Nichols v. Unicare Life & Health Insurance , 739 F.3d 1176 ( 2014 )


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  •                 United States Court of Appeals
    For the Eighth Circuit
    ___________________________
    No. 12-4047
    ___________________________
    Sean Nichols
    lllllllllllllllllllll Plaintiff - Appellee
    v.
    Unicare Life and Health Insurance Company
    lllllllllllllllllllll Defendant
    Acxiom Corporation Life and Accidental Death and Dismemberment Insurance Plan
    lllllllllllllllllllll Defendant - Appellant
    ___________________________
    No. 13-1033
    ___________________________
    Sean Nichols
    lllllllllllllllllllll Plaintiff - Appellee
    v.
    Unicare Life and Health Insurance Company
    lllllllllllllllllllll Defendant - Appellant
    Acxiom Corporation Life and Accidental Death and Dismemberment Insurance Plan
    lllllllllllllllllllll Defendant
    ____________
    Appeal from United States District Court
    for the Eastern District of Arkansas - Little Rock
    ____________
    Submitted: September 25, 2013
    Filed: January 16, 2014
    ____________
    Before WOLLMAN, BEAM, and SMITH, Circuit Judges.
    ____________
    BEAM, Circuit Judge.
    UniCare Life and Health Insurance Company ("Unicare") appeals the district
    court's1 grant of summary judgment in favor of Sean Nichols in this Employee
    Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001 et seq. case. We affirm.
    I.    BACKGROUND
    Nichols is the surviving spouse of Dana Nichols. Dana was employed by
    Acxiom Corporation, and she was insured under the Acxiom Corporation Life and
    Accidental Death and Dismemberment Insurance Plan (the "plan"). The plan is
    funded by a policy underwritten by UniCare, and UniCare also serves as the claims
    administrator.
    On May 3, 2010, Dana was found face down in bed, and upon being
    transported to a nearby hospital, she was pronounced dead. The autopsy report
    1
    The Honorable Susan Webber Wright, United States District Judge for the
    Eastern District of Arkansas.
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    indicated that her manner of death (natural, accidental, etc.) "could not be
    determined," and her cause of death was mixed drug intoxication. The autopsy
    reported that "[t]oxicology detected multiple drugs in the blood to include
    citalopram/escitalopram, hydrocodone, oxycodone and loratadine. The atropine
    detected is the result of terminal medical attention. No alcohol was detected." An
    insurance record documenting Dana's prescription claims during the last twelve
    months of her life show the following prescriptions and fill dates: Endocet 30-day
    prescription last filled on April 27, 2010; Ambien 30-day prescription last filled on
    April 3, 2010; levothyroxine, 30-day prescription last filled on April 3, 2010;
    apap/codeine 2-day prescription last filled on December 29, 2009; diazepam 2-day
    prescription last filled on December 29, 2009; and sertraline, 30-day prescription last
    filled on October 12, 2009. Emergency personnel responding at the scene also
    reported a prescription bottle for hydrocodone on the night stand with 12 pills
    missing from it. As we read the administrative record, there is no information about
    when this prescription was filled.2
    Nichols filed a claim for accidental death benefits under the plan. By letter
    dated February 9, 2011, UniCare denied Nichols' claim, stating that because the cause
    of death was listed as "could not be determined," it had "no choice" but to deny the
    claim. Nichols filed an administrative appeal and supplemented the record (which
    previously consisted only of the autopsy report) with medical and prescription
    records, as well as letters from himself and Dana's parents, recounting her recent
    medical problems and her social history. Nichols recounted that since Dana's March
    2010 car accident, she had difficulty sleeping, and was prescribed Ambien. He noted
    that while on Ambien, Dana had been sleepwalking throughout the house and would
    even eat something and not remember it in the morning. Dana's mother recounted
    2
    The district court noted that Dana's March 2010 car accident had exacerbated
    her back pain, and further observed that the insurer's list of medications in the
    administrative record would not include prescriptions filled without a corresponding
    medical insurance claim.
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    that Dana was happily married with grown children; that Dana's son was newly
    married; and Dana's daughter was set to begin nursing school. Dana's mother also
    recounted that Dana was looking forward to a scheduled lap band surgery to assist her
    with weight loss and ease her back pain from the car accidents and that she was
    generally looking forward to the future. The letter from Dana's father reiterated
    Nichols' statements about Dana's sleepwalking behavior while on Ambien and her
    general good outlook for the future.
    By letter dated September 2, 2011, UniCare denied Nichols' appeal, this time
    stating two reasons for the adverse decision: (1) the manner of death was listed on the
    death certificate as "could not be determined," and (2) the plan excludes benefits for
    death caused by intoxication. Nichols filed the instant action in district court
    pursuant to ERISA. Upon Nichols' motion for summary judgment, the district court,
    applying a de novo standard of review, found that Nichols was entitled to benefits
    because the cause of Dana's death was more likely than not an accident. The district
    court rejected UniCare's argument that its analysis of whether Dana's death was an
    accident satisfied the standard set forth in Wickman v. Northwestern National
    Insurance Co., 
    908 F.2d 1077
    (1st Cir. 1990).
    UniCare argued to the district court that under Wickman, Dana's consumption
    of numerous medications was an intentional act for which she would have
    subjectively expected death to be a highly likely outcome. In this regard, UniCare
    contended that since Dana had been consuming prescription medications for at least
    a year, a reasonable interpretation of the evidence was that Dana had established a
    tolerance to the medications she had been consuming in combination for years, and
    that she must have taken more than the prescribed dosages on the date of her death.
    The district court rejected this argument and noted that UniCare's analysis was flawed
    because it "provides no indication that UniCare attempted to ascertain Dana Nichols's
    subjective expectations or whether a reasonable person in her position would have
    viewed her death as highly likely to occur." J.A. at 32.
    -4-
    With regard to the intoxication exclusion, the district court concluded that the
    exclusion was not intended to cover Dana's situation. Because the plan defines
    "intoxicated" as "legally intoxicated as determined by the laws of the jurisdiction
    where the accident occurred," the district court found that a reasonable person in the
    position of a plan participant would understand that the exclusion for intoxication
    was intended to apply to death caused by committing acts, such as driving, while
    intoxicated, not to situations where the immediate cause of death is ingestion of a
    lethal mixture of prescription drugs. The district court cited Sheehan v. Guardian
    Life Insurance Co., 
    372 F.3d 962
    , 967 (8th Cir. 2004) (finding that exclusion for loss
    resulting from being under the influence of a controlled substance was "intended to
    apply to death caused by, for example, driving while intoxicated, not to the accidental
    ingestion of a controlled substance"), in support of its conclusion. J.A. at 33-34.
    UniCare appeals and argues that the standard of review should be abuse of
    discretion; that the district court impermissibly shifted the burden from Nichols
    having to prove entitlement to benefits to UniCare having to disprove Nichols'
    entitlement; and that the district court erroneously concluded that the intoxication
    exclusion did not preclude an award of accidental death benefits. UniCare also
    challenges the $22,220 attorney fee awarded to Nichols.
    II.   DISCUSSION
    A.     Standard of Review
    ERISA provides that an employee may bring a civil action to recover benefits
    due to him under the terms of an employee welfare benefit plan. 29 U.S.C. §
    1132(a)(1)(B). Although the statute does not specify the scope of judicial review
    applicable to ERISA claims, in Firestone Tire & Rubber Co. v. Bruch, 
    489 U.S. 101
    ,
    115 (1989), the Supreme Court held that a denial of benefits challenged under ERISA
    is subject to de novo review unless the terms of the benefit plan give the plan
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    administrator or fiduciary discretionary authority to determine eligibility for benefits
    or to construe the terms of the plan. When a plan confers such discretionary
    authority, the administrator's or fiduciary's decision is given deference and reviewed
    under an abuse-of-discretion standard. Metro. Life Ins. Co. v. Glenn, 
    554 U.S. 105
    ,
    111 (2008). However, when a conflict of interest exists because the plan
    administrator is both the decision-maker and the insurer, "we take that conflict into
    account and give it some weight in the abuse-of-discretion calculation." Carrow v.
    Standard Ins. Co., 
    664 F.3d 1254
    , 1259 (8th Cir. 2012).
    The district court found that the plan did not confer discretionary authority on
    UniCare as the plan did not contain the necessary discretionary language. The district
    court focused on the language in the claims provisions, specifically the following:
    "[a]ny benefits due under this plan shall be due once we have received proper, written
    proof of loss, together with such reasonably necessary information we may require
    to determine our obligation." We have previously found that similar language did not
    confer discretionary authority on the administrator. See Rittenhouse v. UnitedHealth
    Group Long Term Disability Ins. Plan, 
    476 F.3d 626
    , 629 (8th Cir. 2007) (noting that
    policy language stating that benefits would be paid when "we determine that proof
    . . . is satisfactory" was ambiguous and did not confer discretion on plan
    administrator).
    UniCare, on the other hand, points us to Ferrari v. Teachers Insurance and
    Annuity Ass'n, 
    278 F.3d 801
    (8th Cir. 2002). In Ferrari, the claimant was initially
    awarded disability benefits, and in order to keep receiving them on a long-term basis,
    was required to submit written proof of continued total disability. We noted that the
    plan language "that the employee must provide written proof of continued total
    disability at reasonable intervals to be determined by TIAA and that such proof must
    be satisfactory to TIAA" sufficiently conferred discretion on the administrator. 
    Id. at 806.
    UniCare argues that its plan has the same language, albeit in the section
    addressing enrollment in the policy, not in the section addressing claims
    -6-
    administration. UniCare contends that discretionary language anywhere in the plan
    confers upon it the discretion necessary to obtain an abuse-of-discretion standard of
    review for denial of claims. Nichols, on the other hand, contends that the
    discretionary language must address claims administration or must grant general
    discretion to construe plan terms in order for the plan to obtain an abuse-of-discretion
    standard of review.
    We agree with Nichols that the plan does not grant UniCare discretion to
    determine eligibility for benefits or to generally construe the terms of the plan.
    Ferrari does not bear the weight UniCare places on it because the language from the
    plan in that case gave the administrator the discretion to make decisions about
    "continued total disability claims"–and the viability of a "continued total disability
    claim" was the decision being challenged on appeal. 
    Id. at 805-06.
    In the instant
    case, the decision being challenged on appeal has nothing to do with Dana's
    enrollment in the plan. The challenged decision is the administrator's denial of a
    claim for accidental death benefits. The plan's language in the claims section, which
    is lacking discretion-granting words according to our case law, see 
    Rittenhouse, 476 F.3d at 629
    , is the most relevant. Nor is there a general grant of discretionary
    authority to UniCare to construe all plan terms. Accordingly, we hold that the district
    court correctly applied an abuse-of-discretion standard of review.3
    3
    Even if we were to hold that the plan granted UniCare discretion, the financial
    conflict of interest that exists in this case would be taken into account, somewhat
    ameliorating the abuse-of-discretion standard. See 
    Carrow, 664 F.3d at 1259
    (holding
    that when a conflict of interest exists because the plan administrator is both the
    decision-maker and the insurer, "we take that conflict into account and give it some
    weight in the abuse-of-discretion calculation").
    -7-
    B.     Accidental Death Claim
    Nichols argues UniCare erred in denying his claim for accidental death benefits
    with the stated rationale that the autopsy report listed the manner of death as "could
    not be determined." Nichols submitted proof of his claim for accidental benefits in
    the form of the death certificate, autopsy report, insurance medical records,
    prescriptions records, and evidence relevant to Dana's state of mind, her relationships
    with family, and an upcoming scheduled surgery.
    As noted, in front of the district court, UniCare advanced the Wickman test as
    the vehicle for determining whether Dana's death was an accident, and asserted that
    the facts of this case, as placed in the Wickman rubric, indicated that the incident was
    not an accident. Under Wickman, an event is an accident if the decedent did not
    subjectively expect to suffer "an injury similar in type or kind to that suffered" and
    the suppositions underlying that expectation were 
    reasonable. 908 F.2d at 1088
    .
    "The determination of what suppositions are unreasonable should be made from the
    perspective of the insured, allowing the insured a great deal of latitude and taking into
    account the insured's personal characteristics and experiences." 
    Id. If the
    evidence
    is insufficient to determine the decedent's subjective expectation, the question is then
    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." 
    Id. UniCare contends
    that there is insufficient subjective evidence of Dana's
    expectations, and the objective evidence suggests that Dana's consumption of
    numerous medications was an intentional act for which a reasonable person would
    have expected death as the outcome. UniCare surmises that since Dana had been
    taking this same combination of medications for several months, she became tolerant
    to that level of medicine and subsequently took more than the prescribed dosage on
    the night she died. UniCare argues that, objectively speaking, Dana would have
    -8-
    viewed death as highly likely to occur in such a situation. This argument is strikingly
    similar to the one made by the plan administrator/insurer in the recent case of
    McClelland v. Life Insurance Company of North America, 
    679 F.3d 755
    (8th Cir.
    2012).
    In McClelland, under the deferential abuse-of-discretion standard of review,
    we held that the insurance company erroneously denied accidental death benefits to
    the widow of the insured decedent who died while driving a motorcycle at high
    speeds with an elevated blood alcohol level. As "evidence" of the deceased's state of
    mind, the insurance company offered that McClelland had been educated on the
    dangers of drinking and driving and should have known that death was highly likely
    to occur in his circumstances. We held that this reasoning was an abuse of the
    insurer's discretion, and a misapplication of the agreed-upon standard set forth in
    Wickman, because better and more concrete evidence of McClelland's subjective state
    of mind on the morning of the accident (submitted in the form of affidavits from
    family, friends and witnesses on the day of the accident), was that he had no intention
    to die and certainly did not think death was likely to occur as he went on a social mid-
    Saturday morning motorcycle ride. 
    Id. at 760-61.
    Like the insurance company in McClelland, UniCare ignores the subjective
    evidence submitted by Nichols, and instead makes leaps to get to the "objective"
    conclusion it desires. There was no evidence in the record that Dana had developed
    a tolerance to her medications or that she took all 12 of the missing hydrocodone pills
    on the night of her death. No evidence suggests that Dana was suicidal. Similar to
    the motorcycle driver in McClelland who had been successfully weaving in and out
    of traffic at a high rate of speed for over six miles and therefore did not expect to die
    that day, Dana had been taking this combination of prescribed medications, as
    admitted by UniCare, for some period of time. There is no evidence whatsoever that
    Dana intended to kill herself or thought it likely she would die on May 3, 2010. The
    subjective evidence, in the form of letters and statements from her husband and
    -9-
    parents, suggests otherwise. To the extent that her subjective mind set could still be
    viewed as uncertain, the objective evidence tended to show that Dana had been
    ingesting a combination of prescribed medication for some time, and under these
    circumstances, a reasonable person with Dana's characteristics would not have
    viewed death as highly likely to occur. Nor is there a medical determination that the
    death was "not accidental" as alleged by UniCare. Dana's death falls squarely within
    the meaning of accident, a word not otherwise defined in the policy, and as viewed
    under the Wickman mandate to consider the situation from the "perspective of the
    insured, allowing the insured a great deal of latitude and taking into account the
    insured's personal characteristics and 
    experiences." 908 F.2d at 1088
    . As the district
    court aptly stated, "[i]n sum, all of the evidence indicates that Dana's death was the
    unexpected result of ingesting prescribed medications."4 J.A. at 33. Accordingly, due
    to all of the foregoing, we find that the district court correctly found that UniCare
    erred in denying coverage for accidental death benefits.
    4
    Our conclusion is bolstered by the presumption against suicide that the
    Eleventh Circuit has recognized in the context of an ERISA case, holding that "[b]oth
    the negative presumption against suicide and the affirmative presumption of
    accidental death" advance ERISA's goals of protecting the interests of plan
    beneficiaries and uniformity in plan administration. Horton v. Reliance Standard Life
    Ins. Co., 
    141 F.3d 1038
    , 1041 (11th Cir. 1998). The Horton court held that these
    goals were furthered by providing "uniform rules to resolve coverage questions where
    the evidence of how the insured died is inconclusive." 
    Id. The court
    also noted that
    a majority of states recognize the presumption against suicide, 
    id., and Arkansas
    is
    one of those states. See Wood v. Valley Forge Life Ins. Co., 
    478 F.3d 941
    , 947 (8th
    Cir. 2007) (recognizing the Arkansas "strong" presumption against suicide). There
    would be nothing remarkable about applying such a presumption in an uncertain-
    cause-of-death ERISA case, as ERISA plan administrators are bound to follow federal
    common law, as informed by state common law. Shipley v. Ark. Blue Cross & Blue
    Shield, 
    333 F.3d 898
    , 902 (8th Cir. 2003). However, we need not even rely on the
    presumption because as noted above, Nichols has met his burden to establish
    entitlement to Dana's accidental death benefits.
    -10-
    C.     Intoxication Exclusion
    UniCare's final argument is that it can avoid paying benefits due to the plan's
    intoxication exclusion. The exclusion states that no benefit will be paid for a death
    that results from being intoxicated. "Intoxicated" is defined in the plan as "legally
    intoxicated as determined by the laws of the jurisdiction where the accident
    occurred." Because it is an exception to coverage, UniCare has the burden of proving
    that the exclusion applies. Farley v. Benefit Trust Life Ins. Co., 
    979 F.2d 653
    , 658
    (8th Cir. 1992). We agree with the district court that UniCare did not meet this
    burden. Arkansas law defines intoxication with reference only to the public offenses
    of drunk driving and public intoxication. Jones Truck Lines, Inc. v. Letsch, 
    436 S.W.2d 282
    , 284 (Ark. 1969). Dana's death involved neither. We view the common
    and ordinary meaning of the policy language as a reasonable person in the position
    of the plan participant would have understood the words to mean. Adams v. Cont'l
    Cas. Co., 
    364 F.3d 952
    , 954 (8th Cir. 2004). A reasonable plan participant would
    have understood that the plan's intoxication exclusion is intended to apply to death
    caused by committing acts, such as driving, while intoxicated; not to situations where
    the immediate cause of death is ingestion of a lethal mixture of drugs that have been
    prescribed for use by the decedent. See 
    Sheehan, 372 F.3d at 967
    (finding that
    exclusion for loss resulting from being under the influence of a controlled substance
    was "intended to apply to death caused by, for example, driving while intoxicated, not
    to the accidental ingestion of a controlled substance"). The district court correctly
    found that UniCare had not proven that the exclusion should be used to deny
    coverage.
    D.     Costs and Fees
    In a separate order, the district court awarded Nichols filing fees, prejudgment
    interest and $22,220 in attorney fees. UniCare argues this was an abuse of the district
    court's discretion. In deciding whether to award fees in ERISA cases, we are guided
    -11-
    by the five factors set forth in Lawrence v. Westerhaus, 
    749 F.2d 494
    , 496 (8th Cir.
    1984) (per curiam) ((1) degree of bad faith; (2) ability to pay; (3) deterrence; (4)
    significance of the legal question; and (5) relative merits of the positions). The
    district court's decision is reviewed for an abuse of discretion. 
    Id. at 495.
    In
    analyzing the factors, the district court found that a fee was warranted, and we find
    that the district court did not abuse its discretion in so deciding. Further, the fee
    awarded was reasonable.
    III.   CONCLUSION
    We affirm the district court.
    ______________________________
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