Opinion
Case No. 02-4089-JAR.
July 6, 2005
MEMORANDUM ORDER AND OPINION DENYING IN PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AND REMANDING CASE TO PLAN ADMINISTRATOR
Plaintiffs, the widow and surviving children of Thomas E. Cowser, bring suit pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., to recover benefits of an Accidental Death and Dismemberment Policy administered by defendant, American United Life Insurance Company. Defendant has denied that the accidental death benefits are payable to plaintiffs because Mr. Cowser's motorcycle wreck was not an "accident" as defined in the policy and that an exclusion involving the use of illegal drugs bars payment under the policy. The Court denied without prejudice, defendant's motion for summary judgment (Doc. 14), because the parties had not addressed or briefed questions concerning the standard of review to be applied and the scope of the record or other materials properly considered by this Court. The Court subsequently denied defendant's renewed motion for summary judgment or stay pending administrative review (Doc. 21). This matter is once again before the Court, this time on plaintiffs' motions for summary judgment (Docs. 30 and 32). For the reasons set forth in detail below, the Court denies plaintiffs' motions and remands the case to the plan administrator for further proceedings.
Procedural History
The procedural history of this matter was set forth in the Court's previous order denying defendant's renewed motion for summary judgment (Doc. 21). The Court shall not reiterate its summary as set forth in that order, but shall incorporate it herein and rely upon it by reference, in ruling on the instant motion.
After this Court denied defendant's renewed motion for summary judgment, Magistrate Judge Humphreys entered an order setting new deadlines for discovery and for defendant's designation of an expert. Defendant did not conduct any additional discovery or name an expert witness. A Pretrial Order was entered on October 29, 2004. Plaintiffs' motions followed. The Court requested additional briefing on two issues: (1) ripeness; and (2) the test for accidental death.
Statement of Uncontroverted Facts
The following facts numbered 1-13 have been stipulated to by the parties in the Pretrial Order (Doc. 29):
1. Prior to his death on June 20, 2001, Thomas E. Cowser was an employee of Western Resources, Inc. and was a participant in certain employee welfare benefit plans including basic and voluntary accidental death and dismemberment coverage.
2. The provision of the Accidental Death and Dismemberment coverage (both basic and voluntary) states:
Accidental Death means death due to an accident, directly or independently of all other causes
If You have an accident while insured under the policy which results in a loss shown below, AUL will pay the amount shown opposite the loss if:
1. the loss occurs within 90 days from the date of the accident; and
2. AUL receives acceptable proof of loss
* * * *
Limitations:
Benefits are not payable for loss due directly or indirectly to:
* * * *
5. the voluntary taking of:
a. a prescription drug in a manner other than as prescribed by a physician
b. any other federally or state controlled substance in an unlawful manner
c. non-prescription medicine, in a manner other than as indicated in the printed instructions; or
d. poison
3. On June 16, 2001, Thomas E. Cowser was involved in a one-vehicle motorcycle accident in which he sustained a closed head injury.
4. The Kansas Highway Patrol investigation of Mr. Cowser's collision stated that Mr. Cowser was exiting from eastbound Highway 24 onto Southbound Highway 4 when his motorcycle "left the northside of the ramp and traveled across a grassy area. The driver was thrown from the motorcycle and came to rest on K-4 highway, a short distance from the motorcycle."
5. The Kansas Highway Patrol investigation of Mr. Cowser's collision also noted that "he had a strong odor of alcoholic beverage on his person" and obtained his agreement to "blood draw for testing." The results of that blood draw showed his blood alcohol level to be below the legal limit at 0.07.
6. Upon admission to the hospital, Mr. Cowser was given five mg of morphine sulphate, an opiate, though an IV.
7. About one hour later, a urine sample was taken from Mr. Cowser and the report shows toxicology that was "presumptive for alcohol, amphetamines, and opiates."
8. The discharge summary stated that Mr. Cowser's blood alcohol level was 82.
9. The urine analysis report states: "Urine drug tests are presumptive and not for forensic use. For definitive ID, gas chromatography-mass spectrometry is recommended."
10. Mr. Cowser suffered from Hepatitis C, and some anxiety depression disorders for which he took Prozac daily.
11. The medical reports contain no indication or information regarding the amount or type of amphetamines in Mr. Cowser's system which are noted therein.
12. Mr. Cowser was undergoing treatment for Hepatitis C for which he was prescribed Rebetron, which includes ribavirin pills and interferon injections.
13. Defendant American United Life Insurance Company previously paid all basic life insurance benefits due to the Cowser beneficiaries under which there was no issue or dispute related to the accidental or non-accidental nature of Mr. Cowser's death.
Although not stipulated, defendant does not dispute fact number 19, that Mr. Cowser died on June 20, 2001, five days after being admitted to the hospital.
With respect to fact numbers 14-18, defendant has failed to comply with the local rules which govern the summary judgment process. Defendant has not attempted to controvert plaintiffs' factual contentions 14-18 as required by Rule 56.1. Instead, defendant merely states that it controverts facts 14-18, which "are not adequately supported by references of evidentiary value for purposes of Rule 56 and Local Rule 56.1(a)." But plaintiffs did adequately support these factual contentions, by incorporating by reference, the references to the record and attachments in support of these same factual contentions in their response to defendant's prior summary judgment motion. (Doc.11). Thus, pursuant to Rule 56.1, fact numbers 14-18 in plaintiffs' motion are deemed uncontroverted:
D. Kan. R. 56.1 provides in relevant part as follows:
(1) A memorandum in opposition to a motion for summary judgment shall begin with a section that contains a concise statement of material facts as to which the party contends a genuine issue exists. Each fact in dispute shall be numbered by paragraph, shall refer with particularity to those portions of the record upon which the opposing party relies, and, if applicable, shall state the number of movant's fact that is disputed.
(2) If the party opposing summary judgment relies on any facts not contained in movant's memorandum, that party shall set forth each additional fact in a separately numbered paragraph, supported by references to the record. . . .
14. Mr. Cowser also had some anxiety depression disorders for which he took Prozac daily.
15. He also often took Sudafed for his hay fever and did so in the weeks prior to the accident.
16. He also often took Emetrol, Alka Seltzer, Tums, or Rolaids for upset stomach and did so in the weeks prior to the accident.
17. Rebecca Cowser was married to Mr. Cowser for 13 years. To her knowledge, he never took any illegal drugs or narcotics at any time during their marriage.
18. Rebecca Cowser stated that to her knowledge her husband did not take any illegal drugs or narcotics on the date of his motorcycle accident.
Summary Judgment Standard
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." The requirement of a "genuine" issue of fact means that the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Essentially, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law."
See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Id. at 251-52.
The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. This burden may be met by showing that there is a lack of evidence to support the nonmoving party's case. Once the moving party has properly supported its motion for summary judgment, the burden shifts to the nonmoving party to show that there is a genuine issue of material fact left for trial. "A party opposing a properly supported motion for summary judgment may not rest on mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Therefore, the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. The court must consider the record in the light most favorable to the nonmoving party.
See Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).
See Anderson, 477 U.S. at 256.
Id.
See id.
See Bee v. Greaves, 744 F.2d 1387, 1396 (10th Cir. 1984), cert. denied, 469 U.S. 1214 (1985).
While the material facts are undisputed, the parties vigorously dispute the result of those facts.
Discussion
ERISA provides a detailed and comprehensive set of federal regulations governing the provision of benefits to employees by employers, including disability benefits. ERISA gives a plan beneficiary the right to federal court review of benefit denials, but does not establish the standard of review for such decisions.
Hall v. Unum Life Ins. Co, 300 F.3d 1197, 1200 (10th Cir. 2000).
Id.
The parties agree that because there is no language in the policy that would grant discretionary authority to defendant, de novo review by this Court is the appropriate standard of review. Thus, the Court reviews defendant's decision without deference to that decision and without any presumption of correctness. When a court reviews a decision de novo, it simply decides whether or not it agrees with the decision under review. The court's role is to determine whether the ERISA plan administrator made a correct decision based on the record before it at the time the decision was made. The court should ordinarily restrict its review to the administrative record, but may supplement the record when circumstances clearly establish that additional evidence is necessary to conduct an adequate de novo review of the benefit decision.
See Nance v. Sun Life Assur. Co. of Canada, 294 F.3d 1263, 1266 (10th Cir. 2002).
See Hammers v. Aetna Life Ins. Co., 962 F. Supp. 1404, 1406 (D. Kan. 1997).
Id.
Id.
Hall, 300 F.3d at 1202.
De novo review generally consists of the court's independent weighing of the facts and opinions in the administrative record to determine whether the claimant has met his burden of showing his death was an accident within the meaning of the policy. In addition, as this Court previously ruled (Doc.21), "additional extra-record materials" addressing the issue of illegal drug use may be considered pursuant to the factors set forth in Hall v. Unum Life Insurance Co. Further, it is the plaintiff who bears the burden of making a showing sufficient to establish a violation of ERISA.
Id. at 1197.
See Terry v. Bayer, 145 F.3d 28, 34 (1st Cir. 1998).
1. Ripeness/ERISA Procedural Requirements
The Court has been increasingly concerned with the posture of this case and apparent lack of adherence to ERISA rules and procedures. The informal nature of the administrative proceedings appears to be a result of the fact that a large portion of the insurance available to Mr. Cowser was paid without controversy except as between the respective beneficiary heirs. During the Interpleader action in that matter, much of the communication regarding the accidental death benefits was done between counsel rather than the parties. In fact, when the instant action before this Court was filed on June 6, 2002, defendant had given no specific reason for denial of accidental death benefits, except through counsel, that Mr. Cowser's consumption of alcohol prior to his motorcycle wreck precluded coverage. Nor is there any indication that plaintiffs were notified of an administrative review process. At the request of defendant, the parties and the Magistrate Judge agreed that in lieu of discovery, this matter should be submitted on a motion for summary judgment to determine whether or not Mr. Cowser's death was "accidental" as a matter of law. The situation was compounded when defendant's motion for summary judgment also contended that Mr. Cowser had consumed illegal drugs prior to his motorcycle wreck and that his blood alcohol level was above the legal limit at the time of the accident, prompting plaintiffs to respond with additional evidence.
The issue of subject matter jurisdiction may be raised by the Court sua sponte at any time. Although the issue of ripeness was not raised by defendant, the Court requested additional briefing on the issue, due to the unusual nature of the administrative record in this case. Upon review of the parties' submissions, the Court agrees with plaintiffs that it appears the case is ripe because there was a denial of benefits. This begs the question, however, of whether defendant failed to meet the procedural requirements of ERISA and the plan, as suggested by defendant when it stated the administrative process tended to have "corners cut."
Fed.R.Civ.P. 12(h)(3); Bear v. Patterson, 364 F. Supp. 2d 1242, 1244 (D. Kan. 2005).
ERISA provides that benefit plans shall
(1) provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant, and
(2) afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.
The regulations provide that notification to the claimant shall set forth
(1) The specific reason or reasons for the adverse determination; (2) reference to the specific plan provisions on which the determination is based; (3) A description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such information is necessary; (4) A description of the plan's review procedures and the time limits applicable to such procedures, including a statement of the claimant's right to bring a civil action under section 502(a) of the Act following adverse benefit determination on review.
The denial letter must "set out in opinion form the rationale supporting [its] decision" so that a claimant may "adequately prepare himself for any further administrative review, as well as an appeal to the federal courts." Substantial compliance with procedural requirements will satisfy ERISA, provided the claimant has an opportunity for full and fair review. A full and fair review means "knowing what evidence the decision-maker relied upon, having an opportunity to address the accuracy and reliability of the evidence, and having the decision-maker consider the evidence presented by both parties prior to reaching and rendering his decision."
Baker v. Tomkins Industries, Inc., 339 F. Supp. 2d 1177, 1186 (D. Kan. 2004) (quoting Richardson v. Central States, S.E. S.W. Areas Pension Fund, 645 F.2d 660, 665 (8th Cir. 1981).
Id.
Sage, 845 F.2d at 895 (quoting Grossmuller v. Int'l Union, United Auto., Aerospace Agric., Implement Workers of Am. UAW, Local 813, 715 F.2d 853, 858 n. 5 (3d Cir. 1983)).
In this case, there was a complete failure to provide plaintiffs two necessary categories of information — the full reason for the denial and the appeals procedures. Defendant conceded as much when it moved for a stay of these proceedings pending further administrative review, a request it has renewed in its supplemental briefing. When the Court previously denied defendant's request, it did not appreciate the significance of the lack of administrative record, which has now become readily apparent with the latest round of dispositive motions. Because of the lack of formal procedures, it is hardly surprising that the case is in its current posture.
Plaintiffs, who did not file a cross motion for summary judgment, now move for summary judgment on essentially the same facts as defendant, which the Court denied (Doc. 21).
Where the plan administrator fails to comply with ERISA's procedural guidelines by failing to make the adequate findings or to explain adequately the grounds of her decision, the appropriate remedy is to remand to the plan administrator for a redetermination of the claim. A remand for further action is unnecessary only if the evidence clearly shows that the administrator's actions were arbitrary and capricious, or the case is so clear cut that it would be unreasonable for the plan administrator to deny the application for benefits on any ground. Neither of these exceptions is satisfied here — even with the less deferential de novo standard of review, the case is far from clear cut as there is disputed evidence regarding whether Mr. Cowser's death was accidental and if so, whether the controlled substance exception is applicable. Such a determination requires interpretation of the plan term and further findings of fact.
Caldwell v. Life Ins. Co. of North America, 287 F.3d 1276, 1288-89 (10th Cir. 2002).
Id. (citations omitted).
The Court is sympathetic to the plaintiffs' position, given the protracted history of this case. However, the Court would be committing error if it were to reach the merits of plaintiffs' claims, given defendant's ERISA violations. The Court therefore remands the case to the plan administrator for a full and fair review of the record.
Id.
2. Accidental Death
Relevant to defendant's review on remand is the issue of whether Mr. Cowser's death was accidental. Defendant declined to pay benefits to plaintiffs on the ground that the decedent's death was not accidental because, by consuming alcohol before his motorcycle wreck, his death was not "unexpected" and was the "natural and probable consequence of his actions." As noted, the policy provides benefits where death occurs due to an accident, directly or independently of all other causes. The policy does not define "accident." The determination of substantive rights and obligations under an ERISA plan is a question of federal common law. ERISA was enacted in September 1974 and does not define the term "accident" or "accidental death." Because neither the parties nor the Court's research has yielded any controlling authority on point, the Court looks to persuasive authority.
Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987).
Neither party articulated a test for determining whether a death is an accident and, after reviewing plaintiffs' motion for summary judgment, the Court requested additional briefing on this issue. Specifically, the Court asked the parties to address the applicability of the test for determining accidental death set forth by the First Circuit in Wickman v. Northwestern National Insurance Co. In Wickman, the First Circuit articulated a two-pronged inquiry for determining whether death is an accident. First, a court must ascertain whether the insured, when the policy was purchased, subjectively expected an injury similar in type to the kind suffered. If the Court finds that the insured did not expect such an injury, or where there is insufficient evidence to accurately determine the insured's actual expectation, the court must then,
908 F.2d 1077 (1st Cir. 1990).
Id. at 1088.
Id.
[E]ngage in an objective analysis of the insured's expectations. In this analysis, one must ask whether a reasonable person, with background and characteristics similar to the insured, would have viewed the injury as highly likely to occur as a result of the insured's intentional conduct. The Tenth Circuit has not ruled on the issue of accidental death benefits for a decedent who was involved in a drunk driving accident. Many federal courts, however, have applied a general rule that a death that occurs as a result of driving while intoxicated, although perhaps unintentional, is not an "accident" because that result is reasonably foreseeable.
Id. at 1088.
See, e.g., Cozzie v. Metropolitan Life Ins. Co., 140 F.3d 1104, 1110 (7th Cir. 1998); Walker v. Metropolitan Life Ins. Co., 24 F. Supp. 2d 775, 782 (E.D. Mich. 1997); Schultz v. Metropolitan Life Ins. Co., 994 F. Supp. 1419, 1422 (M.D. Fla. 1997).
After reviewing the parties' responses, as well as the case law, the Court declines to adopt at this time the two-pronged standard in Wickman. The test has questionable application to the drunk-driving scenario and the law in this area is anything but clear. Instead, the Court finds the "reasonable foreseeability" test more appropriate to an alleged drunk-driving scenario. Thus, the test for determining whether Mr. Cowser's death was accidental is whether a reasonable person in his position would anticipate that death that occurs as a result of driving while intoxicated was a reasonably foreseeable result of his actions.
See, e.g., King ex rel. Schanus v. Hartford Life and Acc. Ins. Co., 357 F.3d 840 (8th Cir. 2004), reh. en banc granted, opinion vacated (April 6, 2004), the Eight Circuit Court of Appeals found that the death of an insured as a result of a motorcycle crash while intoxicated qualified for accidental death benefits under an ERISA plan under the Wickman test. The insured in that case had a blood alcohol level of .19, above the legal limit. Rehearing en banc was granted, however, and the opinion was vacated. Cf. Poeppel v. Hartford Life Insurance Co., 2004 WL 298414 (4th Cir. Feb. 17, 2004), cert dismissed 125 S. Ct. 605 (Nov. 9, 2004), the Fourth Circuit, in an unpublished opinion, concluded that a death that occurs as a result of driving while intoxicated is not an accident because the result is reasonably foreseeable, without defining the term. The insured in that case had a blood alcohol level of .212, over twice the legal limit.
In this case, there is insufficient evidence to make a determination of whether Mr. Cowser's death was a reasonably foreseeable result of his actions. Neither party has submitted evidence that a reasonable person in Mr. Cowser's position would anticipate that death was a reasonably foreseeable result of his driving after consuming alcohol, but under the legal limit for intoxication. Instead, the parties rely on decedent's blood alcohol level in support of their respective positions: plaintiffs seem to argue that anything under the legal limit means the death could be accidental, while defendant seems to urge that any amount of alcohol is enough to preclude a finding of accidental death. While the Court cannot find as a matter of law that death is reasonably foreseeable where the decedent was driving under the legal limit, it also declines to adopt the legal limit of 0.08 as a bright line test for whether a death is accidental. This issue is properly addressed by the plan administrator on remand.
K.S.A. § 8-1001 et seq. defines driving under the influence in Kansas when a person's blood alcohol level is 0.08 or greater.
3. Controlled Substance Exclusion
In the event Mr. Cowser's death was an accident, the issue turns to whether the controlled substance exclusion prevents coverage. This exclusion states "Benefits are not payable for loss due directly or indirectly to . . . the voluntary taking of a . . . federally or state-controlled substance in an unlawful manner." Significantly, there is no exclusion for the use of alcohol or the impairment therefrom. The burden of proof is on the insurer to prove the facts that bring the case within a specific exception.
Cozzie, 140 F.3d at 1110; Lapeka, Inc. v. Security Nat'l Ins. Co., 814 F. Supp. 1540, 1545 (D. Kan. 1993).
The record in this case indicates that the decedent's toxicology report shows a positive urine test for "amphetamines." Plaintiffs argue that this does not indicate whether the decedent had ingested an illegal drug or controlled substance. Plaintiffs also submit that the decedent had no history of consuming illegal drugs prior to the wreck and took Sudafed on a regular basis. Defendant responds that the nature and extent of decedent's ingestion of controlled substances are not resolved, and evidence "explaining, interpreting and placing these facts in context, particularly expert evidence by the health care professionals involved in formulating Mr. Cowser's medical records and conducting his treatment, is necessary to settle the ultimate issues of fact." Given the state of the administrative process and the Court's ruling on accidental death, this issue is also more properly addressed by the plan administrator on remand. IT IS THEREFORE ORDERED BY THE COURT that plaintiffs' motions for summary judgment (Docs. 30 and 32) are DENIED without prejudice;
The test also showed a positive test for opiates, but because the urine was taken after decedent received an IV of 5 mg of morphine, a known opiate, defendant has apparently-abandoned this allegation.
IT IS FURTHER ORDERED that this case is REMANDED to the plan administrator for prompt consideration of the claims and for compliance with notice requirements for any denial of those claims. If plaintiffs seek review of any denial of such claims, the plan administrator shall comply with the procedural requirements of the plan and ERISA.
IT IS FURTHER ORDERED that this case is administratively closed, without prejudice, subject to a motion to reopen by any party.
IT IS SO ORDERED.