Southern Farm Bureau Life Ins. Co. v. Moore

• Decision Date: 15 June 1993
• Docket Number: No. 92-7355,92-7355
• Citation: 993 F.2d 98
• Parties: 16 Employee Benefits Cas. 2665, Pens. Plan Guide P 23886D SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY, Plaintiff-Counter Defendant-Appellant, Cross-Appellee, v. Lou Ann MOORE, Defendant-Counter Plaintiff-Appellee, Cross-Appellant. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 98

993 F.2d 98

16 Employee Benefits Cas. 2665, Pens. Plan Guide P 23886D

SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY Plaintiff-Counter Defendant-Appellant, Cross-Appellee, v. Lou Ann MOORE, Defendant-Counter Plaintiff-Appellee, Cross-Appellant.

No. 92-7355

Summary Calendar.

United States Court of Appeals Fifth Circuit.

June 15, 1993.

Sam E. Scott, Robert F. Stacy, Jr., Ott, Purdy & Scott, Jackson, MS, for appellant.

Paul E. Rogers, Vaughn Davis, Jr., Jackson, MS, Michael Todd, New Albany, MS, for appellee.

Appeals from the United States District Court for the Southern District of Mississippi.

Before HIGGINBOTHAM, SMITH, and DeMOSS, Circuit Judges.

DeMOSS, Circuit Judge:

I. FACTS AND PROCEDURAL HISTORY

Lou Ann Moore, an employee of Southern Farm Bureau Life Insurance Company ("Southern Farm Life"), a Mississippi corporation, sought to recover accidental death benefits as a beneficiary of an Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132 (ERISA) regulated group policy insuring herself and her husband, Cary Moore. ¹ Mr. Moore died on April 29, 1989 when he lost control of his vehicle, and it crashed into a shopping center building and burst into flames. The medical testimony is undisputed that Mr. Moore had a brain tumor, a malignant astrocytoma of high grade, and had been suffering from a condition which would cause him to lose consciousness. This condition first occurred in 1983. In fact, in March 1989, just over a month prior to his death, the Ridgeland Fire Department was called to Mr. Moore's house because he had fainted while walking in the street and, in June 1988, the same fire department responded to a call at his house when he had a seizure. Lou Ann Moore was aware that her husband suffered from a condition that would periodically cause him to lose consciousness, and that he was being treated for this condition during 1983 and 1984 by doctors Robinson and Guarnaschelli. Both of these physicians as well as Mrs. Moore's medical experts agreed that the tumor caused Moore to lose consciousness or have a seizure which caused the accident.

On August 25, 1989, Mrs. Moore filed with Southern Farm Life, the plan administrator, a completed claim form to obtain accidental death benefits. On October 5, 1989, Joseph Stroble, senior vice-president of claims at Southern Farm Life, after investigating the claim, determined that Mr. Moore's death was caused or contributed to by a brain tumor and therefore the death was excluded from coverage. The policy defined covered injury as "bodily injury caused by an accident resulting directly and independently of all other causes of loss covered by this policy." The policy also contained the following exclusion:

A loss that is the result of or contributed to by one of the following is not a covered loss even though it was caused by an accidental bodily injury:

(1) A disease or infirmity of the mind or body.

Southern Farm Life commenced its investigation on May 1, 1989, after Mr. Stroble read a newspaper clipping indicating that a brain tumor caused Cary Moore's death. Southern Farm Life obtained Mr. Moore's death certificate and his autopsy report, both of which stated that he died of a brain tumor. Southern Farm Life then received Mrs. Moore's completed claim forms and medical authorizations on August 25, 1989. After receiving the appropriate medical authorizations, Southern Farm Life obtained records from three physicians who had treated Mr. Moore since 1983. The reports showed Mr. Moore's prior treatment of a brain tumor and were consistent with his autopsy report. Mr. Stroble then decided based upon the evidence available that Cary Moore's death was caused or contributed to by the brain tumor, and therefore Southern Farm Life would not pay benefits because of the policy exclusion. When Stroble made his decision, neither Southern Farm Life nor Mr. Stroble had received opinions from any other physicians as to the cause of Mr. Moore's death. On October 10, 1989 Southern Farm Life filed a declaratory judgment action contending that the policy did not require it to pay benefits for Cary Moore's death, but failed to notify Lou Ann Moore that it was denying her claim. In response, Lou Ann Moore filed a counterclaim for policy benefits and an award of attorney's fees.

At trial, the district court allowed Mrs. Moore to introduce additional evidence. Her medical expert, Dr. Lloyd White, testified after reviewing slides of the brain tissue, that although the tumor caused Mr. Moore to suffer a seizure or lose consciousness while driving his van, which resulted in the crash, he could not determine whether the tumor directly caused Mr. Moore's death. After a jury trial, the district court rendered judgment based on the jury's verdict for Lou Ann Moore in the amount of $75,000, the full policy amount, in addition to prejudgment and postjudgment interest. The Court denied Southern Farm Life's Motion for Judgment as a Matter of Law and denied Lou Ann Moore's counterclaim for an award of attorney's fees. Southern Farm Life filed a notice of appeal and Lou Ann Moore filed a notice of cross-appeal. Southern Farm Life appeals contending that the district court erred by: (1) failing to review for an abuse of discretion Southern Farm Life's factual determination of the cause of Cary Moore's death, and (2) erroneously instructing the jury so as to increase Southern Farm Life's burden to prove that the death fit within an exclusion. Moore cross-appeals contending that the district court erred by refusing to award her attorney's fees. 793 F.Supp. 702 (S.D.Miss.1992).

II. DISCUSSION

A. The Proper Standard of Review

ERISA governs the insurance policy in the present case. ERISA does not dictate the appropriate standard of review for reviewing benefit determinations of plan administrators. Courts addressing this issue initially adopted the "arbitrary and capricious" standard of review.

In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) the Supreme Court addressed the issue for the first time and held if the plan does not give the plan administrator discretionary authority to interpret plan terms, then de novo review is the appropriate standard. Id. at 113, 109 S.Ct. at 956. The Supreme Court, however, did not address whether to apply the same standard to a factual determination made by a plan administrator.

This Circuit addressed the issue of the appropriate standard of review to apply to a plan administrator's factual determination in Pierre v. Conn. Gen. Life Ins. Co., 932 F.2d 1552 (5th Cir.1991). Based on facts similar to those in the present case, the court in Pierre held that it should review a factual determination made by a plan administrator for an abuse of discretion. In reaching that decision, the court noted that, according to trust principles, an ERISA fiduciary possesses inherent discretion through a statutory grant of authority to control and manage the operation of the plan. ² The Court then noted the difficulty and uncertainty in applying de novo review on a "cold record" and reasoned that in "virtually all decisional review, some deference is given to the fact finder, whether it is a district court giving deference to an administrative body or an appellate court giving deference to the district court." ³ Accordingly, the Court in Pierre ruled that for practical reasons courts simply cannot supplant plan administrators, through de novo review, as resolvers of mundane and routine fact disputes. ⁴ Ultimately, we held that "for factual determinations under ERISA plans, the abuse of discretion standard of review is the appropriate standard; that is, federal courts owe due deference to an administrator's factual conclusions that reflect a reasonable and impartial judgment." ⁵

The district court in the present case decided to review the plan administrator's factual determination of the cause of Mr. Moore's death on a de novo basis, apparently because the plan administrator failed to provide Mrs. Moore with notice of the denial of her claim. Southern Farm Life concedes that it did not provide Lou Ann Moore or her lawyer notice of denial of her claim before filing the declaratory judgment action on October 11, 1989. However, it contends that failure to provide a written denial does not mean that the abuse of discretion standard announced in Pierre is not applicable.

Title 29 C.F.R. § 2560.503-1(h) promulgated pursuant to section 503 of ERISA, 29 U.S.C. § 1133 provides:

Decision on review. (1)(i) A decision by an appropriate named fiduciary shall be made promptly, and shall not ordinarily be made later than 60 days after the plan's receipt of a request for review, unless special circumstances ... require an extension of time for processing.... The decision on review shall be furnished to the claimant within the appropriate time described in paragraph (h)(1) of this section. If the decision on review is not furnished within such time, the claim shall be deemed denied on review.

29 C.F.R. § 2560.503-1(h)(1), (4).

The Supreme Court stated in Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134, 144, 105 S.Ct. 3085, 3091, 87 L.Ed.2d 96 (1985), that this provision "enables a claimant to bring an action to have the merits of his application determined, just as he may bring an action to challenge an outright denial of benefits." When a reviewing body fails to act and the claim is deemed denied on review, "a claimant's appropriate recourse is to seek review of the denial by the district court." Folke v. Schaffer, 616 F.Supp. 1322, 1330 (D.Del 1985). In our view, the standard of review is no different whether the claim is actually denied or is deemed denied. ⁶ The role of the district court is the same in either event, and therefore we hold that the district court erred in reviewing de novo the plan administrator's factual determination of the cause of Mr. Moore's death. However, under Firestone we...