Wiles v. Am. Family Life Assurance Co. of Columbus

• Decision Date: 05 June 2015
• Docket Number: 106,661.
• Citation: 302 Kan. 66,350 P.3d 1071
• Parties: Jeremy A. WILES, Appellee, v. AMERICAN FAMILY LIFE ASSURANCE COMPANY OF COLUMBUS (AFLAC), Appellant.
• Court: Kansas Supreme Court

302 Kan. 66

350 P.3d 1071

Jeremy A. WILES, Appellee

v.AMERICAN FAMILY LIFE ASSURANCE COMPANY OF COLUMBUS (AFLAC), Appellant.

106,661.

Supreme Court of Kansas.

June 5, 2015.

Thomas S. Carlock, of Carlock, Copeland & Stair, LLP, of Atlanta, Georgia, argued the cause, and Jessica R. Beever and Bryan M. Groh, of Evans & Dixon, LLC, of Kansas City, Missouri, were on the briefs for appellant.

Donald W. Vasos, of Vasos Law Offices, of Fairway, argued the cause, and David A. Hoffman, was with him on the briefs for appellee.

Opinion

The opinion of the court was delivered by JOHNSON, J.:

After suffering severe injuries from an automobile accident, Jeremy Wiles filed a claim for benefits under a hospital intensive care policy issued to him by the American Family Life Assurance Company of Columbus (AFLAC). AFLAC denied the claim under the policy's intoxication exclusion, relying in large part on a hospital toxicology report indicating that Wiles had a blood alcohol concentration of .25 within 2 hours of the accident. Consequently, Wiles filed suit against AFLAC, seeking coverage under the policy. After excluding the hospital toxicology report, the district court found that AFLAC failed to prove that Wiles' accident was in consequence of his intoxication and therefore determined that Wiles' claim for benefits was covered under the policy. The district court then granted Wiles' motion for attorney fees, finding that AFLAC's denial of coverage was without just cause or excuse. AFLAC appealed, and the Court of Appeals reversed the district court's findings and remanded the matter for a new trial.

Wiles petitioned this court for review, arguing that the Court of Appeals erred in determining AFLAC had satisfied the appropriate foundation requirements to admit the hospital's toxicology report. We agree and consequently affirm the district court's judgment, finding coverage under the policy. However, we part company with the district court regarding its determination that AFLAC's denial of coverage was without just cause or excuse and reverse that portion of the district court's judgment awarding attorney fees to Wiles under K.S.A. 40–256.

Facts and Procedural Overview

On March 20, 2009, Wiles had a one-car accident after leaving a friend's house where he had consumed some mixed drinks while watching the NCAA basketball tournament. Wiles claimed he was driving too fast on an S-curved road and lost control of his truck while reaching for his cell phone as it started to slide off his truck's console. Consequently, his truck left the roadway and overturned.

Wiles told a responding emergency medical services (EMS) worker that he had been drinking vodka earlier in the evening but could not recall how much he had consumed. Wiles was transported to the University of Kansas Hospital for emergency medical treatment, where his blood was drawn shortly after admission. The resulting toxicology report indicated that Wiles had a blood alcohol concentration of .25. As a result of the accident, Wiles suffered a spinal cord injury, rendering him a quadriplegic.

Leavenworth County Sheriff's Deputy Chad Sandberg conducted an investigation into the accident. His written report indicated that he was unable to obtain a statement from Wiles at the scene of the accident because of Wiles' injuries. However, the report documented an EMS worker's conversation with Wiles wherein Wiles admitted to drinking some alcohol earlier in the evening. Sandberg's report concluded that “[a]lcohol appears to have been a contributing factor of the accident.”

A few days after the accident, Detective Dan Abramovitz interviewed Wiles, who told the detective that his cell phone began to slide off the truck's console because he was driving too fast on an S-curved road. Wiles stated that as he reached for the phone, his truck veered off the road. The detective prepared a written report documenting his interview with Wiles, but it does not appear that this report was included with Sandberg's initial motor vehicle accident report.

A week after the accident, Wiles submitted a claim to AFLAC pursuant to his policy, which provided certain hospital intensive care benefits in the event of sickness, disability, and/or an accident. The policy specifically excluded coverage for “losses caused by or resulting from ... any loss sustained or contracted due to a covered person's being intoxicated or under the influence of alcohol, drugs or any narcotic unless administered on the advice of a physician and taken according to the physician's instructions.” Wiles attached Deputy Sandberg's accident report and a treating physician's statement in support of the claim.

After reading Sandberg's report indicating that alcohol was a contributing factor to the accident, AFLAC requested a copy of the hospital's toxicology report. On April 3, 2009, AFLAC sent Wiles a letter denying his claim based on the policy's limitations and exclusion language regarding losses caused by or resulting from intoxication or influence of alcohol. AFLAC's denial was based on the accident report and the hospital toxicology report. AFLAC did not interview Wiles, law enforcement personnel, medical personnel, or any other witnesses before denying the claim.

Wiles filed suit against AFLAC, seeking coverage under the policy and claiming that the denial of his claim for benefits was without just cause or excuse. Both parties filed motions for summary judgment. The district court issued an oral decision, first finding that AFLAC's policy language was less favorable to Wiles than Kansas' statutory language, which provides that an insurer shall not be liable for any loss “in consequence of the insured's being intoxicated.” K.S.A. 40–2203(B)(11). The district court then denied both parties' motions, finding an issue of material controverted fact existed, namely, whether the loss was sustained as a consequence of Wiles' intoxication.

A bench trial was conducted wherein AFLAC attempted to admit the hospital's toxicology report by offering the testimony of several witnesses. Angela Buisch, an emergency room (ER) nurse working on the night Wiles was admitted, testified about the hospital's blood-drawing procedures. She stated that the hospital routinely tests the blood of trauma patients to determine blood alcohol content. With regard to the procedure used when drawing blood, Buisch testified that the draw site is prepared with Chloraprep before a needle is inserted into the draw site and the blood is extracted into a vacutainer tube. The vacutainer tube is labeled with the initials of the person who drew the blood and the time the blood was drawn. The tube is then placed in a plastic bag and transported directly from the hospital's trauma area to the laboratory via a system of transportation tubes. Buisch could not recall whether she was the person who drew Wiles' blood on the night of the accident. Contrary to normal procedure, neither his blood sample nor hospital records indicated who drew Wiles' blood.

Buisch also testified regarding the difference in procedures used when drawing blood for medical purposes versus drawing blood for legal purposes. In the latter situation, hospital personnel use a Betadine solution to prepare the draw site, rather than Chloraprep, which contains alcohol that could contaminate the blood sample. The tube containing the blood specimen for legal purposes is sealed with evidence tape on which the person drawing the blood places his or her initials. That tube is placed in another container which is also sealed with evidence tape; and the sealed container is then handed directly to law enforcement officers.

Brian Selig, the nurse manager overseeing the hospital's ER operations, corroborated Buisch's testimony about the hospital's procedures for drawing and transporting blood samples. Selig testified that if the hospital's procedures were followed, Wiles' blood sample should not have been contaminated. However, Selig acknowledged that he had no personal knowledge of whether the proper procedures were followed in Wiles' case.

AFLAC moved to admit a copy of the toxicology report, and Wiles objected, citing a lack of foundation because there was no evidence indicating who drew Wiles' blood and therefore there was no evidence to establish that hospital procedures were actually followed. AFLAC subsequently tried to admit the report as a business record, and Wiles renewed his objection. The district court sustained both of Wiles' objections but admitted the report for the limited purpose of determining whether AFLAC acted in good faith when denying the claim.

AFLAC called Deputy Sandberg as a witness. He initially testified that his conclusion that alcohol contributed to the accident was based solely on the EMS worker's statement regarding Wiles' admission of drinking earlier in the day. However, upon further prompting by AFLAC's trial counsel, Sandberg acknowledged that the clear road conditions and lack of other vehicle involvement also factored into his conclusion that alcohol contributed to the accident.

Wiles testified that on the evening of the accident, he went to a friend's house to watch the NCAA tournament. While there, he drank some vodka mixed with orange juice but could not remember how many drinks he consumed. Approximately 2 hours later, Wiles left to drive to another friend's house. Wiles testified that he accidentally drove off the road while reaching for his sliding cell phone.

After the bench trial, the district court issued a memorandum decision and order finding that because AFLAC failed to admit evidence of intoxication through the hospital toxicology report, the only evidence of intoxication was Wiles' admission that he drank some vodka hours before the accident and the circumstances surrounding the one-car accident. The district court concluded that based on the totality of the evidence, AFLAC failed to prove the accident was in consequence of Wiles' intoxication and therefore determined that Wiles was...