Reinking v. Philadelphia American Life Ins. Co.

• Decision Date: 17 August 1990
• Citation: 910 F.2d 1210
• Parties: 12 Employee Benefits Ca 2222 Curtis REINKING; Carol Reinking, Plaintiffs-Appellees, v. PHILADELPHIA AMERICAN LIFE INSURANCE COMPANY, Defendant-Appellant, and Tennessee Gas Pipeline Company; ICH Corporation, Defendants. Curtis REINKING; Carol Reinking, Plaintiffs-Appellants, v. PHILADELPHIA AMERICAN LIFE INSURANCE COMPANY, Defendant-Appellee, and Tennessee Gas Pipeline Company; ICH Corporation, Defendants. Curtis REINKING; Carol Reinking, Plaintiffs-Appellees, v. PHILADELPHIA AMERICAN LIFE INSURANCE COMPANY, Defendant-Appellant, and Tennessee Gas Pipeline Company, Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1210

910 F.2d 1210

12 Employee Benefits Ca 2222

Curtis REINKING; Carol Reinking, Plaintiffs-Appellees, v. PHILADELPHIA AMERICAN LIFE INSURANCE COMPANY, Defendant-Appellant, and Tennessee Gas Pipeline Company; ICH Corporation, Defendants.

Curtis REINKING; Carol Reinking, Plaintiffs-Appellants, v. PHILADELPHIA AMERICAN LIFE INSURANCE COMPANY, Defendant-Appellee, and Tennessee Gas Pipeline Company; ICH Corporation, Defendants.

Curtis REINKING; Carol Reinking, Plaintiffs-Appellees, v. PHILADELPHIA AMERICAN LIFE INSURANCE COMPANY, Defendant-Appellant, and Tennessee Gas Pipeline Company, Defendant.

United States Court of Appeals, Fourth Circuit.

Argued March 6, 1990.

Decided Aug. 8, 1990.

As Amended Aug. 17, 1990.

David R. Sonnenberg, argued (David R. Rosenberg, on brief), Levan, Schimel, Richman, Belman, Abramson & Scanlan, P.A., Columbia, Md., for defendant-appellant.

Warren D. Stephens, McCarthy, Bacon, Costello & Stephens, Landover, Md., for plaintiffs-appellees.

Before MURNAGHAN, Circuit Judge, BUTZNER, Senior Circuit Judge, and KAUFMAN, Senior United States District Judge for the District of Maryland (sitting by designation).

FRANK A. KAUFMAN, Senior District Judge:

The defendant Philadelphia American Life Insurance Company (PALICO) appeals a district court judgment ordering it to pay medical benefits and attorney's fees for injuries which Carol Reinking incurred when she attempted to commit suicide. Because the district court properly applied the law and was not clearly erroneous in finding that Mrs. Reinking lacked the mental capacity to injure herself intentionally, we affirm the judgment of the district court.

I.

Carol Reinking suffered a miscarriage in April 1986. Children had been at the center of her life, and the traumatic loss of her child left her with an extreme sense of failure. She sought help from her doctor, family, and friends, but she found herself unable to cope with her grief. According to expert medical testimony introduced at trial, Mrs. Reinking suffered from major depression, a mental disorder characterized by loss of weight, sleeping problems, excessive guilt, and suicidal intentions. Further testimony indicated that the depression grossly impaired her judgment, prevented her from formulating or considering options, and inhibited her ability to engage in rational thought.

On May 20, 1986, unable to cope with the miscarriage and unable to conceive of any other alternative that would end her pain, Mrs. Reinking attempted to commit suicide. While her husband was upstairs, she went into their bedroom, took his pocket knife, and stabbed herself 11 times in the arm and wrist, 6 times in her neck, 7 times in her chest (nicking her heart twice), and 8 times in her abdomen. She then thrust the knife into her thigh, virtually severing a finger when the blade closed. Mrs. Reinking injured almost every vital organ in her body as well as severing numerous arteries, tendons, ligaments, and nerves. Despite the extreme brutality of her injuries, she testified that she felt no pain as she inflicted them.

Still conscious after having stabbed herself 32 times, Mrs. Reinking attempted to leave the house to lie down under a bridge and bleed to death. After putting on extra clothing so she "wouldn't look all bloody ... walking down the street," she passed out before she was able to get out the door. Her husband heard the fall and found her when he came downstairs to investigate. Miraculously, she survived. Her recovery, however, has been difficult, and she had incurred medical expenses in the vicinity of $70,000 at the time of trial.

The Reinkings filed a claim for medical benefits under their insurance policy with defendant PALICO. PALICO denied the claim under a provision in the policy excluding coverage for "intentionally self-inflicted injuries." After several unsuccessful appeals within the company, the Reinkings instituted suit in state court to collect the policy benefits. The suit included allegations of breach of contract, breach of fiduciary duty, intentional infliction of emotional distress, and violation of the Employee Retirement Income Security Act of 1974 (ERISA). ¹ PALICO removed the case to federal court. Prior to trial, the district court dismissed the state law claims as pre-empted by ERISA.

The heart of the Reinkings' claim is that, even though Mrs. Reinking inflicted her own injuries, her mental illness rendered her unable to do so "intentionally." During a bench trial, the parties each presented expert testimony concerning Carol Reinking's mental condition. All agreed that she was suffering severe mental depression. ² They also agreed that her acts were purposeful in that she understood the character of her actions and sought to end her life. PALICO's experts testified that she was not delusional or psychotic. The plaintiffs' experts indicated that she could not formulate options and that, while she may have been "purposeful," she was not "rational."

PALICO argued that because Mrs. Reinking understood the character of her actions and sought to end her life, her actions were "intentional" and excluded under the policy. PALICO also asserted that whether or not the trial court agreed with PALICO's decision to deny benefits, the district court should only have reversed that denial if that denial constituted an abuse of discretion. Applying the principles articulated in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), the trial court reviewed de novo the company's decision to deny benefits. On the merits, the court found that Mrs. Reinking was incapable of forming the requisite intent to injure herself and ordered PALICO to pay benefits. The court also awarded the Reinkings attorney's fees under ERISA of over $35,000. PALICO appeals the award of benefits and the grant of attorney's fees while the Reinkings cross-appeal the district court decision that they may not recover extracontractual damages under the ERISA statute. We affirm.

II.

PALICO contends that the district court misapplied Firestone in determining that PALICO's decision to deny benefits was subject to a de novo, rather than an abuse of discretion, standard of review. In Firestone, the plan administrator had interpreted the term "reduction in work force" not to include the sale of a division to another company and denied benefits to workers in that division based on that interpretation. Applying principles of trust law, the Supreme Court held that "a denial of benefits challenged under Sec. 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." 109 S.Ct. at 956. ³ PALICO presents two reasons why this court should apply an abuse of discretion standard.

First, PALICO attempts to distinguish this case from the one decided in Firestone. It argues that the plan administrator in Firestone denied benefits based on an interpretation of an ambiguous term defining the class of individuals eligible for benefits (i.e., those who lost their jobs due to a "reduction in work force"). PALICO contends that this case, by contrast, presents the court with a denial of benefits to a single individual, not a class, based upon the application of unambiguous policy terms. In essence, the company attempts to distinguish the interpretation of a policy term from the application of the policy to a particular individual. The de novo standard, the argument concludes, should apply only to the interpretation of policy terms affecting a class of individuals.

The suggested distinction does not fit well in this case. Just as the dispute in Firestone turned on the interpretation of the phrase "reduction in work force," the dispute in this case turns largely on the interpretation of the phrase "intentionally self-inflicted injury." PALICO presents a definition of the term "intentionally" which would cover Mrs. Reinking's actions (because she acted "purposefully"), while the Reinkings offer another definition which would not cover her actions (because she could not exercise "rational" judgment). The choice between these interpretations determines whether Mrs. Reinking, and other potential beneficiaries in a similar position, are eligible for benefits under the policy. As the Supreme Court articulated in Firestone, the court choosing between these competing definitions owes no deference to either the plan administrator or the employee and should apply a de novo standard of review, unless the plan itself delegates to one of the parties the authority to interpret the policy terms, which in this instance, as discussed supra, the plan does not do.

However, this case does involve a factual question distinguishable from the issue presented in Firestone. The parties in Firestone did not contest the facts underlying the sale of the division; their dispute concerned only the application of the policy to those facts. In this case, however, the parties contest the degree of Mrs. Reinking's mental impairment. PALICO suggests that the court should defer to its factual determination that Mrs. Reinking's depression did not significantly impair her capacity to form intent at the time of her suicide attempt. Its medical expert supported this decision by testifying that she was capable of exercising rational judgment, so she was able to injure herself "intentionally," and in fact so did, under either of the definitions offered by the parties.

But that factual determination is not controlling because the standard announced in Firestone applies both to the interpretation of policy terms and to factual determinations necessary for the administrator to "determine eligibility for benefits." 109 S.Ct. at 956. Courts will review both sets of questions de novo unless the policy delegates discretionary authority to one of the parties. In our view, nothing in the...