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LABO v. AETNA LIFE INSURANCE COMPANY

United States District Court, D. New Jersey


February 14, 2005.

ROSEALIE LABO, Administratrix of the Estate of Michael DiVigenze, deceased and NANCY DIVIGENZE, now known as Nancy Russo, Plaintiffs,
v.
AETNA LIFE INSURANCE COMPANY and SHEET METAL WORKERS INTERNATIONAL ASSOCIATION, LOCAL 27 HEALTH AND WELFARE FUND, Defendants.

The opinion of the court was delivered by: JEROME SIMANDLE, District Judge

OPINION

Presently before the Court are cross-motions for summary judgment by Plaintiffs Rosealie Labo, Administratrix of the Estate of Michael DiVigenze, deceased, and Nancy Divigenze, now known as Nancy Russo ("Plaintiffs") and Defendant Aetna Life Insurance Company ("Defendant" or "Aetna"). Plaintiffs seek payment of the $35,000.00 benefit under the decedent's Accidental Death and Dismemberment coverage in an employee benefit plan for which Aetna denied coverage, finding Mr. DiVigenze's death did not qualify as an "accident" under the plan. Plaintiffs allege that Aetna's decision to deny benefits violates Section 502(a) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a), and cannot withstand scrutiny because it was arbitrary and capricious. For the reasons discussed below, summary judgment will be granted in favor of Defendant and against Plaintiffs.

  BACKGROUND

  Decedent, Michael DiVigenze, a sheet metal worker and member of the Sheet Metal Workers International Association, Local 27 Health & Welfare Fund, died as a result of multiple gunshot wounds on September 1, 2000. (See Def. Ex. A.) The medical examiner who performed the autopsy ruled the death to be a homicide, as decedent's gunshot wounds were apparently inflicted by an off-duty police officer who had been approached by the decedent wielding a knife against the officer outside of a bar. (See Def. Ex. A; Def. Ex. L.) At the time of his death, decedent had been enrolled in an Employee Benefit Plan, governed by the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq., which included a Group Life Accident and Health Insurance Policy and provided to eligible employees life insurance and accidental death and dismemberment coverage. (See Pl. Ex. C; Def. Ex. K.) Both forms of coverage were underwritten by Aetna Life Insurance Company of Hartford, Connecticut. (Id.) The Group Life Plan provided thirty-five thousand dollars ($35,000.00) in death benefit coverage and the Accidental Death and Dismemberment component provided coverage in the amount of an additional thirty-five thousand dollars ($35,000.00) to eligible employees. (See Pl. Ex. C; Def. Ex. K: "Summary of Coverage," p. 5.)

  By letter dated October 28, 2002, Ralph J. Ragno, Fund Administrator for Sheet Metal Workers, submitted to Aetna Life Insurance Company a claim for life insurance for Michael DiVigenze, which included an original copy of the death certificate, a beneficiary designation form, and proof of death. (See Def. Ex. A.) By letter dated November 19, 2002, Veta Amos of Aetna Life Insurance Company acknowledged receipt of the claim for group life insurance benefits for Michael DiVigenze. Aetna's letter explained, however, that benefits were not payable at that point because the claim was under investigation and Aetna requested that police/toxic reports be submitted in order to assist it in arriving at a final decision. Aetna further advised that a competing claim for benefits had been filed. (See Def. Ex. B.)

  Plaintiffs commenced this action in November, 2003 with the filing of their Complaint against Defendants Aetna Life Insurance Company and Sheet Metal Workers International Association, Local 27 Health and Welfare Fund in the Superior Court of New Jersey, Law Division, Gloucester County. On December 30, 2003, Defendant Aetna removed the matter to the United States District Court pursuant to 28 U.S.C. §§ 1441, 1442(a)(1) and 1446. Defendant Aetna filed its answer on January 5, 2004 and by stipulation dated March 18, 2004, the parties agreed to the voluntary dismissal with prejudice of Defendant Sheet Metal Workers. Subsequent to the initiation of litigation in this matter, it was stipulated on behalf of Defendant Aetna that the claim for accidental death and disability benefits would be considered "denied" on the basis that there was no evidence submitted in support of the claim to establish that the death arose out of an "accident." (See Def. Ex. J.)

  Plaintiffs' Complaint seeks payment of accidental death and disability benefits in the amount of $35,000.00 with interest or dividends. The policy's basic death benefit in the amount of $35,000.00 has previously been paid on May 16, 2003,*fn1 but no payment of interest or dividends was paid on the basic coverage.

  DISCUSSION

  Summary Judgment Standard of Review

  Summary judgment is appropriate when the materials of record "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A dispute is "genuine" if "the evidence is such that a reasonable jury could return a verdict for the non-moving party." See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is "material" only if it might affect the outcome of the suit under the applicable rule of law. Id. Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment. Id.

  In deciding whether there is a disputed issue of material fact, the court must view the evidence in favor of the non-moving party by extending any reasonable favorable inference to that party; in other words, "[T]he nonmoving party's evidence `is to be believed, and all justifiable inferences are to be drawn in [that party's] favor.'" Hunt v. Cromartie, 526 U.S. 541, 552 (1999) (quoting Liberty Lobby, 477 U.S. at 255). The threshold inquiry is whether there are "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Liberty Lobby, 477 U.S. at 250; Brewer v. Quaker State Oil Refining Corp., 72 F.3d 326, 329-30 (3d Cir. 1995) (citation omitted).

  In this claim for ERISA benefits under 29 U.S.C. § 1132(a), Plaintiffs have the burden of proving entitlement. Abnathya v. Hoffman-La Roche, Inc., 2 F.3d 40, 46-48 (3d Cir. 1993). The moving party always bears the initial burden of showing that no genuine issue of material fact exists, regardless of which party ultimately would have the burden of persuasion at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Country Floors v. Partnership of Gepner and Ford, 930 F.2d 1056, 1061-63 (3d Cir. 1991) (reviewing district court's grant of summary judgment in a trademark action); Lucent Info. Manage. v. Lucent Tech., 986 F. Supp. 253, 257 (D.N.J. 1997) (granting summary judgment in favor of telecommunications provider in trademark action), aff'd, 186 F.3d 311 (3d Cir. 1999); Jalil v. Avdel Corp., 873 F.2d 701, 706 (3d Cir. 1989), cert. denied, 493 U.S. 1023 (1990). However, where the nonmoving party bears the burden of persuasion at trial, as plaintiff does in the present case, "the burden on the moving party may be discharged by `showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Celotex Corp., 477 U.S. at 325.

  The non-moving party "may not rest upon the mere allegations or denials of" its pleading in order to show the existence of a genuine issue. Fed.R.Civ.P. 56(e). Plaintiff must do more than rely only "upon bare assertions, conclusory allegations or suspicions." Gans v. Mundy, 762 F.2d 338, 341 (3d Cir. 1985), cert. denied, 474 U.S. 1010 (1985) (citation omitted); see Liberty Lobby, 477 U.S. at 249-50. Thus, if the plaintiff's evidence is a mere scintilla or is "not significantly probative," the court may grant summary judgment. Liberty Lobby, 477 U.S. at 249-50; Country Floors, 930 F.2d at 1061-62.

  The standard by which the court decides a summary judgment motion does not change when the parties file cross-motions. Weissman v. United States Postal Serv., 19 F. Supp. 2d 254 (D.N.J. 1998). When ruling on cross-motions for summary judgment, the court must consider the motions independently, Williams v. Philadelphia House Auth., 834 F. Supp. 794, 797 (E.D. Pa. 1993), aff'd, 27 F.3d 560 (3d Cir. 1994), and view the evidence on each motion in the light most favorable to the party opposing the motion. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

  ERISA Standard of Review

  Section 1132 of ERISA allows a participant or beneficiary to bring suit to recover benefits under a plan. When a disability plan grants an administrator discretionary authority to construe the terms of the plan or to determine eligibility for benefits, courts ordinarily may reverse the denial of benefits only if the administrator's decision was "arbitrary and capricious." Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101 (1989). This standard of review applies whether the administrator's decision was based on the interpretation of the plan or on factual determinations. Mitchell v. Eastman Kodak, Co., 113 F.3d 433, 438 (3d Cir. 1997).

  However, when, as here, an insurance company both determines eligibility for benefits and pays benefits out of its own funds, a court reviews the denial of benefits under a "heightened arbitrary and capricious" standard. Pinto v. Reliance Std. Life Ins., Co., 214 F.3d 377, 378 (3d Cir. 2000). A conflict of interest is presumed where an insurance company both determines eligibility for benefits and pays out those benefits from its own funds because there exists "an active incentive to deny close claims in order to keep costs down and keep themselves competitive so that companies will choose to use them as their insurers." Id. at 388. Such potential self-dealing warrants that the insurer's decision be closely inspected. Id. at 387-88. This Court must therefore look not only at whether the result is supported by reason, but also at the process by which the result was achieved, if relevant.

  Though reviewing Aetna's claim determination here under a heightened arbitrary and capricious standard, this Court is limited to the record that was before Aetna at the time it rendered its final claim determination. See Mitchell, 113 F.3d at 440 ("Under the arbitrary and capricious standard of review, the `whole' record consists of that evidence that was before the administrator when he made the decision being reviewed.").

  Aetna's Benefit Plan and Claim Determination

  Decedent was an enrollee in the Sheet Metal Workers, Local 27 Health and Welfare Fund, which included, as part of the benefit package, a plan of Life Insurance and Accidental Death and Dismemberment coverage. (See Pl. Ex. C; Def. Ex. K.) It is undisputed that the life insurance benefit was paid after it was determined which parties were the proper beneficiaries. The issue, therefore, in the instant litigation is limited to Plaintiffs' claim of entitlement to benefits under the decedent's Accidental Death and Dismemberment coverage.

  Aetna's Accidental Death and Dismemberment coverage requires Aetna to pay this benefit "if, while insured, you suffer a bodily injury in an accident and if, within 90 days after the accident, you lose, as a direct result of the injury: . . . Your life." (Pl. Ex. C at 6; Def. Ex. K at 6.) The plan further provides that "[b]enefits are paid for losses caused by accidents only," and that "[n]o benefits are payable for a loss caused or contributed to by: bodily or mental infirmity; disease, ptomaines or bacterial infections; medical or surgical treatment; suicide or attempted suicide (sane or insane); intentionally self-inflicted injury; war or any act of war (declared or undeclared)." (Id.)

  The main issue here revolves around the parties' disagreement as to whether decedent's passing is properly termed an "accident." As to be expected, Plaintiffs seek to classify the death as accidental, while Aetna does not. As a preliminary matter, it must be noted that the text of the Accidental Death and Dismemberment Coverage does not provide a definition of the term "accident."

  In interpreting the provisions of an ERISA plan, "the terms of the policy `must be given their plain meanings, meanings which comport with the interpretations given by the average person.'" McLain v. Metropolitan Life Ins. Co., 820 F. Supp. 169, 176 (D.N.J. 1993) (quoting Wickman v. Northwestern Nat'l Ins. Co., 908 F.2d 1077, 1084 (1st Cir. 1990), cert. denied, 498 U.S. 1013 (1991)). The determination of whether a term is ambiguous is a question of law. Alexander v. Primerica Holdings, Inc., 967 F.2d 90, 92 (3d Cir. 1992); Taylor v. Continental Group Change in Control Severance Pay Plan, 933 F.2d 1227, 1233 (3d Cir. 1991). A term is ambiguous if it is subject to reasonable alternative interpretations. Id. Once a term is held to be ambiguous as a matter of law, "a court may consider the intent of the plan's sponsor, the reasonable understanding of the beneficiaries, and the past practice, among other things." Alexander, 967 F.2d at 96; Taylor, 933 F.2d at 1233-34.

  Plaintiffs argue that the term "accident" in this case is ambiguous and should be construed against Aetna. However, as a matter of law, this Court holds that term to be unambiguous. As will be discussed below, giving this term its plain meaning and interpreting it in light of the applicable body of case law in which this term is used in the context of accidental death and dismemberment benefit plans, the meaning of the term "accident" becomes readily apparent in Aetna's plan.

  Applying the basic tenets of contract interpretation, the first place to look for a definition is in the terms of the policy contract itself. However, here, the policy is wholly silent as to what is explicitly meant by the term "accident," and therefore not dispositive of the issue. Where the language of the policy is silent, courts have traditionally looked next to the decedent's subjective expectation. More specifically, courts 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." Wickman, 908 F.2d at 1087. In other words, courts inquire into whether the decedent "either expected the result, or that a reasonable person in his shoes would have expected the result, and that any other expectation would be unreasonable." Id. at 1089.

  Aetna places primary reliance upon the holding of McLain v. Metropolitan Life Ins. Co., 820 F. Supp. 169 (D.N.J. 1993), which analyzed language virtually identical to the instant plan of Defendant Sheet Metal Workers, Local 27 Health and Welfare Fund. There, the court found no evidence of an "accident" to have been submitted and held that, under any standard of review (either arbitrary and capricious or de novo), it was appropriate for the insurance company to deny such benefits. In McLain, the decedent has been a habitual user of cocaine and, in fact, was using the drug when he died; the amended report of the medical examiner indicated that the cause of death was an acute drug reaction. There, the defendant insurer denied the accidental death and dismemberment benefit on two bases: (1) that the evidence submitted did not support classifying the death as accidental; and (2) that the death was a result of a purposefully self-inflicted injury. The court affirmed the denial of benefits, concluding first that decedent's death was not accidental, as decedent "knew or should have known that serious bodily injury or death was a probable consequence substantially likely to occur as a result of the use of cocaine," id. at 178, and second that death resulted from a purposefully self inflicted injury. Plaintiffs mistakenly argue that McLain's holding was based solely on an express reliance upon the policy's exclusion from coverage of a "purposefully self-inflicted injury" in denying the plaintiff the policy's accidental death benefit. However, as discussed above, the court's decision was based on two independent reviews.

  Plaintiffs, however, argue that this case is more like the situation presented in Furr v. Metropolitan Life Ins. Co., 270 A.2d 69 (N.J.Super.Ct. Law Div. 1970), in which the insured was fatally shot by the police, after allegedly ignoring warning shots fired by officers responding to reported looting at a liquor store during a period of rioting in Newark, New Jersey, because the insured was seen carrying beer from the store. The Furr court held that the insured's death was an occurrence which, from his point of view, was not the "foreseeable, natural, and probable consequence of his own actions" and was therefore accidental. Id. at 72. However, the facts here are distinguishable from those in Furr. Unlike the plaintiff in Furr who was seen running away from the police officers to avoid an encounter, the medical examiner's report's synopsis states that decedent actively came after an off-duty police officer while brandishing a knife. By entering into an altercation with a deadly weapon, the decedent's own death was a foreseeable and expected consequence of his actions. Such a result therefore cannot be deemed accidental. Here, 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. Such facts warrant the conclusion that 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. "If he actually expected the result, even if he did not specifically intend it, then his actual expectations make his death not accidental." Wickman, 908 F.2d at 1089 (emphasis in original). Thus, this Court finds the present situation more like that addressed by the court in McLain than that in Furr.

  Moreover, Aetna's determination cannot be said to be arbitrary and capricious, as the documentation submitted at the time the claim was made, and subsequently denied, as to decedent's Accidental Death and Dismemberment coverage consisted solely of the report of the medical examiner, which did not list the death as accidental but rather described the decedent as an aggressor. In the synopsis provided as an attachment to the medical examiner's report, the medical examiner states:

The altercation began and members of the motorcycle group had knives and were hacking at people when one patron identified himself as a police officer. The victim came at the off duty police officer with a knife and the officer proceeded to shoot the victim three times.
(Def. Ex. L.)

  Plaintiffs assert, as an afterthought, that there may be some genuine issue of material fact here as to whether or not the off-duty police officer identified himself and whether decedent still had the knife at the time he was shot which precludes the entry of summary judgment in Defendant's favor. First, no such contrary evidence has emerged in the four years since the knife fight. Even if true, however, decedent would clearly have known that serious bodily injury or death was a probable consequence substantially likely to occur as a result of his role as an aggressor in a bar fight and in resuming a confrontation that had, at least temporarily, subsided.*fn2 Moreover, the information with which Aetna was provided by those seeking benefits included only the recitation of the incident that was contained in the medical examiner's report. It cannot be said that, based on the information before it at the time it made its determination, Aetna's decision was arbitrary or capricious. Instead, Aetna's determination that Plaintiffs failed to submit satisfactory proof that decedent's death was accidental is rational and based on consideration of the relevant factors before it, and no reasonable fact finder could reach a contrary conclusion upon the record before Aetna.*fn3 Thus, for these reasons, summary judgment must be entered in favor of Defendant Aetna.

  CONCLUSION

  For the reasons discussed above, Defendant's motion for summary judgment will be granted and Plaintiffs' cross motion will be denied. The accompanying Order is entered.

  ORDER

  This matter having come before the Court upon cross motions for summary judgment by Plaintiffs and Defendant Aetna Life Insurance Company; and the Court having considered the submissions of the parties in support thereof and in opposition thereto; and for the reasons expressed in the Opinion of today's date; and for good cause shown;

  IT IS this 14th day of February, 2005, hereby

  ORDERED that Plaintiffs' motion for summary judgment [Docket Item No. 13-1] shall be, and hereby is, DENIED; and

  IT IS FURTHER ORDERED that Defendant Aetna Life Insurance Company's motion for summary judgment [Docket Item No. 16-1] shall be, and hereby is, GRANTED; and

  IT IS FURTHER ORDERED that the Clerk of Court shall close this case upon his docket.


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