The Tenth Circuit Court of Appeals affirmed the Colorado District Court's denial of summary judgment for an insurer, granting accidental death benefits to an insured's family. The insured died in a car accident while driving with a blood alcohol level nearly three times the legal limit. His family claimed benefits under MetLife's Accidental death and dismemberment ("AD&D") policy.
The insured obtained life insurance and AD&D coverage with MetLife. Under the ERISA-governed benefits plan, the insured's AD&D coverage provided "a benefit in addition to life insurance if the insured died as the result of an accident." The insured's death certificate indicated the "immediate cause" of death was head and internal injuries due to blunt force trauma from a car accident. The toxicology report showed the insured's blood alcohol level was roughly three times the legal limit.
The insured's parents' claim for life and AD&D benefits was denied by MetLife. They sought an administrative appeal of the denial of benefits, which was heard after the sixty-day timeframe required by ERISA. See 29 C.F.R. § 2560.503-1(h)(4)(i). When the administrative appeal was heard, MetLife denied the benefits to the insured's parents because: (1) the insured's extreme intoxication contributed to the crash, (2) the crash was a reasonably foreseeable result of driving while intoxicated and it was not an accident under the plan; and (3) the plan's exclusion applied to a loss caused or contributed to by injuring oneself on purpose.
The parents sued for breach of contract, and the Colorado District Court concluded the insurer improperly denied AD&D benefits because the car crash constituted an accident under the policy.
The Tenth Circuit Court of Appeals reviewed de novo the Colorado District Court's decision. The Court of Appeals applied de novo review because the insurer failed to follow proper procedure in issuing a decision denying the beneficiaries' administrative appeal. The Court of Appeals would have applied a deferential standard of review had the insurer heard the administrative appeal within the timeframe allotted by ERISA.
The Court of Appeals found the insurer's first reason for denying the insured's parents AD&D benefits was improper. The insured did not die as a result of alcohol intoxication, but instead, from head and internal injuries suffered in a motor vehicle crash as set forth on the death certificate.
The Court of Appeals denied the insurer's position the accident was reasonably foreseeable, and thus non-accidental, because of the insured's intoxication. The term "accident" was ambiguous as used in the insurance contract. The Court of Appeals construed the term accident against the insurer as the party who drafted the contract under the doctrine of contra proferentem. The Court of Appeals stated, "it is not too much to ask of ERISA insurers to set forth explicitly what is and is not an accident covered by their AD&D policy, and to state unambiguously whether death and disability caused by the insured's drunk driving is an accident and, if not, to include a workable definition of drunkenness and of causation attributed to such drunkenness." A reasonable person would believe his death in a one-car rollover crash was the result of an accident.
The Court of Appeals held the insurer could not deny the claim for benefits based on the concept the accident fell within the plan's exclusion from AD&D coverage for a loss caused or contributed to by injuring oneself on purpose. There was no evidence in the record the insured intended to injure himself on the night of the accident.
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This opinion may be cited as precedent now. The result in this case could change, however, if a subsequent petition for rehearing or a petition for certiorari to the United States Supreme Court is granted.
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