Johnson v. Am. United Life Ins. Co.

• Decision Date: 24 May 2013
• Docket Number: No. 12–1381.,12–1381.
• Citation: 716 F.3d 813
• Parties: Angela JOHNSON, Plaintiff–Appellant, v. AMERICAN UNITED LIFE INSURANCE COMPANY, Defendant–Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

716 F.3d 813

Angela JOHNSON, Plaintiff–Appellant,

v.AMERICAN UNITED LIFE INSURANCE COMPANY, Defendant–Appellee.

No. 12–1381.

United States Court of Appeals, Fourth Circuit.

Argued: Dec. 5, 2012.

Decided: May 24, 2013.

ARGUED:Gavin James Reardon, Rossabi Black Slaughter, PA, Greensboro, North Carolina, for Appellant. Elizabeth J. Bondurant, Smith Moore Leatherwood, LLP, Atlanta, Georgia, for Appellee. ON BRIEF:T. Matthew Creech, Smith Moore Leatherwood, LLP, Greensboro, North Carolina, for Appellee.

Before TRAXLER, Chief Judge, and FLOYD and THACKER, Circuit Judges.

Reversed and remanded by published opinion. Chief Judge TRAXLER wrote the opinion, in which Judge FLOYD and Judge THACKER joined.

OPINION

TRAXLER, Chief Judge:

Richard Johnson (“Richard”) participated in an employee welfare benefit plan (“the Plan”) that provided life insurance and accidental death and dismemberment (“AD & D”) benefits through group policies issued by American United Life Insurance Company (“AUL”). When Richard died in a singlevehicle crash, his widow Angela Johnson (“Johnson”) received life insurance benefits, but AUL, which also served as administrator for the Plan, refused to pay AD & D benefits. Richard was highly intoxicated at the time of his fatal crash, and AUL concluded that Richard's drunk-driving death was not the result of an “accident” under the Plan. Johnson filed this action under the Employee Retirement Income Security Act (“ERISA”), see29 U.S.C. § 1132(a)(1)(B), to recover these AD & D benefits. Applying a de novo standard of review, the district court affirmed the denial of benefits on the grounds that Richard's death was not accidental because the fatal crash was an “anticipated and expected” result of driving while intoxicated.

For the reasons set forth in detail below, we must reverse. The insurance policies do not define the term “accident” despite its critical importance for determining eligibility for AD & D benefits. Because “accident” is susceptible to more than one reasonable interpretation, we construe it against AUL, the drafting party, and conclude that a reasonable plan participant under similar circumstances would have understood Richard's alcohol-related crash to be an “accident” under the policy language.

The question of whether drunk-driving deaths or injuries are “accidental” for purposes of accidental death insurance has perplexed the judiciary for some time.¹ Given the “sheer number of court cases nationwide involving disputes over claims by drunk drivers,” an insurer surely understands that it will “likely face claims under its AD & D policies based on injuries sustained in alcohol-related collisions.” Kovach v. Zurich Am. Ins. Co., 587 F.3d 323, 336 (6th Cir.2009). The interpretive onus belongs on the insurers who draft these accident insurance policies; they can eliminate dilemmas like this one by clearly and plainly stating whether a loss caused by the participant's driving drunk is “accidental” so that the insured “know[s] what he is getting in his insurance policy.” Senkier v. Hartford Life & Accident Ins. Co., 948 F.2d 1050, 1053 (7th Cir.1991).

Reaching this result gives us no great pleasure. Drunk driving is reckless, irresponsible conduct that produces tragic consequences for the thousands it touches annually. But our task in this case is not to promote personal responsibility or enforce good driving habits. We must focus on the terms of the policies issued under the Plan and determine whether Richard died as a result of an accident without “allowing our moral judgments about drunk driving to influence our review.” Kovach, 587 F.3d at 330. At bottom, this ERISA appeal presents a problem of contract law which requires us to determine the intent of the parties as reflected in the language of the policy.

I.

A.

The Plan provided Richard with (1) standard AD & D and life insurance benefits of $25,000 through a policy paid for by Richard's employer, and (2) voluntary AD & D and life insurance benefits of $100,000 through a policy paid for by Richard. AUL issued both policies. Johnson is the designated beneficiary under the policies.

Under the AD & D provision in the policies, AUL pays benefits “[i]f a Person has an accident while insured under the policy which results in a [covered] loss.” J.A. 268. In the case of an accidental loss of life to the insured, the policies pay the principal benefit amount which in this case is $100,000 and $25,000 for the employee- and employer-paid policies, respectively. The policies define “accidental death” as “death due to an accident, directly and independently of all other causes,” J.A. 224, but fail to define the predicate term “accident.”

The AD & D provision contains a limitations clause expressly excluding the payment of benefits in various circumstances:

Benefits are not payable for loss due directly or indirectly to:

1. suicide or attempted suicide, whether sane or insane;

2. air travel as a crew member;

3. participation in a riot or from war or an act of war, whether declared or undeclared;

4. commission of an assault or felony;

5. the voluntary taking of:

a. a prescription drug in a manner other than as prescribed by a physician;

b. any other federally- or state-controlled substance in an unlawful manner;

c. non-prescription medication, in a manner other than as indicated in the printed instructions; or

d. poison, except for accidental ptomaine poisoning.

6. the voluntary inhaling of gas (unless due to occupational accident); or

7. sickness other than infection occurring as a result of accidental injury.

J.A. 226.

With two exceptions, the terms of the employer- and employee-paid policies are virtually identical. First, the employee-paid policy includes an additional category in the limitations clause for which AD & D benefits are not payable—“participation in hang-gliding, bungee jumping, automobile racing, motorcycle racing, skydiving, rock climbing, or mountain climbing.” J.A. 269. Second, the employee-paid policy provides an additional AD & D benefit not available under the employer-paid policy—the “Seat Belt” benefit. According to the policy, “AUL will pay an additional accidental death benefit, called the Seat Belt Benefit, if a Person dies as a result of an Automobile accident while properly wearing a Seat Belt at the time of the accident.” J.A. 270.

Significantly, the Seat Belt Benefit alone is expressly subject to a drunk-driving limitation clause:

This benefit will not be paid if the Person, while operating the Automobile, was legally intoxicated as defined by applicable laws, violating traffic laws, racing, stunt-driving, or engaging in other similar activity during the accident.

In addition to the above limitation, this benefit is subject to the further limitations and provisions of this AD & D section.

J.A. 270 (emphasis added).

B.

On August 2, 2007, at about 1:30 a.m., Richard was driving a pickup truck owned by his employer near Myrtle Beach, South Carolina, when he lost control of the vehicle and veered off the road, struck a highway sign and flipped over multiple times. Richard was partially ejected from the vehicle and sustained fatal injuries. The law enforcement officer who investigated the incident reported that the primary factor contributing to Richard's crash was that he was driving too fast for conditions. The post-incident traffic report estimated that Richard had been driving 65 mph in a 50 mph zone. The report contains no mention of alcohol. The Certificate of Death issued by the Horry County Coroner stated under “Cause of Death” that Richard died from internal injuries from a motor vehicle accident occurring when “victim lost control of [his] vehicle, striking [the highway] pole.” J.A. 192. A toxicology report subsequently issued by the South Carolina Law Enforcement Division (“SLED”) indicated that Richard's blood alcohol content (“BAC”) was 0.289 percent at the time of his fatal crash, significantly higher than South Carolina's legal limit of .08 percent.

Richard's employer submitted a claim on behalf of Johnson for benefits under the two group policies. AUL immediately paid the life insurance benefits but refused to pay AD & D benefits under the two policies (totaling $125,000). AUL issued a denial letter, concluding that, based on his state of intoxication, Richard did not die in an accident and thus did not qualify for AD & D benefits:

Based upon the police and medical reports provided to AUL, Richard Johnson had a sufficient quantity of intoxicants in his system to make him lose control of his mental and physical faculties at the time of his fatal collision. Therefore, benefits are not payable under the accidental death and dismemberment provisions of the policy.

Mr. Johnson's death was not accidental in nature since it was not caused directly and independently of all other causes. An accident occurs when an unforeseen, sudden and unexpected event, usually of an afflictive or unfortunate character[,] occur[s]....

The hazards of drinking excessively are widely known and widely publicized. It is clearly foreseeable that drinking excessive amounts of alcohol, and driving may result in death or bodily harm. As the decedent should have foreseen the consequences of drinking excessive amounts of alcohol, a determination of his death not being accidental is reasonable.

J.A. 359. The denial letter also noted that the limitations clause specifically applicable to the Seat Belt Benefit excluded any payment of benefits in light of the fact that Richard's BAC exceeded the legal limit.

The employer sent a written request asking AUL to reconsider its denial, observing that “being intoxicated by alcohol is not listed as a limitation under the AD & D benefit. The only reference to a limitation for legal intoxication appears on the following page and appears to apply to the seat belt benefit exclusively.” J.A. 170. On December 14, 2007, AUL again denied AD & D benefits on the same grounds as before—that Richard's...