of the Court's review turns on the language of the plan itself. In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 103 L. Ed. 2d 80, 109 S. Ct. 948 (1989), the Supreme Court held that "a denial of benefits . . . is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." If the plan provides the administrator with discretionary authority to determine a participant's eligibility for benefits, the arbitrary and capricious standard applies. Id. at 111; see also Hullett v. Towers, Perrin, Forster & Crosby, Inc., 38 F.3d 107, 114 (3d Cir. 1994); Abnathya v. Hoffman-LaRoche, Inc., 2 F.3d 40, 45 (3d Cir. 1993). The trust instrument need not expressly grant discretionary authority; rather, such discretion may be implied from the terms of the plan. See Hullett, 38 F.3d at 114; Heasley v. Belden & Blake Corp., 2 F.3d 1249, 1256 (3d Cir. 1993); Luby v. Teamsters Health Welfare & Pension Trust Funds, 944 F.2d 1176, 1181 (3d Cir. 1991) (holding no "magic words" such as discretion need be used to accord discretion).
Here, the parties dispute: (1) which instrument governs the terms of defendant's claim; (2) the appropriate standard of review for assessing plaintiff's denial of AD&D benefits and (3) the meaning of the language governing claims of accidental loss.
Plaintiff argues that Policies No. 18000-G and 26600-G were terminated by amendment and that the SPD governs defendant's claims. Plaintiff argues that the SPD gives plaintiff discretion to review claims and that any denial thereof is subject to an arbitrary and capricious standard of review. Plaintiff contends that its denial of AD&D benefits was not unreasonable, arbitrary or capricious because the decedent's death was not "solely the result of an accident," which the SPD requires for an award of AD&D benefits. Alternatively, plaintiff argues that regardless of which document governs, the language of the policies and the SPD are functionally equivalent in their grant of discretion and in requiring an accident to be the singular cause of death. Plaintiff therefore argues that its denial of benefits was proper under either instrument or standard of review.
Defendant argues that plaintiff cannot retroactively terminate the insurance policies and that Policies No. 18000-G and 26600-G therefore govern his claims for AD&D benefits. Defendant argues that plaintiff's denial of AD&D benefits is subject to de novo review by this Court because the policies do not grant plaintiff discretion in reviewing claims. Defendant also argues that the language of the policies and the SPD are not functionally equivalent. Defendant contends that the policy language requiring death as a result of accidental injuries independent of all other causes means that no intervening injuries between the accident and death can contribute to death; while the SPD language requiring that death occur "solely" as the result of an accident does not concern intervening injuries. Defendant also contends that this Court should order plaintiff to pay AD&D benefits because the plan does not contain an exclusion for alcohol-related incidents and, regardless of decedent's intoxication, the decedent's death was the result of accidental bodily injuries sustained in a motor vehicle collision when decedent's car veered off a dangerous roadway. Alternatively, defendant argues that even if de novo review is not required a standard less deferential than arbitrary and capricious is mandated because plaintiff's dual role as plan insurer and claims fiduciary creates a conflict of interest. Defendant further argues that even under an arbitrary and capricious standard of review, plaintiff's denial was unreasonable, arbitrary and capricious because plaintiff has failed to consistently interpret the plan provisions governing AD&D benefits.
The Court need not determine which instrument governs defendant's entitlement to AD&D benefits or, more precisely, whether Policy No. 26600-G remains in effect or whether plaintiff's retroactive termination of Policy No. 18000-G was valid such that the SPD alone governs the parties' respective rights. This is so because, as plaintiff suggests, regardless of which instrument controls, (1) the language in the various instruments is functionally equivalent in requiring an accident to be the singular cause of death and (2) under each of the three instruments plaintiff retains discretion to interpret the plan provisions.
First, as noted, the SPD provides that accidental death benefits are not payable unless the death is "solely...the result of an accident..." Potter Aff., Ex. A, at 150; Gacek Aff., Ex. A, at 150. Policy No. 18000-G states that AD&D benefits will be payable only where the insured sustained and died as a result of "accidental bodily injuries...independently of all other causes...." Burzynski Aff., Ex. M, at 17. Policy No. 26600-G and the appended benefits booklet do not mention the word "accident" at all; and while the dependent life insurance claim statement for making claims under that policy clearly leaves a space for "Amount of Dependent Accidental Loss Insurance on this Dependent," the form provides no indication as to the criteria by which such claims are evaluated. See Burzynski Aff., Ex. V. Despite this silence, defendant appears to argue that the same criteria set forth in Policy No. 18000-G for AD&D benefits governs dependent AD&D benefits under Policy No. 26600-G, i.e., that death must have been the result of "accidental bodily injuries...independently of all other causes...."
Even assuming, arguendo, that the language governing claims under Policy No. 18000-G also controls claims made under Policy No. 26600-G, giving the language in the instruments its plain meaning the Court finds no articulable distinction between the policy language requiring "accidental bodily injuries...independently of all other causes" and that of the SPD requiring that death occur "solely" as the result of an accident. The Court rejects defendant's argument that the language of the policies means something different from the language of the SPD. Whether death occurs "solely" by accident or by an accident "independently of all other causes" is semantically irrelevant because both phrases unambiguously indicate that plaintiff will not pay benefits unless an accident is the singular or exclusive cause of death.
Turning to the discretion question, the plain language of the SPD clearly and unequivocally confers on plaintiff the "complete discretionary authority to determine conclusively for all parties...any and all questions arising from...interpretation of all Plan provisions, determination of all questions relating to...eligibility for benefits...amount and type of benefits payable to any participant, spouse or beneficiary, and construction of all terms of the Plan..."
Plaintiff's discretion under Policy No. 18000-G is similarly apparent. As noted, with regard to AD&D benefits, the policy insuring clause states that "upon receipt of...satisfactory proof...that any Employee, while insured hereunder for [AD&D] Insurance, shall have sustained accidental bodily injuries...and shall have suffered any of the losses specified [herein]...the Insurance Company shall pay...the amount of insurance specified for such loss.....All [AD&D] Insurance benefits will be paid immediately after receipt of due proof." Courts which have considered whether similar language confers discretion on plan administrators have consistently held that language requiring "satisfactory" proof of the claimed loss grants discretionary authority requiring application of the arbitrary and capricious standard of review. See, e.g., Snow v. Standard Ins. Co., 87 F.3d 327, 330 (9th Cir. 1996) (citing cases) (holding that plan requiring "satisfactory written proof of claimed loss" confers discretion to determine eligibility for benefits); Donato v. Metropolitan Life Ins. Co., 19 F.3d 375, 379-80 (7th Cir. 1994) (holding that ERISA plan stating that insurer would pay long-term disability benefits "upon receipt of proof" and that "all proof must be satisfactory to [the insurer]" furnished sufficient discretion to apply the arbitrary and capricious standard of review); Miller v. Metropolitan Life Ins. Co., 925 F.2d 979, 984 (6th Cir. 1991) (holding that provision in ERISA plan providing that benefits entitlement determination would be made "on the basis of...evidence satisfactory to the [trustee]" conferred discretion on plan administrator, thus requiring application of arbitrary and capricious standard of review").
Whether Policy No. 26600-G confers discretion on plaintiff is decidedly less clear. However, as Firestone and its progeny hold, it is not necessary that an ERISA plan contain a clear and unequivocal grant of discretionary authority to the administrator to determine eligibility for benefits or to construe plan terms for a court to find that the plan confers such discretion. While in most cases the plan language alone will determine whether the plan confers discretion, Firestone authorizes a court to look to the parties' course of dealing and other manifestations of the parties' intent in making such a determination. See Firestone, 489 U.S. at 112; Heasley, 2 F.3d at 1256.
Policy No. 26600-G itself contains no express grant of discretion with regard to eligibility or interpretation. With regard to eligibility, the policy merely requires the covered employee to have been employed for six months and to have one or more dependents. With regard to interpretation, defendant argues that the policy is silent. The first page of the policy provides:
In return for the payment of the premiums when they fall due Metropolitan Life Insurance Company (Herein Called Metropolitan) will pay the Insurance and other benefits which are described in the Exhibits, subject to the terms and provisions of this Policy. The Schedule of Exhibits sets forth each Exhibit which is to be attached to and made a part of this Policy and to whom each such Exhibit applies.
The booklet entitled "Dependent Group Life Insurance Plan," appended as Exhibit Number 1 to the policy, states that plaintiff "has the exclusive right to interpret the provisions of the Plan," and further states that the policy and the employee's policy application "legally govern the operation of the plan."
It is clear that the booklet defers to the policy proper as controlling, a fact which, in conjunction with the policy's silence, might in other circumstances preclude a finding of discretion. However, the Court finds that the policy's incorporation of the benefits booklet, which expressly reserves discretion to plaintiff, unambiguously evidences the parties' intention that plaintiff would retain the exclusive right to interpret all plan provisions.
Having found that, regardless of which instrument governed, plaintiff is required to pay AD&D benefits only where an accident was the singular cause of death and that plaintiff retained the discretion to interpret plan provisions, the Court must determine whether plaintiff's denial of AD&D benefits based on its determination that decedent's death was not accidental was arbitrary and capricious. See Abnathya, 2 F.3d at 40. Under the arbitrary and capricious standard, which is similar to the abuse of discretion standard, a court may conclude that a plan administrator's determination is arbitrary and capricious only if the determination is "'without reason, unsupported by substantial evidence or erroneous as a matter of law."' Id. (quoting Adamo v. Anchor Hocking Corp., 720 F. Supp. 491, 500 (W.D.Pa. 1989)); Moats v. United Mine Workers of America Health and Retirement Funds, 981 F.2d 685, 688 (3d Cir. 1992) ("In a case involving the interpretation of a provision of a pension plan,...under the arbitrary and capricious standard, the trustee's interpretation should be upheld even if the court disagrees with it, so long as the interpretation is rationally related to a valid plan purpose and not contrary to the plain language of the plan."). This review is necessarily narrow in view of the policies underlying the Supreme Court's decision in Firestone, and this Court "'is not free to substitute its own judgment for that of the defendants in determining eligibility for plan benefits.'" Id. (quoting Lucash v. Strick Corp., 602 F. Supp. 430, 434 (E.D.Pa. 1984), aff'd, 760 F.2d 259 (3d Cir. 1985)).
The Third Circuit has adopted a series of factors for courts to consider in determining whether the Plan administrator's interpretation of the Plan's terms was reasonable. See Moench v. Robertson, 62 F.3d 553, 566 (3d Cir. 1995), cert. denied, 516 U.S. 1115, 116 S. Ct. 917, 133 L. Ed. 2d 847 (1996). Those factors include:
(1) Whether the interpretation is consistent with the goals of the plan; (2) whether it renders any language in the plan meaningless or internally inconsistent; (3) whether it conflicts with the substantive or procedural requirements of the ERISA statute; (4) whether the [administrator] interpreted the provision at issue consistently; and (5) whether the interpretation is contrary to the clear language of the plan.
Id. (quoting Cooper Tire & Rubber Co. v. St. Paul Fire & Marine Ins. Co., 48 F.3d 365, 371 (8th Cir.), cert. denied, 516 U.S. 913, 116 S. Ct. 300, 133 L. Ed. 2d 205 (1995)). No single factor is dispositive, and thus the Court must examine the factors as a whole in making a determination. See McCall v. Metropolitan Life Ins. Co., 956 F. Supp. 1172 (D.N.J. 1996).
Plaintiff declined to pay AD&D benefits to defendant on the ground that the decedent's death was not accidental, but rather an expected and foreseeable consequence of her driving while intoxicated. An analysis of plaintiff's determination under the Moench factors raises material questions of fact which preclude entry of summary judgment in favor of either party.
Beginning with the first three Moench factors, defendant has not pointed to any plan goal which conflicts with plaintiff's interpretation of the plan,
any plan language rendered meaningless by plaintiff's interpretation of the plan, or any pertinent provision of ERISA with which plaintiff's interpretation conflicts. None of these factors suggest that plaintiff's interpretation of the plan was unreasonable, arbitrary or capricious.
The Court turns next to the fourth Moench factor, whether the administrator interpreted the provision in question consistently. Defendant argues that plaintiff's claims file shows conflicting interpretations of the plan language by the people who reviewed defendant's claim and by plaintiff in reviewing other AD&D claims involving drunk driving fatalities. Defendant argues that plaintiff's initial approval and payment of defendant's AD&D claim under Policy No. 18000-G, based on plaintiff's determination that defendant had submitted "due proof" conflicts with its denial of dependent AD&D benefits under Policy No. 26600-G. See Burzynski Aff., Ex. H (death claim worksheet). Defendant also points to three incidents in 1988 and 1989 in which plaintiff paid AD&D benefits for drunk driving fatalities.
Plaintiff responds that its initial payment was a mistake, and while it does not dispute that it previously paid AD&D benefits for drunk driving fatalities, it argues that it has not done so since the onset of heightened awareness of the risks of driving while intoxicated.
The Third Circuit has instructed that past practice in interpreting plan provisions is of no significance where the plan language is clear. Epright v. Environmental Resources Management, Inc., 81 F.3d 335, 339 (3d Cir. 1996) (finding plan language clear where plan specifically defined term which was the focus of the parties' dispute). Here, the plan language is not clear because, as noted, the plan does not define "accident" or "accidental loss." Thus, under Moench, plaintiff's inconsistent interpretations are very relevant to the Court's determination of whether plaintiff's current interpretation was arbitrary and capricious.
The first inconsistency is that created by plaintiff's past payment of AD&D benefits for drunk driving fatalities and plaintiff's recent denial of the same benefits for drunk driving fatalities. The Court is not persuaded by plaintiff's effort to attribute such inconsistent interpretations of accident or accidental loss to recent heightened public awareness of the hazards of drinking and driving. The plan itself requires plaintiff to interpret the plan provisions consistent with the language, goals and policies of the plan, not in accordance with the ebb and flow of public opinion.
A second inconsistency appears in plaintiff's handling of defendant's claims at the various stages of plaintiff's claims review process. On October 13, 1993, plaintiff's benefits supervisor approved defendant's claim for $ 100,000 in dependent AD&D benefits. See Burzynski Aff., at Ex. G. On November 1, 1993, plaintiff also appears to have approved defendant's claim for $ 132,000 in AD&D benefits under the decedent's policy. See Burzynski Aff., Ex. H (noting that defendant submitted "due proof' of loss). On the same date that plaintiff appears to have approved the AD&D claim under the decedent's policy, plaintiff issued defendant a claim statement, which stated that $ 132,000 in life insurance benefits had been deposited in an account in defendant's name, and which further noted that defendant's claims for accidental death insurance were under consideration. See Potter Aff., at Ex. D. On November 11, 1993, plaintiff notified defendant that his claims for AD&D benefits were being reviewed by plaintiff because decedent's collision was alcohol-related. See Potter Aff., at Ex. F, Ex. G. On December 2, 1993, one of plaintiff's employees issued an internal memorandum to a senior approver or supervisor which stated that a determination on defendant's AD&D claim was pending review by the "law" department, that a determination as to the dependent AD&D claim should be withheld until receipt of the "law response." See Burzynski Aff., Ex. C. The memorandum also stated "no plan exclusion for alcohol." See id. On May 26, 1994, plaintiff denied defendant's AD&D claims stating that the decedent's death was foreseeable, not accidental, and that "driving while intoxicated is too great a risk to be tolerated without penalty." See Potter Aff., Ex. H. In response to defendant's instant motion, plaintiff submitted the affidavit of its claims supervisor certifying that plaintiff's payment of $ 132,000 to defendant, instead of the $ 44,000 to which he was entitled in life insurance benefits, was a "mistake." Dygert Aff., at P 8.
The evidence suggests that plaintiff may have initially approved defendant's AD&D claims, then later denied them, and that plaintiff's denial may have been a "penalty" for decedent's drunk driving. However, the record is unclear as to what actually transpired during the claims approval process, or why, given its reliance on heightened awareness of the hazards of drunk driving, plaintiff failed to amend its policies (or the SPD) to define "accident" or to exclude coverage for alcohol-related injuries. The seemingly conflicting determinations at the various levels of plaintiff's claims review process, questions concerning plaintiff's motivation behind the denial
and the lack of sufficient explanation for plaintiff's differing treatment of past and recent AD&D claims raise material fact questions which preclude entry of summary judgment in favor of either party.
An analysis of the fifth Moench factor, whether plaintiff's interpretation of the term "accident" or "accidental" is contrary to the clear language of the plan, also precludes entry of summary judgment in favor of either party. As noted, the plan provides AD& D benefits where death occurs exclusively or singularly as the result of an accident or accidental injury. Neither the policies nor the SPD define "accident" or "accidental loss." In denying defendant's claims for AD&D benefits, plaintiff based its interpretation of "accident" and "accidental loss" on "common sense" and "case law." Potter Aff., Ex. H., at 2.
In the absence of any plan definition, the Court looks to case law defining "accident" and "accidental loss" in the context of insurance coverage. Because the Court's research has not yielded any controlling authority on point, the Court looks to persuasive authority.
In Wickman v. Northwestern Nat'l Ins. Co., 908 F.2d 1077 (1st Cir. 1990), the Court of Appeals for the First Circuit reviewed the decision of the Magistrate Judge which upheld an insurer's denial of accidental death benefits pursuant to an ERISA plan covering loss "due to accidental injury" where the insured fell to his death after hanging over the edge of a guard rail. Noting that the definition of "accident" has perplexed both state and federal courts for years, the Wickman court explained that the actual meaning of the word is "largely intuitive." Id. at 1087. Wickman articulated a two-pronged inquiry for determining whether death is accidental. First, a court must ascertain whether the insured, when the policy was purchased, subjectively expected an injury similar in type to the kind suffered. If the Court finds that the insured did not expect such an injury, or where there is insufficient evidence to accurately determine the insured's actual expectation, the court must then
engage in an objective analysis of the insured's expectations. In this analysis, one must ask 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. at 1088. In affirming the Magistrate Judge's decision upholding the denial of benefits, the court stated:
the linchpin of the magistrate's findings was his conclusion that "[the decedent] knew or should have known that serious bodily injury or death was a probable consequence substantially likely to occur as a result of his volitional act..." This finding equates with a determination either that [the decedent] expected the result, or that a reasonable person in his shoes would have expected the result, and that any other expectation would be unreasonable.
In Todd v. AIG Life Insurance Co., 47 F.3d 1448 (5th Cir. 1995), the Court of Appeals for the Fifth Circuit reviewed an administrator's denial of accidental death benefits under a plan covering loss due to "bodily injury caused by an accident...resulting directly and independently of all other causes" where the insured died from autoerotic asphyxiation during masturbation. Finding that asphyxia is not a condition that necessarily leads to death and that it is "commonplace" for those who engage in such an activity to regain consciousness and survive, the court declined to announce a per se rule that death caused by autoeroticism is never accidental. Id. at 1452. After surveying the authorities on which the district court's decision was made and noting that the district court relied primarily on Wickman, the Fifth Circuit upheld the district court's adoption of Wickman, stating:
For death under an accidental death policy to be deemed an accident, it must be determined (1) that the deceased had a subjective expectation of survival, and (2) that such expectation was objectively reasonable, which it is if death is not substantially certain to result from the insured's conduct. This holding was appropriate.