Two new ERISA cases from the Tenth Circuit, reversing plan determinations
The Tenth Circuit has recently decided two cases involving benefits under an ERISA plan. The first case dealt with death benefits. In Kellogg v. Metropolitan Life, the plaintiff’s husband was killed in a one car accident. General life insurance benefits were paid, but the accidental death claim was denied. It was claimed that the deceased had suffered a seizure just before he lost control of the car, and that the seizure caused the death, not the accident. The ADD policy excluded coverage when the loss was cause by a physical illness or infirmity. Summary judgment for the insurance company was reversed, and the trial court was directed to enter judgment for the plaintiff. Procedurally, the case was interesting because the Plan did not make a ruling on the appeal from the denial of benefits, so a de novo standard of review was used. The court held that the deceased died from injuries received from the accident, not from the seizure (if any). Further, the court ruled that the insurance company could not raise a new ground for denial on appeal. In reaching its decision, the court cites numerous cases where a physical ailment caused an accident which resulted in death. In such cases, the death was caused by the accident, not the physical ailment, and therefore covered. In this case, the death was caused by a skull fracture resulting from the car accident, not by physical or mental illness; while the seizure may have been the cause of the crash, it was not the cause of death.
The second case, Brown v. Hartford, involved a disability policy. Like most disability policies, this one said that for the first year, you were entitled to benefits if you can’t do your old job; but after that, you are only entitled to benefits if you can’t do any job. Hartford told Brown to apply for Social Security benefits (which reduced the amount Hartford had to pay under the policy) and then said that it was not bound by Social Security’s determination that Brown was unable to work. Since Hartford believed that Brown could work at some job, it cut off benefits. Hartford got summary judgment and the Tenth Circuit reversed.
First, the trial court erred in finding that Hartford did not have discretion under the Plan. Although this means that Hartford’s decision can only be overturned if its arbitrary and capricious, there is an additional factor – Hartford’s conflict of interest which was not considered by the trial court. The Tenth Circuit said the trial court should consider whether Hartford’s financial conflict could have had a role in influencing its decision to ignore the SSA and workers compensation court’s determinations that Brown was totally disabled. The Tenth Circuit apparently felt it was unfair for Hartford to require Brown to apply for Social Security, reduce the amounts it paid because of the award, and then ignore the SSA’s finding of disability in order to cut Brown off from all further payments.
It remains to be seen if this marks a change in the rulings of the Tenth Circuit on these sorts of benefit determinations. The Tenth Circuit has, up to now, been very protective of a Plan’s benefit determinations.
