ERISA Exclusions, Accidental Death and Appellate Review
In Brimer v. Life Insurance Company of North America, the deceased insured's spouse and children sued the insurance company claiming that they were entitled to benefits under a group insurance policy.
James Brimer died and autopsy results attributed the death to acute combined drug toxicity due to the ingestion of prescription drugs. The medical examiner noted that Mr. Brimer had a history of hypertension and back pain. The medical examiner determined that Brimer's death was an accident.
Life Insurance Company of North America (LINA) insured Mr. Brimer under a group policy through his employer. The policy covered losses from accidental bodily injuries which directly and from no other cause, result in a covered loss. The policy's exclusions in relevant part were as follows: No benefits will be paid from losses resulting from: (1) intentional self-inflicted injuries or any attempt thereat; (6) benefits will not be paid for loss covered by or resulting from sickness, disease, bodily infirmity, or medical or surgical treatment thereof…;(7) voluntary self -administration of any drug or chemical substance not prescribed by, and taken according to the directions of, a licensed physician. [Accidental ingestion of a poisonous substance (is) not excluded.]
The Brimers submitted a claim to LINA and LINA denied the claim under Exclusion 7 (voluntary, self-administration of drugs). The Brimers administratively appealed the decision arguing that Mr. Brimer had ingested medication that was prescribed to him by his physician. LINA, on appeal, held that the denial was correct based on four grounds: (1) Mr. Brimer's death was not accidental, (2) Exclusion 1 applies, (3) Exclusion 6 applies, and (4) Exclusion 7 applies. LINA informed the Brimers that they had exhausted all administrative appeals.
The Brimers sued in state court alleging breach of contract and breach of the covenant of good faith and fair dealing. LINA removed the action to federal district court because of diversity and that the policy is governed by the Employee Retirement Income Security Act ("ERISA").
The District Court issued two opinions. In Brimer I, the court rejected the Brimers' argument that because LINA based the initial denial of their claim solely on Exclusion 7, not Exclusion 6, that it was only fundamentally fair the LINA be held to Exclusion 7. The District Court also affirmed LINA's decision to deny the claim because even if the Brimers could prove the death was accidental the claim was barred by Exclusion 6. LINA cited authority which was uncontested that an exclusion in an insurance policy for medical treatment of a sickness or disease, unambiguously includes death caused by accidentally overdosing on a drug prescribed by a doctor for a medical condition.
In Brimer II, the district court reversed its previous decision regarding the accidental nature of Mr. Brimer's death. It concluded that the Brimers have met the burden of proving the death was an accident.
The court also dealt with Exclusions 1 and 7. It ruled that Exclusion 1 was not a legitimate basis for denial and that Exclusion 7 was ambiguous. Exclusion 6 still applied.
The Brimers appealed and the appeals court affirmed the district court's judgment in favor of LINA. The court held that although LINA had violated ERISA the procedural violation did not prejudice the outcome. In spite of the procedural issues the district court did consider LINA's denial of benefits under Exclusion 6.
The Brimers asserted on appeal that the district court erred when it declined to consider their argument that Exclusion 6 was ambiguous when read along with Exclusion 7. LINA argued, and the appeals court agreed, that the Brimers forfeited this argument because they did raise it in a timely fashion and did not carry their burden on appeal of showing that plain error occurred.
The court of appeals held that since the procedural defect in the administrative appeal did not prejudice the Brimers or foreclose judicial review of Exclusion 6, because the Brimers forfeited their argument that Exclusion 6 conflicts with Exclusion 7 and failed to argue plain error, and finally, because the Brimers have not otherwise challenged the district court's conclusion, that Exclusion 6 precludes coverage.
