ORDER REVERSING DEFENDANT L-3 COMMUNICATIONS CORPORATION MASTER LIFE AND ACCIDENTAL DEATH AND DISMEMBERMENT INSURANCE PLANS' DENIAL OF BENEFITS
(ECF NOS. 21, 22)
GONZALO P. CURIEL, District Judge.
In this ERISA case, Plaintiff seeks review of a decision to deny her claim for benefits under her now deceased husband's accidental death and dismemberment insurance policy. Plaintiff's husband, Mr. Ciberay, died nine days after sustaining pelvic fractures incurred as a result of falling down a set of stairs while intoxicated. The core issue is whether Defendant, through its delegees, abused its discretion in denying Plaintiff's claim for benefits pursuant to the policy's intoxication exclusion.
The review of Defendant's decision to deny benefits comes before the Court via the parties' cross-motions for summary judgment. The Court finds the motions suitable for disposition without oral argument. See CivLR 7.1.d.1; see also Duncan v. Hartford Life & Accident Ins. Co., 2013 WL 506465, at *1 (E.D. Cal. Feb. 8, 2013) (finding oral argument unnecessary where decision in ERISA case based on review of administrative record).
After a careful review of the parties' briefs, administrative record, and applicable law, the Court will DENY Defendant's Motion for Summary Judgment and GRANT Plaintiff's Motion for Summary Judgment. The Court will thus REVERSE Defendant's denial and require payment of Plaintiff's claim.
I. The Plan & Policy
Through his employer, Plaintiff's husband enrolled in the defendant L-3 Communications Corporation Master Life and Accidental Death and Dismemberment Insurance Plan ("Plan" or "Defendant"). The Plan is an employee welfare general plan governed by the Employee Retirement Income Security Act ("ERISA"). The Plan is funded by an insurance policy ("Policy"), which American International Life Assurance Company of New York ("AIG") issued to L-3 Communications Corporation, the Plan Sponsor and Administrator. Plaintiff's claim for benefits was processed by AIG through its agent Chartis Claims, Inc. ("Chartis"). Notwithstanding this chain of entities, Defendant agrees it is fully responsible for the decision to deny Plaintiff's claim for benefits.
The Plan provides that the Plan Administrator, L-3 Communications Corporation, has delegated to AIG the full and complete discretionary authority and responsibility to decide all questions of eligibility for benefits under the Plan. The Plan further provides that AIG's decisions (in this case, through Chartis) are final and binding on all persons to the full extent permitted by law.
The Policy provides that, "[i]f injury to the insured person results in death within 365 days of the dates of the accident that caused the Injury, the Company will pay 100% of the Principal Sum" of benefits. "Injury" is defined as a "bodily injury caused by an accident occurring while this Policy is in force as to the person whose injury is the basis of claim and resulting directly and independently of all other causes in a covered loss." The Policy contains an exclusion whereby the Policy "does not cover any loss caused in whole or in part by, or resulting in whole or in part from the following... (5) the Insured Person being under the influence of drugs or intoxicants, unless taken under the advice of a Physician."
The Plan provides, "In general, ERISA preempts state law. However, ERISA does not preempt state laws that regulate insurance. The Plan will always be construed to comply with applicable federal and state law." Similarly, the Policy provides, "This Policy is governed by the laws of the state in which it is delivered." The Policy further provides, "Conformity with State Statutes. Any provision of this Policy which, on its effective date, is in conflict with the statutes of the state in which this Policy is delivered is hereby amended to conform to the minimum requirements of those statutes."
The Policy was in full force and effect at the time Plaintiff's husband died. All premiums had been paid, and any conditions required for issuance of benefits under the Policy had been fulfilled. Plaintiff is named as the primary beneficiary of the Policy, which provides $620, 000 in accidental death benefits.
II. The Accident & Medical Care
On February 7, 2010, Mr. Ciberay fell down ten or fourteen stairs at his and Plaintiff's home in Escondido, California. Plaintiff did not see her husband fall but later told an interviewer that her husband was carrying a plate and drinking glasses down the stairs and that he told her after the fall that he had missed the first or second step. Prior to his fall, Mr. Ciberay had been playing with his grandson in an upstairs room.
When paramedics arrived, Mr. Ciberay was examined and found to be "Alert and Oriented X4, with no loss of consciousness." His neuro exam revealed his pupils were equal and reactive to light and that he was able to move all four extremities on command. He was further noted to have a normal respiratory rate of 20 breaths per minute. He complained of pain on standing, mostly in his left pelvic region. He admitted he had been drinking heavily related to the Super Bowl football game that day.
Plaintiff's husband was transported to the hospital where his chief complaint was described as "alcohol fall" and where his blood alcohol level was measured at.422 mg/dL or.422%. He was admitted with a diagnosis of a left superior and inferior pubic ramus fracture with pain on standing, mostly in the left pelvic region. Hospital records note Plaintiff's husband had a history of alcohol dependence and that his hospital admission was also for alcohol withdrawal concerns. On the day of his admission, a physician determined he was cognitively intact, was not a surgical candidate for repair of his pelvic fractures, and that "most of [his] admission was for alcohol withdrawals, " as Plaintiff's husband was reported to drink vodka intermittently on top of 2 to 3 beers a day.
On February 10, 2010, while hospitalized, Plaintiff's husband developed a fever that rose to 104 degrees. He was noted to be delirious only on that day. He was found to have bacterial infections that, up until the day of his death, responded well to antibiotic treatment. Indeed, on February 14, 2010, Plaintiff's husband was downgraded from ICU to IMC, with a plan to discharge him to "rehab" after a few days of monitoring out of the ICU.
On February 16, 2010, however, Plaintiff's husband was returned to the ICU when he experienced a lapse of consciousness or possible seizure after standing up. Persistent efforts were made to stabilize his cardiac condition, but he continued to deteriorate through the morning. After coding twice, Plaintiff's husband died on February 16, 2010, at 12:02 p.m.
The medical examiner issued an initial external examination report following the Mr. Ciberay's death. Initially, the cause of death was listed as hypertensive cardiovascular disease, with the following other significant conditions: alcohol abuse, pelvic fractures, obesity, and diabetes mellitus. The manner of death was listed as an accident. The medical examiner later issued an amended external examination report to correct the time of death and to amend the cause of death to be complications following pelvic fractures, with the following other significant conditions: hypertensive cardiovascular disease, alcohol abuse, obesity, and diabetes mellitus. The manner of death remained an accident.
III. Claim Process
Following her husband's death, Plaintiff timely submitted a claim for payment of the accidental death benefit under the Policy. The claim listed the cause of death as "complications following pelvic fractures." As noted above, Chartis (AIG's claims administrator) received and handled Plaintiff's claim. Chartis acknowledged receipt of Plaintiff's claim by letter dated June 30, 2010. Plaintiff thereafter complied with all requests for information and documentation.
The claim memo contains a summary and notes dated July 26, 2010, indicating the Policy excludes losses due to intoxication and stating that the reserve would remain at $1.00.
The claim memo contains a note dated November 4, 2010, stating in part, "Clmt fell and broke his pelvis. It was determined that he was intoxicated at the time of the fall. Clmt later died and the coroner related the death to the fall."
The claim memo contains a final general note dated November 18, 2010, which sets forth the information that Chartis reviewed in handling Plaintiff's claim. Regarding the hospital discharge summary, the final general note states:
Records indicate decedent was intoxicated and fell down the stairs. He was found to have a pelvic fracture and was doing well. Indicated most of his admission for alcohol concerns. He was found to be delirious on 2/12/10 but was never intubated. He was thought to have cirrhosis. Abdominal ultrasound 2/12/10 showed fatty liver disease but no moderate or severe cirrhosis. He started to improve. He was found to have staph aurreus and E. coli and was started on Keflex. He had a lapse of consciousness or possible seizure after completing a bowel movement and getting up. His abdomen was very distended with feculent drainage removed from the stomach. Testing suggested a large massive pulmonary embolism and clot in right atrium. He coded on 2/16/10, and they could not revive him. Time of death 12:02 02/16/10.
The November 18, 2010 final general note makes the following recommendation:
Recommend denial of accidental death benefits. 60 year old male fell down the stairs and fractured pelvis on 2/7/10. It was determined from blood testing that Clmt had a BAC of 422 mg/dL or.422%. BAC at this level can cause ataxia, tremors, disorientation, disturbed equilibrium and up to unconsciousness, depressed respiration, and even death.... Cause of death was determined to be complications of pelvic fracture. There is no sickness exclusion. There is an intoxication exclusion on the policy. Based on review of the available records, this loss was caused in whole or in part by being under the influence of intoxicants.
The claim memo contains a further note dated December 3, 2010, in which Chartis indicated it "could only identify the intoxication exclusion under this policy as far as applicable exclusions for this loss."
By letter dated December 3, 2010, Chartis notified Plaintiff that her claim was denied. The denial letter states: "The records we reviewed indicate that your spouse died as a result of complications of a pelvic fracture with other significant conditions causing death listed to be hypertensive cardiovascular disease, alcohol abuse, obesity, and diabetes mellitus on February 16, 2010."
The denial letter further states:
The medical records and fire department report indicate that your spouse fell down some stairs and sustained a pelvis fracture as a result of the fall on February 7, 2010 and passed away on February 16, 2010. His blood alcohol level was determined to be 422 mg/dL, or.422% when tested at the hospital. He admitted to drinking heavily that day. A BAC level of.422% has the following typical effects: ataxia, tremors, disorientation, disturbed equilibrium, and can even lead to unconsciousness, depressed respiration, and death.
After quoting relevant Policy language, the denial letter provides:
Based on our review of the available records, we determined that your spouse's death was not the direct result of a bodily injury caused by an accident resulting directly and independently from all other causes, but was caused in whole or in part by, or resulting in whole or in part from your spouse being under the influence of intoxicants. Therefore, we must respectfully deny your claim for Accidental Death Benefits.
By letter dated February 28, 2011, Plaintiff timely appealed the denial of her claim. In her February 28, 2011 ...