King v. Hartford Life and Acc. Ins. Co., 02-3934.

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Citation414 F.3d 994
Docket NumberNo. 02-3934.,02-3934.
PartiesAlane KING, as Conservator and Natural Parent of Amber Lynn Schanus, Appellant, v. HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY, Appellee.
Decision Date22 July 2005

Thomas M. Neuville, argued, Northfield, MN, for appellant.

Eric Tostrud, argued, Minneapolis, MN, for appellee.


COLLOTON, Circuit Judge.*

This appeal involves the review of a decision by Hartford Life and Accident Insurance Company ("Hartford") to deny a claim for benefits under an employee benefit plan governed by the Employee Retirement Income and Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461. We reverse the decision of the district court granting summary judgment in favor of Hartford, and remand the case to the district court with directions that it be returned to the administrator for further consideration.


Hartford issued a group insurance policy to Prairie Island Indian Community d/b/a Treasure Island Resort and Casino in Minnesota. As part of its employee benefit plan, Treasure Island provided its employees with life insurance benefits and accidental death benefits under the Hartford policy. Martin Schanus, an employee of Treasure Island, died in a motorcycle crash in June 2000, and this dispute involves whether his designated beneficiary is entitled to an accidental death benefit. The beneficiary is Schanus's daughter, Amber Lynn Schanus, and this action was brought by her mother, Alane King, as conservator for Amber Lynn.

Schanus was killed after the motorcycle he was operating veered off a road and struck a fence. Schanus was ejected from the motorcycle and suffered fatal head injuries. Blood tests taken after the accident showed that Schanus was legally intoxicated at the time of the crash (with a blood-alcohol level of 0.19), and his death certificate listed "acute alcohol intoxication" as a significant condition contributing to death.

Hartford denied a claim for an accidental death benefit, which would have doubled the life insurance benefit paid to Amber Lynn, on the ground that Schanus's death was not the result of an "accidental bodily injury" within the meaning of the policy. Alternatively, Hartford asserted that the claim fell within a policy exclusion for losses caused by an "intentionally self-inflicted injury, suicide, or suicide attempt, whether sane or insane." King then brought an action in Minnesota state district court, alleging that Hartford's denial of the accidental death benefit was "arbitrary, capricious, and not a fair or logical reading of the policy language." Hartford removed the action to the United States District Court for the District of Minnesota because the claim arises under ERISA. See Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 67, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).

In the district court, despite the general rule that a challenge to the decision of a benefits administrator under ERISA should be decided based on the evidence presented to the administrator, see, e.g., Short v. Central States, Southeast and Southwest Areas Pension Fund, 729 F.2d 567, 571 (8th Cir.1984), King presented new evidence in support of the claim for benefits, and Hartford did not object to this unusual procedure.1 With the record so developed, the parties agreed that the facts were undisputed and filed cross-motions for summary judgment.

Hartford defended its decision that Schanus's death did not result from an "accidental bodily injury" by invoking the definition of "accident" set forth in Wickman v. Northwestern National Insurance Co., 908 F.2d 1077 (1st Cir.1990). The Wickman decision excluded from the scope of "accident" those cases in which "a reasonable person ... would have viewed the injury as highly likely to occur as a result of the insured's intentional conduct." Id. at 1088. Applying Wickman, the district court concluded that "neither Hartford's definition of its plan terms nor its application of those terms to the facts can be considered either arbitrary or capricious," (Hr'g Tr. at 23), and it granted summary judgment in favor of Hartford. The court, however, expressed "no hesitation whatsoever in indicating that this is an extraordinarily hard rule of law," and remarked that "[i]t would be very pleasing to this court were the court of appeals to take a very careful look at this." (Id. at 26).

On appeal, a panel of this court reversed the grant of summary judgment in favor of Hartford and remanded the case for further proceedings. King v. Hartford Life and Accident Ins. Co., 357 F.3d 840 (8th Cir.2004). The panel adopted the opinion in Wickman as the applicable test for determining whether Schanus died as a result of accidental bodily injury, and then evaluated whether Schanus's death was "highly likely to occur" as a result of his drunk driving. Relying on statistical evidence that drunk driving deaths constitute less than one percent of the number of people arrested for drunk driving, the panel concluded that such "long-shot chances" of death by drunk driving failed to satisfy the Wickman test. Id. at 844. We subsequently granted rehearing en banc and vacated the panel's opinion.

Having considered the matter en banc, we now reverse the grant of summary judgment in favor of Hartford, but we do so on a narrower ground than that articulated by the panel. For the reasons detailed below, we conclude that Hartford's litigating position concerning the proper interpretation of "accidental bodily injury" is fundamentally inconsistent with its stated basis for denying the claim in 2001 during the administrative process. Under these circumstances, we hold that the administrator's decision cannot be sustained, and the appropriate remedy is to remand the case to the district court, with directions to return the case to the administrator for application of the standard that Hartford now says should govern the claim.


Several basic principles govern our review of challenges to the decision of an plan administrator to deny a claim for benefits under a plan governed by ERISA. Congress enacted the statute with "expectations that a federal common law of rights and obligations under ERISA-regulated plans would develop." Pilot Life v. Dedeaux, 481 U.S. 41, 56, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987). As distinguished from the "brooding omnipresence in the sky" that was federal common law prior to Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), see Southern Pac. R. Co. v. Jensen, 244 U.S. 205, 222, 37 S.Ct. 524, 61 L.Ed. 1086 (1917) (Holmes, J., dissenting), Congress intended as a matter of positive law under ERISA that "a body of Federal substantive law will be developed by the courts to deal with issues involving rights and obligations under private welfare and pension plans." Franchise Tax Bd. v. Const. Laborers Vacation Trust, 463 U.S. 1, 24 n. 26, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983) (quoting 120 Cong. Rec. 29,942 (1974) (remarks of Sen. Javits)).

In Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), the Supreme Court took a major step in developing this "federal common law" of ERISA by explaining the appropriate standard of review for actions brought under 29 U.S.C. § 1132(a) to recover benefits allegedly due to a participant or beneficiary under an ERISA-regulated plan. The Court in Bruch concluded that principles of trust law should guide the determination of a standard of review. Under these established principles, unless a benefit plan gives the plan administrator power to construe disputed or doubtful terms, or provides that eligibility determinations are to be given deference, judicial review of the administrator's decision is de novo. Id. at 115, 109 S.Ct. 948. In such a case, a federal court may apply other aspects of the federal common law developed under ERISA to construe disputed terms in a plan, e.g., Brewer v. Lincoln National Life Insurance Co., 921 F.2d 150, 153-54 (8th Cir.1990), and, if there is good cause to do so, the court may allow parties to introduce evidence beyond the materials presented to the administrator. Donatelli v. Home Ins. Co., 992 F.2d 763, 765 (8th Cir.1993); Weber v. St. Louis Univ., 6 F.3d 558, 560-61 (8th Cir.1993).

Where a plan gives the administrator discretionary power to construe uncertain terms or to make eligibility determinations, however, the landscape is much different. In those circumstances, the administrator's decision is reviewed only for "abuse ... of his discretion," Bruch, 489 U.S. at 111, 109 S.Ct. 948 (quoting Restatement (Second) of Trusts § 187 (1959)), and the administrator's interpretation of uncertain terms in a plan "will not be disturbed if reasonable." Id. In an effort to give content to the requirement of "reasonable" interpretation by plan administrators, our court has catalogued several factors to be considered in the analysis. These include "whether their interpretation is consistent with the goals of the Plan, whether their interpretation renders any language of the Plan meaningless or internally inconsistent, whether their interpretation conflicts with the substantive or procedural requirements of the ERISA statute, whether they have interpreted the words at issue consistently, and whether their interpretation is contrary to the clear language of the Plan." Finley v. Special Agents Mut. Benefit Assoc., Inc., 957 F.2d 617, 621 (8th Cir.1992) (citing de Nobel v. Vitro Corp., 885 F.2d 1180, 1188 (4th Cir.1989)). These so-called "Finley factors" inform our analysis, but "[t]he dispositive principle remains ... that where plan fiduciaries have offered a `reasonable interpretation' of disputed provisions, courts may not replace [it] with an interpretation of their own — and therefore...

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