Buce v. Allianz Life Insurance Company, No. 99-15405

• Citation: 247 F.3d 1133
• Decision Date: 10 April 2001
• Docket Number: No. 99-15405
• Parties: (11th Cir. 2001) Patricia W. BUCE, Plaintiff-Appellee, v. ALLIANZ LIFE INSURANCE COMPANY, f.k.a. North American Life and Casualty Company, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

Page 1133

247 F.3d 1133 (11th Cir. 2001)

Patricia W. BUCE, Plaintiff-Appellee, v. ALLIANZ LIFE INSURANCE COMPANY, f.k.a. North American Life and Casualty Company, Defendant-Appellant.

No. 99-15405.

United States Court of Appeals, Eleventh Circuit.

April 10, 2001.

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Appeal from the United States District Court for the Northern District of Georgia. (NO. 98-00112-CV-TWT-1), Thomas W. Thrash, Judge.

Before CARNES and BARKETT, Circuit Judges, and POLLAK^*, District Judge.

POLLAK, District Judge:

This appeal presents questions arising from the denial-initially by the plan administrator and then by the insurance carrier-of death benefits claimed under an employer-sponsored personal injury insurance policy governed by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. 1001 et seq. On "heightened arbitrary and capricious" review by the District Court, the denial of benefits was overturned and the plaintiff-the widow of the decedent-was awarded $150,000, the face amount of the policy. On appeal to this court, the insurance carrier contends that the District Court erred, under ERISA, (1) in its rejection of the carrier's interpretation of the policy term "bodily injury caused by an accident ... and resulting directly and independently of all other causes in loss covered by the policy" as applied to the facts of the decedent's death, and (2) in its rejection of the carrier's reliance on the policy's intoxication exclusion provision as an alternative ground for denial of the claimed benefits. The insurance carrier also argues that the proper standard of District Court review of the denial of benefits was not "heightened arbitrary and capricious" but "arbitrary and capricious."

In Part I of this opinion we outline the principal facts giving rise to the plaintiff's claim and the manner in which the claim was addressed by, first, the plan administrator and, second, the insurance carrier. In Part II, we summarize the history of the case after it came to court-first, a Georgia state court and then, on removal, the District Court. In Part III we consider the contentions made by the insurance carrier on appeal.

I

Walter H. Buce, Jr., a Georgia resident, was employed by National Services Industries, Inc. ("NSI"), a company located in Atlanta. In 1985 Mr. Buce elected to become insured under a group Personal Accident Insurance Plan provided by NSI as an optional employee benefit. The accident insurance plan-originally underwritten by Fireman's Fund, Inc., but taken over, in 1993, by Allianz Life Insurance Company of North America ("Allianz")-provided that: "The Plan is to be interpreted in accordance with the laws of the State of Georgia." On December 13, 1995, at about 2:00 a.m., Mr. Buce, was killed in a single-vehicle crash on Interstate 75 near Cleveland, Tennessee. There were no passengers or other witnesses. A posthumously drawn blood sample measured Mr. Buce's alcohol level as .22 percent.

Mr. Buce's widow, Patricia W. Buce, the beneficiary of her husband's accident policy, filed a claim. NSI, Mr. Buce's employer, referred the claim to Allianz, the insurance carrier. Allianz in turn referred the claim to American Special Risk Management ("ASRM"), the company retained by Allianz to act as administrator of the insurance plan; as of that time, Allianz was ASRM's sole client.

On March 12, 1996, ASRM, in a letter written by its Claims Director, Edward F. Carroll, denied Mrs. Buce's claim. The substance of Mr. Carroll's decision was as follows:

This Policy provides a "Loss of Life Accident Indemnity. When injury results in the loss of life of the Insured Person". The Policy also states the following:

20.The Company shall not be liable for any loss sustained in consequence of the person whose injury is the basis of a claim being intoxicated or under the influence of any narcotic unless administered on the advise [sic ] of a physician.

We have obtained the Cleveland Police Department report that indicated this single car accident happened when the car "left the roadway on the right hand shoulder of the road striking the guard rail". The Tennessee Bureau of Investigation's Forensic Services Crime Laboratory report on Alcohol, indicated the insured's level was twice the legal limit permitted to operate a vehicle. We therefore, must deny any Accidental Death Benefits for this accident, under the terms of this policy.

Mrs. Buce's attorney, John E. Robinson, took issue with Mr. Carroll's decision in a letter dated May 9, 1997. Mr. Robinson's letter was referred to Douglas Campbell, Allianz's attorney. On July 11, 1997 Mr. Campbell wrote to Mr. Robinson reaffirming the denial of Mrs. Buce's claim:

This Firm represents Allianz Life Insurance Company of North America [the "Company"] and your letter of May 9, 1997, regarding the above referenced claim has been referred to us for response ....

[T]he Company has, at your request, re-evaluated this claim and the materials you have submitted in support thereof. This is an accident policy which, as applicable to this particular claim, provides payment of benefits where loss of life is due to bodily injury caused by an accident and resulting directly and independently of all other causes in death. As such, it is an "accidental means" policy which requires that, in the act which preceded the injury, there must have occurred something sudden, unexpected and unforeseen. In the first instance, the materials you have submitted do not show any positive identification of the individual found in the wrecked automobile as in fact being Mr. Buce, even though the death certificate states that it was. Moreover, even if the body was that of Mr. Buce, tests revealed that, several hours after the wreck, there was present a blood alcohol level of .22%, which would mean that Mr. Buce was intoxicated at the time of the wreck. Given the weather and road conditions as reported by the authorities, and the lack of any evidence of vehicular malfunction, it appears that Mr. Buce's injuries were occasioned by his voluntary ingestion of alcohol and were therefore not "bodily injuries cause[d] by an accident" as required by the coverage provisions of the Policy.

Furthermore, the Policy contains the following exclusion:

20.The Company shall not be liable for any loss sustained in consequence of the person whose injury is the basis of claim being intoxicated ...

As the Policy contains no definition of intoxication, the common law definition would apply-namely, that the person was materially impaired from guarding himself against casualty or injury. A person with a .22% (or higher at the time of the wreck) blood alcohol level is undoubtedly materially impaired within the meaning of that definition. As discussed in the preceding paragraph, it was this impairment which caused the wreck that resulted in Mr. Buce's death.

For the foregoing reasons, and based entirely on the information available to us at this time, including the information you submitted in support of the claim, the Company, upon reconsideration, again denies the claim.

On December 5, 1997, in response to a further letter from Mr. Robinson, Debra Libby, NSI's Assistant Counsel, stated that "we regret that this unfortunate event occurred, but the claim does not appear to be covered by the Plan."

II

Six days later-on December 11, 1997-Mrs. Buce filed this law suit, naming as defendants NSI, ASRM and Allianz (the latter was originally sued under its former name, North American Life and Casualty Company). Suit was brought in the Superior Court of Fulton County, Georgia. Invoking ERISA, the defendants removed the case to the United States District Court for the Northern District of Georgia.

After granting in part and denying in part motions for summary judgment filed by the defendants, the District Court conducted a two-day bench trial. Shortly thereafter, the District Court filed its opinion awarding judgment in Mrs. Buce's favor, against Allianz, for the policy proceeds of $150,000, plus prejudgment and postjudgment interest. "The denial of benefits was arbitrary and capricious," the District Court ruled, "and the Plaintiff is entitled to the death benefit due under the Plan." Buce v. National Service Industries, Inc., et al., 74 F.Supp.2d 1272, 1280 (N.D.Ga.1999). Finding no "breach of fiduciary duty," id., on the part of ASRM and NSI, the District Court directed the entry of judgment in favor of those defendants.

In ruling against Allianz, the District Court came to a series of conclusions:

(A) The first issue addressed by the District Court was the standard of review under which it was to judge the correctness of Allianz's denial of benefits. The District Court noted that the Supreme Court, in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), had held that "a denial of benefits challenged under [29 U.S.C.] 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan .... Of course, if a benefit plan gives discretion to an administrator or fiduciary who is operating under a conflict of interest, that conflict must be weighed as a 'facto[r] in determining whether there is an abuse of discretion.' " In the case at bar, the District Court found that de novo review was not an option, since the policy's Summary Plan Description provided that "[t]he insurance company has the exclusive right to interpret the provisions of the Plan, so its decision is conclusive and binding." 74 F.Supp.2d at 1275. The District Court pointed out, however, that, in conformity with Firestone 's admonition about conflicts of interest, the very deferential "arbitrary and capricious" standard requires modification where the insurance carrier is the effective decision-maker. As the District...