Pierre v. Connecticut General Life Ins. Co./Life Ins. Co. of North America
| Citation | 866 F.2d 141 |
| Decision Date | 23 February 1989 |
| Docket Number | No. 88-3506,88-3506 |
| Parties | Celestine PIERRE, Plaintiff-Appellant, v. CONNECTICUT GENERAL LIFE INSURANCE COMPANY/LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant-Appellee. Summary Calendar. |
| Court | United States Courts of Appeals. United States Court of Appeals (5th Circuit) |
Paul Brian Spurlock, New Orleans, La., for plaintiff-appellant.
James F. Ryan, Law Offices of Donald T. Giglio, New Orleans, La., for defendant-appellee.
Appeal from the United States District Court for the Eastern District of Louisiana.
Before REAVLEY, JOHNSON and JONES, Circuit Judges.
Celestine Pierre brought this action contesting the denial of insurance benefits for the shooting death of her husband, James Pierre. Mr. Pierre purchased an accidental death insurance policy from Connecticut General Life Insurance Company and Life Insurance Company of North America (Connecticut General), which was provided as part of an employee welfare benefit plan through his employer. Connecticut General determined that Mr. Pierre's death was not an accident and refused to pay benefits to Mrs. Pierre. The district court upheld the denial of benefits and dismissed the complaint with prejudice. Because we find the denial of benefits to be based on substantial evidence and not arbitrary and capricious, we affirm.
New Orleans police found the body of James Pierre in his car on October 26, 1986. He had been shot twice. Antoinette Collins, a girlfriend of Mr. Pierre, turned herself in to the police the next day. She confessed to shooting Mr. Pierre when he refused to stop beating her with his own handgun. The police, accepting Miss Collins' story, declined to prosecute her.
Celestine Pierre filed claims to recover benefits under an accident insurance policy and an accidental injury benefit provision of a separate life insurance policy. Recovery under both policies is precluded if Mr. Pierre was shot and killed in self-defense. The claims were investigated by Robert Weidele, an assistant claims manager for Connecticut General. The circumstances of the shooting were gleaned from a discussion with the detective on the case, the death certificate and autopsy report, and the written report of a private investigator who reviewed police records and interviewed Miss Collins. On the basis of this information, Connecticut General concluded that Mr. Pierre's death was not an accident and denied Mrs. Pierre's claims for recovery of benefits.
Mrs. Pierre did not request a reconsideration hearing and initially filed her claim in state court. The employee welfare benefits plan, through which Connecticut General provides insurance, is governed by the Employee Retirement Income Security Act (ERISA). Connecticut General removed the action to federal district court. Mrs. Pierre's motion to remand the claim to state court was denied. On the basis of written trial memoranda and stipulations, the district court issued an opinion and order on the merits. The district court held that hearsay statements were properly considered in assessing the claim for benefits and that denial of the claim was not arbitrary and capricious.
The insurance policies in this action are governed by ERISA, 29 U.S.C. Secs. 1001- 1461. Because it exercises authority or control in the distribution of assets of the benefits plan, Connecticut General is a fiduciary for purposes of ERISA. 29 U.S.C. Sec. 1002(21)(A). ERISA imposes duties of care, fair dealing, and impartiality on a fiduciary. See 29 U.S.C. Sec. 1104(a)(1).
Denial of benefits by a plan fiduciary may not be disturbed under ERISA unless the decision was made arbitrarily and capriciously or in bad faith, as the decision would be if it were unsupported by substantial evidence or based on an erroneous conclusion on a question of law. Dennard v. Richards Group, Inc., 681 F.2d 306, 314 (5th Cir.1982) (citing Wardle v. Central States, Southeast & Southwest Areas, Pension Fund, 627 F.2d 820, 824 (7th Cir.1980), cert. denied, 449 U.S. 1112, 101 S.Ct. 922, 66 L.Ed.2d 841 (1981)). The standard of review has elasticity to allow reviewing courts to account for possibilities for self-interest and other biases. This flexibility is evident in the different incantations of the standard that look for bad faith and substantial evidence. See Van Boxel v. Journal Co. Employees' Pension Trust, 836 F.2d 1048, 1049-50 (7th Cir.1987).
Mrs. Pierre contends that the arbitrary and capricious standard is inappropriate in this case because of the self-interest Connecticut General has in denying benefits. While Mrs. Pierre's concern is not without merit, this circuit's rule follows the weight of authority applying the arbitrary and capricious standard in ERISA cases. See Denton v. First Nat'l Bank of Waco, 765 F.2d 1295, 1303-04 (5th Cir.1985); Ganze v. Dart Industries, Inc., 741 F.2d 790, 792 (5th Cir.1984); Bayles v. Central States, Southeast and Southwest Areas Pension Fund, 602 F.2d 97, 99 (5th Cir.1979). The standard applies equally when the insurance carrier is the decision-making fiduciary. See Reilly v. Blue Cross & Blue Shield United of Wisconsin, 846 F.2d 416, 419 (7th Cir.), cert. denied, --- U.S. ----, 109 S.Ct. 145, 102 L.Ed.2d 117 (1988). The district court correctly applied an arbitrary and capricious standard of review.
Mrs. Pierre next contends that even if the arbitrary and capricious standard of review applies in this case the use of hearsay by Connecticut General in its determination requires reversal. It is difficult to see how a plan administrator or fiduciary could base a decision on anything but extrajudicial statements. Even in formal administrative proceedings controlled by the Administrative Procedure Act (APA) hearsay evidence is permitted. To determine whether hearsay evidence may constitute substantial evidence in support of a decision, however, the reviewing court must look to factors establishing underlying reliability and probative weight. School Bd. of Broward County v. Dept. of Health, Education & Welfare, 525 F.2d 900, 906 (5th...
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Pierre v. Connecticut General Life Ins. Company/Life Ins. Co. of North America
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