “for the purpose of determining whether the administrator’s review was arbitrary and capricious.”48 The court further noted that plaintiff failed to point to any legal support for her assertion that a plan administrator deciding a claim for benefits could only consider evidence that would be admissible in a district court proceeding.
Catledge v. Aetna Life Insurance Co.
Adam V. Russo | July 9, 2010
In the context of an ERISA claim in which the insurer’s structural conflict of interest was a factor in the court’s analysis, the court concluded the record was insufficient to determine if the insured’s drinking antifreeze was accidental in Catledge v. Aetna Life Insurance Co. The policy excluded loss “caused or contributed to by: an intentional self-inflicted injury” or “use of…intoxicants.” According to the death certificate, corroborated by police reports, the insured died after he “drank antifreeze,” which the coroner called an “accident.” The court criticized Aetna for failing to construe what the decedent’s intent was when he drank antifreeze and concluded Aetna should have sought “to clarify the ambiguous record prior to making a decision on the intertwined questions of whether [the insured] died” of accidental causes.
Munger v. Transguard Insurance Co. of America, Inc.
Adam V. Russo | July 9, 2010
The court in Munger v. Transguard Insurance Co. of America, Inc. distinguished between a foreseeable event and a foreseeable injury in upholding a denial of an accident claim. The plaintiff, a tractor and trailer operator, sustained injury to his back while performing the duties of his employment, which he had done “hundreds of times” over the years. In affirming Transguard’s claim denial, the court found that regardless of whether the injury was unforeseeable, unexpected, and unintended, in order to satisfy the definition of accident in the policy, the injury must have been caused by an event that was unforeseeable, unexpected, and unintended. The court found plaintiff’s voluntary action while performing his work was the foreseen consequence of an undertaking that resulted in his foreseeable injury, such that his injury was not covered under the policy.
Kay-Woods v. Minnesota Life Insurance Co.
Adam V. Russo | July 9, 2010
This year’s lone felony/intoxication case raises an interesting question: when is driving under the influence a felony? In Kay-Woods v. Minnesota Life Insurance Co.,13 the insured died in a single-vehicle accident while driving with a revoked license and under the influence of alcohol and cocaine. The policy provided that benefits would not be paid if the death resulted from or was caused directly by commission of a felony. Although the spouse argued the cause of the revoked license was a previous reckless driving conviction, the evidence showed this same reckless driving conviction extended an earlier DUI license revocation. Under Illinois Vehicle Code, driving under the influence of alcohol was a Class felony; therefore, the district court ruled that the felony exclusion applied.
Pollitt v. Health Care Service Corp
Adam V. Russo | July 9, 2010
Juli Pollitt, a federal employee, had health insurance administered by Health Care Service Corp. (HCSC). In July 2007, HCSC stopped paying claims submitted on behalf of Pollitt’s son Michael and began trying to collect from health care providers any payments made on Michael’s behalf since 2003. According to HCSC, it did this because the Department of Labor, which tells HCSC which federal employees have what coverage, instructed HCSC that Pollitt’s coverage was for herself only rather than for herself and her family. According to Pollitt’s complaint in this suit, however, HCSC reached this conclusion on its own because the Department of Labor had failed to pay the appropriate premium into a fund that covers the expense of the medical benefits. Instead of checking with the department or with her, Pollitt’s complaint alleged, HCSC abruptly stopped covering Michael’s medical expenses and made demands for reimbursement that subjected her family to humiliation and expense. Just as abruptly, HCSC changed course in October 2007 and started paying the claims again. But even then, Pollitt asserted, HCSC did not inform medical providers, who continued trying to collect from Pollitt the back payments they thought HCDC was dunning them for. (more…)
Drunk-Driving Crash Still an ‘Accident,’ Court Says
Adam V. Russo | November 23, 2009
By TIM HULL
(CN) – An insurance company must award benefits to an Ohio man who lost his leg in a drunken motorcycle crash, the 6th Circuit ruled, because the incident falls within the broad definition of an “accident.” (more…)
When Updating Your Plan Documents, Don’t Forget The Following:
Adam V. Russo | October 28, 2009
Reporting to Medicare
The purpose of these reporting requirements is to enable the Centers for Medicare & Medicaid Services (CMS) to determine whether those covered by Medicare are also covered by other insurance that, by law, must pay primary to Medicare. (more…)
Acne, Pregnancy Among Disqualifying Conditions
Adam V. Russo | September 29, 2009
by David S. Hilzenrath of The Washington Post, www.washingtonpost.com
A proposal to make preexisting health conditions irrelevant in the sale of insurance policies could help not just the seriously ill, but also people who might consider themselves healthy, documents released Friday by a California-based advocacy group illustrate. (more…)
Plan Exclusion: Pitfalls To Avoid (TPA Series #1)
Adam V. Russo | September 18, 2009
by Roy Harmon, III, www.healthplanlaw.com
A typical plan will contain an exclusion for accidents or injuries resulting from intoxication, unlawful conduct and so forth. How the plan states the exclusion can vary quite a bit, and the distinctions can make a significant difference in outcomes.
Military Exclusion
Adam V. Russo | July 28, 2009
In MacLeod v. Proctor & Gamble Disability Benefit Plan, 460 F. Supp. 2d 340 (D. Conn. 2006) the administrator denied the participant’s application for benefits on the grounds that the claimed disability resulted from the participant’s prior military service and therefore was excluded from coverage. At oral argument, the administrator admitted that its decision was based on the “categorical military exclusion” and did not entail an individualized consideration of the particular facts of the application. The plan at issue, however, specifically provided that in the event of an “illness, accident or injury occurs while the Participant is working for pay for some person or organization other than the Company, payment of benefits under the Plan shall be made only at the discretion of the [administrator] after their review of the facts of the case.” Although the court did not find that the administrator’s conclusion that the participant’s disability occurred during his time in the military was arbitrary and capricious, it concluded that the manner in which the administrator evaluated the claim was an unreasonable interpretation of the plan language and remanded the matter.
Self-Inflicted Injury: Overdose
Adam V. Russo | July 28, 2009
In Thomas v. Reliance Standard Life Insurance Co., 487. F. Supp. 2d 697 (D.S.C. 2007), the court examined whether death by asphyxia from vomitus resulting from drug self-administration was an accident within the terms of an ERISA-governed policy. Reliance Standard denied benefits pursuant to the policy’s exception for losses caused by suicide or intentionally self-inflicted injuries because the insured had expressed a desire to commit suicide in the exact place he was later found dead. Reliance Standard further argued that the insured’s intentional use of prescription drugs contributed to his inability to maintain a clear airway. The court sided with the insurer, citing evidence that the insured “intended to commit suicide, ingested dangerous narcotic medication, and died as a result.” Accordingly, the court concluded that the insurer “reasonably found that [the insured] intended the ultimate result, although he may not have anticipated the exact means.”
Self-Inflicted Injury
Adam V. Russo | July 28, 2009
In Bond v. Ecolab, Inc., 2007 WL 551595 (E.D. Mich. Feb. 21, 2007, an ERISA plan participant died while engaging in autoerotic asphyxiation. The police and medical examiners concluded that the participant’s death was accidental. The plan’s claims administrator, MetLife, denied the beneficiary’s claim for benefits based on the plan’s exclusion for self-inflicted injuries. In entering judgment in favor of defendants, the district court rejected plaintiff’s argument that the death certificate’s identification of the manner of death as accidental was controlling and held that MetLife’s decision to deny benefits was not arbitrary and capricious because MetLife’s determination that the participant’s intentional disruption of oxygen to his brain was a self-inflicted injury and was not unreasonable in light of the plan’s language.
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