Capone v. Aetna Life Ins. Co.

• Decision Date: 05 January 2010
• Docket Number: No. 09-10222.,09-10222.
• Citation: 592 F.3d 1189
• Parties: James M. CAPONE, Plaintiff-Appellant, v. AETNA LIFE INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

592 F.3d 1189

James M. CAPONE, Plaintiff-Appellant, v. AETNA LIFE INSURANCE COMPANY, Defendant-Appellee.

No. 09-10222.

United States Court of Appeals, Eleventh Circuit.

January 5, 2010.

Randall D. Grayson, Anderson Dailey, LLP, Atlanta, GA, Marc R. Ginsberg, Madina & Ginsberg, P.A., Miami, Lakes, FL, for Capone.

Elizabeth J. Bondurant, Nikole Marie Crow, Smith, Moore, Leatherwood, LLP, Atlanta, GA, for Defendant-Appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before MARCUS, FAY and ANDERSON, Circuit Judges.

FAY, Circuit Judge:

Plaintiff-Appellant James Capone struck his head on the bottom of the ocean while diving in the Bahamas, paralyzing himself from the neck down. Capone sought benefits under the Accidental Death and Personal Loss provision of his employee health insurance policy administered by Aetna Life Insurance Company (Aetna). Aetna denied Capone's claim for benefits twice, prompting this civil action. The district court granted Aetna's motion for summary judgment, holding that Aetna properly applied the plan's accidental means and alcohol exclusion provisions barring recovery. We disagree, holding that Aetna's investigation was insufficient to support their conclusions.

I. FACTUAL AND PROCEDURAL BACKGROUND

Capone, an Ohio resident, was an employee of Dent Wizard International Inc., (Dent Wizard) a Missouri company and wholly-owned subsidiary of Cox Enterprises, Inc. (Cox), a Georgia corporation. As an employee of Dent Wizard, Capone participated in Cox's Welfare Benefit Plan. The Welfare Benefit Plan is governed by the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. Although Cox self-funded the majority of the benefits available under the plan, the Accidental Death and Personal Loss benefits were funded through an insurance policy with Aetna. The policy had a choice of law provision, which designated Georgia as the governing jurisdiction.

In April 2004, Capone attended a Dent Wizard employee training and incentive program in the Bahamas. At approximately 3:16 p.m., Capone joined a group of guests jumping and diving from a dock adjacent to the Wyndham Nassau Resort. On his first dive, Capone dove into the ocean without incident. On his second dive, Capone struck his head on the bottom, fracturing his spine and suffering permanent quadriplegia.¹ At 4:20 p.m. Capone was admitted to the Princess Margaret Hospital in Nassau and stabilized.

As part of their admittance procedure, the hospital performed a blood serum test and entered the results at 5:22 p.m.² The alcohol in Capone's blood serum measured 243.9 mg/dL, which was later converted to a blood alcohol content (BAC) of 0.244 by Aetna's claims administrator.³ The next day, Capone was transferred from the Bahamian hospital to Jackson Memorial Hospital in Miami, Florida for further treatment. Both hospitals characterized his injury as a result of diving into shallow water and the Miami hospital labeled the incident as a "+ETOH diving accident"⁴ and recorded that Capone "noted a history of alcohol abuse."

Capone sought benefits under the Accidental Death and Personal Loss provision of his employee Welfare Benefits Plan. Dent Wizard submitted Capone's initial claim for benefits to Aetna in June 2004, stating that Capone "dove off pier and broke neck." Aetna received a second claim form describing the injury more specifically as a "diving accident" that "resulted [in] C6-7 fracture with complete C5-6 quadriplegia."

After several requests to Capone, Aetna received his medical records and toxicology report in November 2005. On February 1, 2006, Aetna denied Capone's claim for benefits on two independent grounds. First, Aetna claimed that Capone intentionally exposed himself to unnecessary and foreseeable risks by voluntarily diving from a fifteen to twenty foot high dock into the ocean. Therefore, his injury was not the result of an "accident" as defined by the policy. Aetna based its denial on an accident report from the Wyndham Nassau Resort, and information provided by Alfred Rolle, a security officer for the Wyndham, who indicated that "no diving" signs were posted on the dock and ignored by Capone.

Second, Aetna claimed that even if his injuries were the result of an "accident," no benefits were payable under the policy for accidents "caused or contributed to by the use of alcohol." Aetna cited Capone's medical records and the toxicology report in its denial. Aetna stated that because Capone was intoxicated, he could not recover under his policy.

Appealing Aetna's denial, Capone claimed that jumping from the dock was a common practice. Capone stated that, contrary to Aetna's assertion, "no diving" signs were not posted and a nearby lifeguard did not stop the group from diving. Capone supported his appeal with photographic evidence of the dock and resort area, taken two weeks after his injury.

The photographs showed the dock sitting four to five feet above the water instead of the fifteen to twenty feet claimed by Aetna. The photographs also showed several people jumping off the dock, though no people were diving. "No diving" signs were not visible in the photographs. Depositions of Wyndham employees later revealed that the "no diving" signs had been blown away months earlier and never been replaced. No lifeguard was visible in the photographs.

Addressing the alcohol exclusion, Capone argued that Aetna failed to adequately specify how alcohol contributed to his injury. Capone challenged the accuracy and reliability of the toxicology report due to the hospital's failure to provide calibration testing of its equipment. Capone also contended that an accurate conversion of his blood serum level put his BAC at 0.18 instead of the 0.244 claimed by Aetna.⁵

Capone further alleged that because the accident occurred at 3:16 p.m., and he had consumed alcohol in the hour immediately preceding the accident, his actual BAC at the time of the accident would have been substantially less than 0.18 due to the delay in alcohol absorption. Capone cited the same medical treatise used by Aetna to support his argument. Finally, Capone contended the accident was caused by a sudden change in water depth due to wave action and not his alcohol consumption.

Capone supported his appeal with an eyewitness affidavit signed by Capone's coworker and friend, Kevin Zeh. Zeh attested that both he and Capone successfully dove from the dock prior to Capone's accident, and that other guests were jumping and diving as well. Zeh stated that he did not see Capone "acting inappropriately" or having "red eyes, slurred speech, or difficulty walking," immediately preceding the accident.

In a letter dated May 31, 2006, Aetna denied Capone's appeal. Aetna concluded that a voluntary and intentional dive into the ocean was not an accidental means of injury under Georgia law, despite the fact that the resulting injury may have been unexpected. Additionally, Aetna explained that the toxicology results, showing a BAC of 0.244, barred his recovery. Aetna relied on a learned medical treatise, which stated that someone with a BAC of 0.20 to 0.30 would exhibit the following behavior: "staggering, grossly impaired, drunk; may be lethargic and sleepy or hostile and aggressive."⁶ Aetna noted that even if Capone's BAC was 0.18 as claimed by his appeal letter, the treatise stated that he would still show signs of "increas[ed] impairment of sensory motor activities, reaction times, attention, visual activity, and judgment."⁷ Aetna dismissed Capone's challenge to the reliability of the blood serum test because Capone failed to provide any expert or medical documentation to support his assertions.

Capone filed this action for benefits against Aetna, Cox, and Cox's Welfare Benefits Plan. Capone claimed a wrongful denial of benefits under 29 U.S.C. § 1132(a)(1)(B). The district court dismissed all claims and defendants except for the benefits claim against Aetna. In response to Aetna's motion, the district court issued a preliminary order stating that the standard of review for Capone's ERISA benefits claim was this circuit's "heightened arbitrary and capricious standard" because Aetna was a conflicted administrator acting as both evaluator and payor of claims.

After conducting limited discovery, Capone and Aetna filed cross motions for summary judgment. On de novo review, the first step of ERISA's arbitrary and capricious standard, the district court concluded that Aetna's claim decision was correct and granted Aetna's motion for summary judgment. Capone argues that the district court erred by: (1) applying the incorrect standard of review under ERISA in reviewing his claims; (2) denying his claim under Georgia's "accidental means" standard; and (3) applying the insurance plan's alcohol exclusion as an alternative, independent ground for denial.

II. STANDARD OF REVIEW

We review de novo a district court's grant of summary judgment, applying the same legal standards governing the district court's decision. Sierra Club, Inc. v. Leavitt, 488 F.3d 904, 911 (11th Cir. 2007).

ERISA provides no standard for reviewing decisions of plan administrators or fiduciaries. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 109, 109 S.Ct. 948, 953, 103 L.Ed.2d 80 (1989). However, the Supreme Court in Firestone established three distinct standards for reviewing an ERISA plan administrator's decision: (1) de novo where the plan does not grant the administrator discretion; (2) arbitrary and capricious where the plan grants the administrator discretion;⁸ and (3) heightened arbitrary and capricious where the plan grants the administrator discretion and the administrator has a conflict of interest. See Buckley v. Metro. Life, 115 F.3d 936, 939 (11th Cir.1997). Recent cases from this circuit have expanded the Firestone test into a six-step analysis to guide district courts in reviewing an administrator's benefits decision:

(1) Apply the de novo...