Tran v. United of Omaha Life Ins. Co.

• Citation: 780 F.Supp.2d 965
• Decision Date: 31 January 2011
• Docket Number: No. 4:10CV3128.,4:10CV3128.
• Parties: Dung TRAN, Plaintiff,v.UNITED OF OMAHA LIFE INSURANCE CO., Defendant.
• Court: U.S. District Court — District of Nebraska

780 F.Supp.2d 965

Dung TRAN, Plaintiff,

v.UNITED OF OMAHA LIFE INSURANCE CO., Defendant.

No. 4:10CV3128.

United States District Court, D. Nebraska.

Jan. 31, 2011.

Jeffry D. Patterson, Bartle, Geier Law Firm, Lincoln, NE, for Plaintiff.Timothy J. Thalken, Fraser, Stryker Law Firm, Omaha, NE, for Defendant.

MEMORANDUM AND ORDER

RICHARD G. KOPF, District Judge.

The plaintiff, Dung Tran (“Tran”), is a beneficiary under a group life and accidental death and dismemberment insurance policy that the defendant, United of Omaha Life Insurance Company (“United of Omaha”), issued to Lester Electrical of Nebraska, Inc. (“Lester Electrical”). Tran's nephew, Huy Nguyen (“Nguyen”), was insured under the policy as an employee of Lester Electrical, and he named Tran as his sole beneficiary. Nguyen was killed when he drove his car around a lowered cross-arm at a railroad crossing in Lincoln, Nebraska, and was struck by a train. United of Omaha paid Tran the life insurance benefits under the policy but denied coverage for accidental death benefits. The denial was based on a determination that Nguyen was driving while intoxicated and under the influence of controlled drugs.

Tran appealed the claim denial in accordance with the procedure specified in the policy, but when that was unsuccessful he brought suit against United of Omaha in the County Court of Lancaster County, Nebraska. The action was removed to this court on the basis of federal question jurisdiction. There is no dispute that the group insurance policy was an employee benefit plan governed by the Employee Retirement Income and Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq., and therefore the action effectively is brought under 29 U.S.C. § 1132(a)(1)(B)(providing that “[a] civil action may be brought ... by a participant or beneficiary ... to recover benefits due to him under the terms of his plan[.]”).

The matter is submitted to the court on cross-motions for summary judgment based solely on evidence contained in the administrative record that was developed by United of Omaha (filing 15, hereinafter designated as “AR”). ¹ Although lacking an index and not authenticated, the administrative record appears to include a copy of the insurance policy (AR at 1–69), written correspondence (AR at 70–76, 78, 80–87, 89–91, 93, 110), notes (AR at 88, 92, 111), Tran's claim for benefits (AR at 94–97), Nguyen's application for insurance (AR at 98–99), a motor vehicle accident report (AR at 100–101), an autopsy report with attached forensic toxicology report (AR at 102–108), a death certificate (AR at 109), and internal emails (AR 77, 79, 112–114).

The evidence indicates that Lester Electrical is the plan administrator, but that United of Omaha has discretionary authority to construe the terms of the insurance policy and to determine eligibility for benefits. Thus, the summary plan description states:

By purchasing this Policy, the policyholder [Lester Electrical] grants us [United of Omaha] the discretion and the final authority to construe and interpret the Policy. This means that we have the authority to decide all questions of eligibility and all questions regarding the amount and payment of any Policy benefits within the terms of the policy as interpreted by us.... Our interpretation of the Policy as to the amount of benefits and eligibility shall be binding and conclusive on all persons.

(AR at 67.)

The parties are in agreement that the foregoing provision requires the court to apply a deferential abuse-of-discretion standard in reviewing United of Omaha's decision to deny Tran's claim for accidental death benefits. See McKeehan v. Cigna Life Ins. Co., 344 F.3d 789, 792 (8th Cir.2003) (“In reviewing the denial of ERISA benefits, the reviewing court applies a deferential abuse-of-discretion standard if the plan ‘gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.’ ”) (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989)); Parkman v. Prudential Ins. Co. of America, 439 F.3d 767, 772 (8th Cir.2006) (“A plan gives the administrator or fiduciary discretionary authority if it contains explicit discretion-granting language.”). Under this standard, the court may only reverse a decision to deny ERISA benefits if the decision is “arbitrary and capricious.” Jackson v. Prudential Ins. Co. of America, 530 F.3d 696, 701 (8th Cir.2008). When a plan administrator or fiduciary “offers a reasonable explanation for its decision, supported by substantial evidence, it should not be disturbed.” Id. (quoting Ratliff v. Jefferson Pilot Fin. Ins. Co., 489 F.3d 343, 348 (8th Cir.2007)). “Substantial evidence ‘means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.’ ” Ratliff, 489 F.3d at 346 (quoting McGee v. Reliance Standard Life Ins. Co., 360 F.3d 921, 924 (8th Cir.2004)). The discretionary decision of a plan administrator or fiduciary “is not unreasonable merely because a ‘different, reasonable interpretation could have been made.’ ” Id. at 348 (quoting Parkman, 439 F.3d at 773). However, when an insurer both evaluates claims for ERISA benefits and pays granted claims, a conflict of interest exists which may be relevant in determining whether the insurer abused its discretion in denying a claim. See Jones v. Unum Provident Corp., 596 F.3d 433, 438 (8th Cir.2010); Chronister v. Unum Life Ins. Co. of America, 563 F.3d 773, 775 (8th Cir.2009); Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105, 112–15, 128 S.Ct. 2343, 171 L.Ed.2d 299 (2008).

According to the motor vehicle accident report prepared by the investigating officer from the Lincoln Police Department, the car-train collision occurred at 5:56 a.m. on November 11, 2009. Witnesses stated that Nguyen drove his car around another vehicle which was stopped at the railroad crossing and then proceeded into the crossing at between five to ten miles per hour. The cross-arms and flashing red warning lights at the crossing were activated and working, and the approaching Amtrak train was blowing its whistle. Nguyen was pronounced dead at the scene. (AR at 100–01.)

An autopsy performed at the Douglas County Morgue ² on November 20, 2009, determined that Nguyen died from severe blunt trauma, with severe head and internal injuries. (AR at 102–03.) Attached to the autopsy report is a forensic toxicology report prepared by Creighton Medical Laboratories on November 24, 2009, which indicates that specimens received from the autopsy included “urine, scant blood, cavity fluid, vitreous humor.” (AR at 104.) The forensic toxicology report states without any elaboration that Nguyen's blood ethanol level was “0.088g/100mL” and that “[c]annabinoids and alcohol were detected in the urine.” (AR at 104.)

Tran completed a proof of death form and application for accidental death benefits on November 20, 2009. (AR at 94–97.) On January 11, 2010, United of Omaha wrote Tran to advise that while his claim for life insurance benefits was approved, his claim for accidental death benefits was disallowed. The explanation provided in the letter was as follows:

The Exceptions of the Accidental Death provisions state that “We will not pay for any loss which: (g) is caused by You, and is the result of injuries You receive, while under the influence of a Controlled Drug, unless administered on the advice of a Physician;” ... (h) “is caused by You, and is a result of injuries You receive, while Intoxicated.” Controlled Drug is defined as any drug having the capacity to affect behavior and regulated by law with regard to possession and use. Intoxicated is defined as your blood alcohol level at death or dismemberment that equals or exceeds the legal limit for operating a motor vehicle in the jurisdiction in which the loss occurs.

We have received and reviewed the death certificate, the State of Nebraska Investigator's Motor Vehicle Accident Report and the Autopsy Report and Forensic Toxicology Report from the Coroner's office. The Accident Report indicates that your nephew was seen driving around the crossing guard at the train tracks. Witnesses reported that he ignored the flashing warning lights and train whistle. The Toxicology Report states that your nephew's blood alcohol content at the time of his death was 0.0880%. The legal limit for operating a motor vehicle in the state of Nebraska is 0.08%. The report also indicates that your brother [sic] tested positive for cannabinoids (marijuana) at the time of his death.

Therefore, after a review of the information received, it has been determined that your nephew caused the accident, while Intoxicated and while under the influence of a Controlled Drug, and the Accidental Death benefit under this policy must be denied.

(AR at 89.) The letter also advised Tran, among other things, that “[i]n the event you wish to appeal this denial, you have the right to request a review by the Group Life Claims Department. The request for an appeal must be submitted within 180 days from receipt of this notice.” ³ (AR at 89.)

On January 18, 2010, Tran, through his attorney, notified United of Omaha that he was appealing the denial. Tran's attorney pointed out that the presence of cannabinoids in Nguyen's urine did not establish that he was “under the influence” of a controlled drug at the time of the accident. He also argued that the blood ethanol level was an inexact number, which could vary by as much as 0.01%, and objected that there was no showing the “scant blood” was collected, preserved, and tested in accordance with accepted procedures. (AR at 80–81.)

United of Omaha acknowledge receipt of the appeal on January 28, 2010, and provided Tran's attorney with a copy of the administrative claim file on February 1, 2010. (AR at 76, 78.) A second letter was sent to Tran's attorney on March 1, 2010, in which United of Omaha stated:

The information...