Argued: December 5, 2012
Appeal from the United States District Court for the Middle District of North Carolina, at Greensboro. L. Patrick Auld, Magistrate Judge. (1:09-cv-00037-LPA-LPA)
Gavin James Reardon, ROSSABI BLACK SLAUGHTER, PA, Greensboro, North Carolina, for Appellant.
Elizabeth J. Bondurant, SMITH MOORE LEATHER-WOOD, LLP, Atlanta, Georgia, for Appellee.
T. Matthew Creech, SMITH MOORE LEATHERWOOD, LLP, Greensboro, North Carolina, for Appellee.
Before TRAXLER, Chief Judge, and FLOYD and THACKER, Circuit Judges.
TRAXLER, Chief Judge:
Richard Johnson ("Richard") participated in an employee welfare benefit plan ("the Plan") that provided life insurance and accidental death and dismemberment ("AD & D") benefits through group policies issued by American United Life Insurance Company ("AUL"). When Richard died in a single-vehicle crash, his widow Angela Johnson ("Johnson") received life insurance benefits, but AUL, which also served as administrator for the Plan, refused to pay AD & D benefits. Richard was highly intoxicated at the time of his fatal crash, and AUL concluded that Richard's drunk-driving death was not the result of an "accident" under the Plan. Johnson filed this action under the Employee Retirement Income Security Act ("ERISA"), see 29 U.S.C. § 1132(a)(1)(B), to recover these AD & D benefits. Applying a de novo standard of review, the district court affirmed the denial of benefits on the grounds that Richard's death was not accidental because the fatal crash was an "anticipated and expected" result of driving while intoxicated.
For the reasons set forth in detail below, we must reverse. The insurance policies do not define the term "accident" despite its critical importance for determining eligibility for AD & D benefits. Because "accident" is susceptible to more than one reasonable interpretation, we construe it against AUL, the drafting party, and conclude that a reasonable plan participant under similar circumstances would have understood Richard's alcohol-related crash to be an "accident" under the policy language.
The question of whether drunk-driving deaths or injuries are "accidental" for purposes of accidental death insurance has perplexed the judiciary for some time. Given the "sheer number of court cases nationwide involving disputes over claims by drunk drivers, " an insurer surely understands that it will "likely face claims under its AD & D policies based on injuries sustained in alcohol-related collisions." Kovach v. Zurich Am. Ins. Co., 587 F.3d 323, 336 (6th Cir. 2009). The interpretive onus belongs on the insurers who draft these accident insurance policies; they can eliminate dilemmas like this one by clearly and plainly stating whether a loss caused by the participant's driving drunk is "accidental" so that the insured "know[s] what he is getting in his insurance policy." Senkier v. Hartford Life & Accident Ins. Co., 948 F.2d 1050, 1053 (7th Cir. 1991).
Reaching this result gives us no great pleasure. Drunk driving is reckless, irresponsible conduct that produces tragic con- sequences for the thousands it touches annually. But our task in this case is not to promote personal responsibility or enforce good driving habits. We must focus on the terms of the policies issued under the Plan and determine whether Richard died as a result of an accident without "allowing our moral judgments about drunk driving to influence our review." Kovach, 587 F.3d at 330. At bottom, this ERISA appeal presents a problem of contract law which requires us to determine the intent of the parties as reflected in the language of the policy.
The Plan provided Richard with (1) standard AD & D and life insurance benefits of $25, 000 through a policy paid for by Richard's employer, and (2) voluntary AD & D and life insurance benefits of $100, 000 through a policy paid for by Richard. AUL issued both policies. Johnson is the designated beneficiary under the policies.
Under the AD & D provision in the policies, AUL pays benefits "[i]f a Person has an accident while insured under the policy which results in a [covered] loss." J.A. 268. In the case of an accidental loss of life to the insured, the policies pay the principal benefit amount which in this case is $100, 000 and $25, 000 for the employee- and employer-paid policies, respectively. The policies define "accidental death" as "death due to an accident, directly and independently of all other causes, " J.A. 224, but fail to define the predicate term "accident."
The AD & D provision contains a limitations clause expressly excluding the payment of benefits in various circumstances:
Benefits are not payable for loss due directly or indirectly to:
1. suicide or attempted suicide, whether sane or insane;
2. air travel as a crew member;
3. participation in a riot or from war or an act of war, whether declared or undeclared;
4. commission of an assault or felony;
5. the voluntary taking of:
a. a prescription drug in a manner other than as prescribed by a physician;
b. any other federally- or state-controlled substance in an unlawful manner;
c. non-prescription medication, in a manner other than as indicated in the ...