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Deborah Firman v. Becon Construction Company

April 15, 2011


The opinion of the court was delivered by: Ewing Werlein, Jr.united States District Judge


Pending are Defendants' Motion for Summary Judgment (Document No. 23) and the Cross Motion for Summary Judgment of Plaintiff Deborah Firman (Document No. 53). After having considered the motions, responses, the applicable law, and the administrative record, the Court concludes as follows.

I. Background

Plaintiff Deborah Firman claims, pursuant to ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), that Defendant Life Insurance Company of North America ("LINA")*fn2 wrongly denied her the benefits of her common-law husband's ERISA-governed Group Accident Policies. Her husband, Gilberto Espinoza, an employee of Houston-based Defendant Becon Construction Company, Inc. ("Becon"), participated in two accidental death and dismemberment policies under the Becon Personal Accident Insurance Plan/502 (the "Plan")*fn3

Group Accident Policy OK 826455 issued to Becon by LINA and LINA Voluntary Personal Accident Insurance Group Policy OK 822833 (together, the "Policies"),*fn4 both of which named Plaintiff as the beneficiary.*fn5 Becon was the ERISA Plan sponsor and administrator under the plan,*fn6 but designated LINA as the claims administrator,*fn7 and both policies conferred upon LINA "full discretionary authority to administer and interpret" both policies.*fn8

Both Policies state that benefits will be paid for "loss from bodily injuries . . . caused by an accident which happens while an insured is covered by this policy."*fn9 Neither policy, however, contains a definition of the term "accident."

A. Insured's Death

Espinoza died in a single-vehicle crash in Kentucky on September 20, 2008. His blood and urine alcohol content were 0.20 percent and 0.35 percent, respectively, at the time of his death,*fn10 and the investigating officer reported a "strong odor of alcohol" and "an open container of cold Budlight Beer inside the vehicle" upon his arrival.*fn11 According to the officer's report, Espinoza's truck veered off the roadway to the right upon entering a left curve; Espinoza overcorrected, sending the truck over the road onto the left shoulder, where it rolled over.*fn12 Espinoza was not wearing a seat belt, and he was partially ejected out of the passenger-side window and crushed by the vehicle.*fn13 The crash occurred shortly after noon in clear weather and dry road conditions.*fn14 The medical examiner who performed Espinoza's autopsy opined that the cause of death was "[m]ultiple blunt force injuries," and marked the death as an "Accident,"*fn15 which was also reflected on Espinoza's death certificate.*fn16

B. LINA's Investigation and Denial of Benefits

Plaintiff made a claim for benefits under the Policies, which LINA received on December 4, 2008.*fn17 It reviewed Plaintiff's claim, Espinoza's death certificate, the police report, the toxicology report, the medical report, and the Policies, then on December 23, 2008, informed Plaintiff that the claim was not covered because it was not an "accident."*fn18 LINA interpreted "accident" in the Policies to mean "a sudden, unforeseeable event,"*fn19 and stated that Espinoza "would have been aware of the risks involved in operating his vehicle while under the influence" because "every state in the nation has criminalized drunk driving," and therefore "[a]ll licensed motorists throughout the United States are on notice, by operation of law, of the state-declared prohibitions against drunk driving and its consequences."*fn20 The letter stated that Espinoza had an "alcohol level of 0.35%," which it asserted was "more than four times the maximum level of alcohol in which it is legal to operate a motor vehicle in the state of Kentucky."*fn21 Because Espinoza "would have been aware of the risks involved in operating his vehicle while under the influence, his death was a foreseeable result of his actions and thus not an accident."*fn22

LINA also relied upon the "self-inflicted injury" exclusion in the Policies as a reason for denial. It noted that, by drinking and driving, Espinoza "placed his life and the lives of others in jeopardy" because "[i]t is commonly known that driving while intoxicated may result in death or bodily harm, as intoxication can lead to impaired judgment and decreased reflexes."*fn23 His death was therefore "a result of intentionally self-inflicted injuries," and was excluded by the Policies.*fn24

C. Plaintiff's Appeal

Plaintiff retained counsel and appealed LINA's decision in January 2009.*fn25 Her letter of appeal also advised LINA to consider it "as notice of her claim to pursue litigation, damages, statutory penalties, and attorney fees if this claim is not immediately resolved."*fn26 Her counsel pointed out that LINA's denial letter improperly compared Espinoza's urine alcohol content to Kentucky's legal blood alcohol limit for driving under the influence,*fn27 and subsequently submitted additional information consisting of affidavits of the investigating officer and medical examiner.*fn28

The investigating officer asserted that he believed the curve on the road was dangerous for someone not familiar with the area, noting that he had investigated numerous accidents at the site.*fn29

He further stated that, based on his investigation, there was no evidence that Espinoza intentionally caused the accident, knew it would occur, or reasonably could have anticipated his death.*fn30 The medical examiner similarly found no evidence that Espinoza intended his death, nor that he reasonably could have anticipated it, because "'driving under the influence' does not naturally and probably lead to the type of injuries" that resulted in his death.*fn31

Plaintiff's counsel also submitted Texas and Kentucky state case law interpreting accidental death insurance policies in the context of alcohol-related automobile crashes, concluding that under the law of either state, Espinoza's crash would be considered an "accident" under the Policies.*fn32

In response to these submissions, LINA informed Plaintiff that it was conducting a "home office review," which was "needed in order to interpret the documents we have received as they relate to the provision of this policy."*fn33 The claims administrator assigned to the appeal forwarded Plaintiff's contentions to LINA's in-house counsel,*fn34 who responded with a five-page memo labeled "PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION."*fn35 The memo opined that Plaintiff's relied-upon state law would be inapplicable to the interpretation of an ERISA policy governed exclusively by federal law: "The standard that claimant advances - one of natural and probable consequences - is not the standard utilized by federal courts applying the common law of ERISA."*fn36 It then noted the absence of Fifth Circuit authority regarding "whether an ERISA insured's death that occurs while driving when intoxicated is an accident in the context of [an] accidental death benefit plan," and looked to decisions by the Fourth, Sixth, and Seventh Circuit Courts of Appeal as authority that, if LINA had discretion to make determinations under the Plan, it would not abuse that discretion by concluding that Espinoza's death was not an "accident" because "a reasonable person would foresee the likelihood of death or serious injury as a result of driving while intoxicated."*fn37 The memo also stated that the officer's and medical examiner's affidavits were not persuasive, because they were based not "on the facts of the incident, but on their personal view of whether it was natural and probable that Mr. Espinoza could not reasonably have foreseen his death."*fn38

LINA issued a letter to Plaintiff denying her appeal because:

Injury or death resulting from driving under the influence of alcohol is considered foreseeable and is not covered by the provisions of [the Policies]. Driving when intoxicated precludes a finding that a death is Accidental. As mentioned previously, the policy definition of a Covered Accident requires that a loss not be foreseeable.*fn39

In the letter, LINA again erroneously stated that Espinoza's "blood alcohol concentration was 0.35%," which it again asserted was "more than four times the threshold for presumed intoxication while driving in the state of Kentucky."*fn40 Finally, the letter advised Plaintiff that she had exhausted all levels of administrative appeal.*fn41

Pending are cross-motions for summary judgment. Plaintiff asserts that LINA abused its discretion in denying her benefits, and further asserts that its denial was procedurally improper due to LINA's failure to disclose its in-house ...

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