A Sweet Win

The U.S. Court of Appeals for the Tenth Circuit issued an opinion yesterday, Kellogg v. Metropolitan Life Ins. Co., reversing a denial of an accidental death claim.  The decision contains a number of important points. You can find the case here in the website library.

Taking off from a stop sign in Merced, California, Brad Kellogg traveled down the street for approximately half a block and then crossed the opposite lane of traffic and plowed into a tree. Although he wasn’t going particularly fast, his head hit the car frame with enough force to cause a skull fracture and hemorrhage.  The medical examiner determined that these injuries caused his death.  A witness to the accident said that he appeared to be having a seizure shortly before he left the road and hit the tree. A blood test by the medical examiner revealed a large number of prescription drugs in his system, one of which, bupropion, had been noted to have the side effect of seizures.

Brad’s widow, Cherilyn, submitted a claim for accidental death and dismemberment insurance benefits. MetLife, the insurer, gathered some information relating to the claim and then denied the claim asserting that an exclusion in the policy did not allow payment of a claim where death was the result of a physical illness. MetLife said that a seizure caused the accident and death of Kellogg. Cherilyn then appealed this denial, indicating that Brad had no history of seizures and that MetLife had no factual or legal basis to deny the claim. Her letter went on to ask MetLife to send a number of different documents including a copy of the plan document, Summary Plan Description and claim file for the matter. MetLife ignored the letter. About four months later, Cherilyn’s counsel wrote again and reiterated his request for the documents. MetLife ignored the request. So Cherilyn sued.

The trial court ruled that MetLife was entitled to a deferential standard of review and that it was not unreasonable for MetLife to deny the claim. Cherilyn appealed to the Tenth Circuit.

The court first dealt with whether MetLife was entitled to an arbitrary and capricious standard of review. Cherilyn argued that because MetLife had never ruled on her appeal, there was no exercise of discretion by MetLife for a court to defer to. She asserted that, under the circumstances, the proper standard of review was de novo. MetLife argued that Cherilyn had never appealed the case but had just indicated an intent to appeal. The court rejected that argument stating that the language in Cherilyn’s letter clearly was an appeal. In addition, MetLife’s stonewalling of Cherilyn violated both the letter and the spirit of ERISA’s claims procedure regulations. "To conclude otherwise would provide plan administrators with an incentive to violate the provisions of ERISA by ignoring requests by plan participants and beneficiaries for plan documentation and other relevant information." Slip opinion, p. 18. The failure of MetLife to respond to Cherilyn’s appeal within the time frame required by ERISA and its claims procedure regulations meant that the standard of review was de novo.

Next, the court considered whether MetLife was precluded from asserting for the first time in litigation new reasons to deny the claim. The only basis for denial presented by MetLife in its denial letter was that Kellogg died as a result of a physical illness. Yet in litigation MetLife argued that Kellogg’s claim must fail because Cherilyn had failed to prove that Kellogg died as a result of an accident. Cherilyn objected to this tactic, arguing that it was improper to allow MetLife to raise this basis for denial for the first time in litigation. Relying on Tenth Circuit precedent, the court agreed and required that MetLife’s denial stand or fall on the question of whether Brad Kellogg died as a result of the purported seizure.

The court concluded that the crash, rather than any seizure that may have occurred, caused Brad Kellogg's death. What follows is a thorough and interesting discussion about what constitutes an accident and what language an insurer must use in its policy if it wants to clearly provide for an exclusion applied to Kellogg’s circumstances. The court notes that MetLife could have drafted its policy to exclude coverage for accidents caused by injury or illness. But that is not what the language of the policy stated. The court reversed the trial court’s ruling and entered judgment in favor of Cherilyn on the AD&D claim.

This is a gratifying win for a lot of reasons but being able to help out Cherilyn and her kids made it really worthwhile.