Hamilton v. Aig Life Ins. Co.

• Decision Date: 15 January 2002
• Docket Number: No. CIV.A.00-01132 HHK.,CIV.A.00-01132 HHK.
• Citation: 182 F.Supp.2d 39
• Parties: James Patrick HAMILTON, et. al., Plaintiffs, v. AIG LIFE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — District of Columbia

182 F.Supp.2d 39

James Patrick HAMILTON, et. al., Plaintiffs, v. AIG LIFE INSURANCE COMPANY, Defendant.

No. CIV.A.00-01132 HHK.

United States District Court, District of Columbia.

January 15, 2002.

COPYRIGHT MATERIAL OMITTED

Richard Alan Seligman, Washington, DC, for plaintiffs.

Waldemar Jacob Pflepsen, Jr., Richard Karpinski, Raul Antonio Cuervo, Jorden Burt Boros Cicchetti Berenson & Johnson, L.L.P., Washington, DC, for defendant.

MEMORANDUM OPINION

KENNEDY, District Judge.

Plaintiffs James Patrick Hamilton, Jill McLaughlin and Robin McLaughlin claim that defendant AIG Life Insurance Company ("AIG") violated the Employee Retirement Income and Security Act (ERISA), 29 U.S.C. § 1001 et seq., by refusing to pay them benefits they claim they are due as beneficiaries under an insurance plan that covered the life of Bruce McLaughlin. AIG moves for summary judgment on the grounds that no benefits are owed because McLaughlin's death resulted from an "intentionally self-inflicted injury," a manner of death excluded from the insurance plan's coverage. Upon consideration of AIG's motion, the opposition thereto, and the record of this case, the court concludes that the motion should be granted.

I. BACKGROUND

On October 19, 1997, Bruce McLaughlin was found dead by his partner, James Hamilton, upon Hamilton's return to their Washington, D.C. residence from a business trip. McLaughlin was discovered with a bondage collar around his neck that was attached to a clothesline threaded through two bolts on opposite walls. McLaughlin was found naked, except for a pair of wool socks, and was kneeling in front of mirrors with a pair of combat boots in front of him. An autopsy concluded that the cause of death was asphyxiation and that the death was accidental.

At the time he died, Bruce McLaughlin was an employee of Cisco Systems, Inc. ("Cisco") and was a participant in Cisco's Accidental Death & Dismemberment ("AD & D") life insurance plan. The plan provides benefits for members who die as a result of injuries suffered while covered by the plan, but excludes coverage for death caused by, or resulting from, "suicide or any attempt at suicide or intentionally self-inflicted injury or any attempt at self-inflicted injury." Def. Mot. for Summ. J., Zimmerman Aff., Ex. B, at 7. AIG, the author of Cisco's life insurance plan, is also the plan's administrator.

McLaughlin named plaintiffs, his partner Hamilton and his siblings Jill and Robert McLaughlin, as the policy's beneficiaries.¹ Soon after McLaughlin's death, plaintiffs filed a claim with AIG for death benefits. As part of its claim investigation, AIG obtained a police report of McLaughlin's death, an autopsy report, and McLaughlin's death certificate. Based on these reports, AIG believed that McLaughlin's death resulted from autoerotic asphyxiation, an act where one seeks to enhance sexual stimulation by restricting the flow of oxygen to the brain. AIG determined that when McLaughlin set up his apparatus, he tied his ropes too tight, causing him to accidentally choke himself to death while engaging in his act of sexual gratification. As a result, the insurance company concluded that McLaughlin was not covered because his death resulted from the "intentionally self-inflicted injury" of autoerotic asphyxiation.

AIG did not deny the claim immediately, however, but requested advice from Robert Morris of the law firm of Epstein, Becker & Green as to whether the law allowed insurance companies with "intentionally self-inflicted injury" exclusions to deny a claim arising out of a death by autoerotic asphyxiation. In his review of the matter, Morris stated that the law was limited and unclear, but provided some basis for denying plaintiffs' claim. On March 3, 1998, based on the police report of McLaughlin's death, the autopsy report, the death certificate, and the outside legal opinion it obtained, AIG denied plaintiffs' claim on the ground that it was excluded by the "intentionally self-inflicted injury" provision of Cisco's life insurance plan.

Plaintiffs appealed the denial through AIG's internal review procedures, claiming that McLaughlin's death was not the result of an intentionally self-inflicted injury. In support of their appeal, plaintiffs submitted an affidavit from Dr. Michael G. Gelles, a psychologist who claimed extensive experience in reviewing and investigating autoerotic fatalities. Gelles suggested that McLaughlin did not intend to cut off the flow of oxygen to his brain but rather had created a bondage-style setting that was part of a staged fetishistic masturbation scene. In other words, McLaughlin's sexual stimulation derived from the visual pleasure of seeing himself in bondage attire and not from any self-induced hypoxia.²

AIG responded to the appeal by seeking the opinion of an independent forensic psychologist Dr. James Lewis. Dr. Lewis evaluated the information upon which AIG based its initial denial as well as Dr. Gelles's report and concluded that the cause of death was autoerotic asphyxiation and that the act resulting in death was intentional. AIG also sought another review from Morris asking if Dr. Gelles's report affected the merits of plaintiffs' claim. Morris stated that the report did not change his legal analysis regarding autoerotic asphyxiation, but noted that Dr. Gelles's conclusions, if true, improved plaintiffs' chances of succeeding in court.

Based on the opinions of Dr. Lewis and Frank Morris, AIG denied plaintiffs' appeal. This suit followed.

II. SUMMARY JUDGMENT STANDARD

Under Federal Rule of Civil Procedure 56, summary judgment shall be granted if the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits show that there is no genuine issue of material fact in dispute and that the movant is entitled to judgment as a matter of law. Facts "that might affect the outcome of the suit under the governing law" are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). The non-movant's opposition must consist of more than mere unsupported allegations or denials and must be supported by affidavits or other competent evidence setting forth specific facts showing that there is a genuine issue for trial. See Fed.R.Civ.P. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The non-movant's evidence must be of a nature "that would permit a reasonable jury to find" in its favor. Laningham v. Navy, 813 F.2d 1236, 1242 (D.C.Cir.1987). Evidence that is "merely colorable" or "not significantly probative," is not sufficient to sustain a grant of summary judgment. Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505.

III. ANALYSIS

A. Standard of Review

1. Abuse of Discretion vs. De Novo

In Firestone Tire & Rubber Co. v. Bruch, the Supreme Court established that claims brought under ERISA challenging the denial of insurance benefits are "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" in which case review is for abuse of discretion. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989). A plan administrator's decision is not an abuse of discretion if it is reasonable. See Block v. Pitney Bowes, Inc., 952 F.2d 1450, 1454 (D.C.Cir.1992) ("The essential inquiry here, in short, is what the district court understood it to be: Did the [plan administrator] reasonably construe and apply [the company's] plan in [plaintiff's] case?"). Neither side disputes that Cisco's AD & D plan confers discretion on AIG in determining eligibility.

In deciding whether an abuse of discretion occurred, courts will account for a conflict of interest on the part of an insurance company. In Firestone, the Supreme Court cautioned that "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.'" Id. (citing Restatement (Second) of Trusts, § 187, Comment d (1959)).³ Because administrators of insurance plans are considered fiduciaries under ERISA, they must act in the best interests of their policyholders. But insurance companies that pay benefits out of their own pockets also have an incentive to deny policyholders' claims, thus creating a potential conflict of interest. See Fitts v. Federal Nat'l Mortgage Ass'n, 77 F.Supp.2d 9, 20 (D.D.C.1999), rev'd on other grounds, 236 F.3d 1 (D.C.Cir.2001). Because AIG is a plan fiduciary that also stands to save money through a claim denial, it acts under a potential conflict of interest. While recognizing the presence of a potential conflict, in obeisance to Firestone, the court reviews AIG's decision for abuse of discretion.

2. The Appropriate Level of Deference Within Abuse of Discretion Review Standard

Plaintiffs posit that this court should dramatically decrease the amount of deference shown AIG in determining whether AIG abused its discretion because its decision was tainted by its conflict of interest. Plaintiffs make two arguments in support of their position. First, plaintiffs contend that AIG's policy of consistently denying autoerotic asphyxiation claims demonstrates self-interest because it shows that AIG was committed to denying plaintiffs' claim regardless of its merits. Second, plaintiffs maintain that AIG's reversal of the initial recommendation that their claim be paid shows that AIG's decision was actuated by its conflicting interest. Plaintiffs point out that soon after AIG received their claim, Jill Vivian, one of the company's claims examiners, recommended that it be paid. Philip Harbottle, director of AIG's claims department, disagreed with Vivian's recommendation and recommended denial of the claim. Plaintiffs contend that AIG's change of course demonstrates that...