Life Insurance and AD&D Benefit Claims

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This week’s notable decision is Arruda v. Zurich Am. Ins. Co., No. 19-1247, __F.3d__, 2020 WL 880548 (1st Cir. Feb. 24, 2020), where the First Circuit parted from its sister circuits in declining to adopt a “substantial factor” test to the application of an exclusion in a life insurance policy where abuse of discretion review applies.  In so doing, it reversed the district court’s entry of summary judgment to the beneficiary and directed entry of summary judgment to Zurich.

The case involves an unfortunate motor vehicle accident that resulted in the death of the insured, Joseph Arruda, who had named his wife, Plaintiff-Appellee Denise Arruda, as the beneficiary of any death benefits under his employer’s basic accident policy (“the Policy”) insured by Zurich.  On the day of his death, Mr. Arruda was driving down a four-lane road on his way to a work event when his car crossed all lanes of traffic, collided with another car, hit the curb, rolled over, and landed on its wheels on the opposite side of the road.  He was alive briefly following the accident but was pronounced dead at the scene.
Continue Reading First Circuit Holds Denial of Accidental Death Benefits Due to Pre-existing Illnesses Was Not Abuse of Discretion

Ho ho ho, merry holidays. This week Kantor & Kantor helped bring justice to the nice and coal to the naughty as we take a closer look at why a district court in Harris v. Life Ins. Co. of N. Am., No. 19-cv-04594, __ F.Supp.3d __, 2019 WL 6769660 (N.D. Cal. Dec. 11, 2019), reminded an ERISA fiduciary that failing to do what it said it would do may have equitable consequences. 

Plaintiff’s husband received life insurance coverage through an ERISA plan sponsored by his employer, BDO USA, LLP, and insured by Life Insurance Company of North America (“LINA”). Both BDO and LINA were ERISA fiduciaries with respect to the life insurance plan. Plaintiff’s husband stopped working due to terminal cancer in July 2015 and LINA approved his disability benefits. In this situation, under the terms of the life plan, coverage continued for another twelve months – through July of 2016 – after which coverage continued if it was converted or ported. 
Continue Reading District Court Finds Breach of Fiduciary Duty Claim Adequately Plead Where Claimant Was Not Given Life Insurance Conversion Options

Think of someone driving 17 miles per hour over the speed limit on an unpaved road.  What words initially come to mind?  If one of them is “crime” then you might agree with the outcome in this week’s notable decision, Caldwell v. Unum Life Insurance Company of America, No. 17-8078, __F.App’x__, 2019 WL 4463495 (10th Cir. Sept. 18, 2019).

Caldwell involves a dispute over accidental death and dismemberment (AD&D) benefits for the death of the insured who died “when he was thrown from the vehicle he was driving at 74 mph on an unpaved road.”  Unum Life Insurance Company of America denied payment of AD&D benefits based on an exclusion in its policy for losses “caused by, contributed to by, or resulting from … an attempt to commit or commission of a crime.”  The district court found that Unum’s interpretation of “crime” to include speeding (which is a misdemeanor under Wyoming law) was reasonable and made in good faith.  Caldwell v. Unum Life Ins. Co. of Am., 271 F. Supp. 3d 1252, 1264 (D. Wyo. 2017), aff’d, No. 17-8078, 2019 WL 4463495 (10th Cir. Sept. 18, 2019).  It explained that the term “crime” is not ambiguous; it is a violation of the law.  Even if some level of speeding is deemed normal in Wyoming, people understand speeding to be a crime.  The district court granted summary judgment to Unum.
Continue Reading Tenth Circuit Affirms Denial of AD&D Benefits for Death Related to Speeding