Thies et al v. Life Insurance Company of North America

Filing 81

MEMORANDUM AND OPINION by Chief Judge Thomas B. Russell on 08/16/2011 re 67 MOTION for Summary Judgment filed by Matthew Thies, Elizabeth Thies; appropriate order to issue. cc:counsel (CSD)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
PADUCAH DIVISION
CASE NO. 5:09-CV-98
ELIZABETH THIES and
MATTHEW THIES

PLAINTIFFS

v.
LIFE INSURANCE COMPANY OF
NORTH AMERICA

DEFENDANT

MEMORANDUM OPINION
This matter is before the Court upon Plaintiffs’ Motion for Judgment on Counts I & II
(Docket #67). Defendant has responded (Docket #77). Plaintiff has replied (Docket #79). The
Court has reviewed the administrative claim file (Docket #51). This matter is now ripe for
adjudication.
BACKGROUND
On May 28, 2006, Wade Thies was killed while operating a jet ski on Kentucky Lake.
Administrative Record at 198-99 [hereinafter “A.R. at __”]. According to the Kentucky Boating
Accident Report, Mr. Thies’s vessel “ramped off an under water rock and struck an above water
rock causing Mr. Thies to strike the above water rock.” A.R. at 199. “After Mr. Thies struck the
above water rock he fell into of [sic] water and drowned.” Id.
At the time of his death, Mr. Thies was employed as a riverboat captain by Ingram
Industries, Inc. (“Ingram”), a corporation that subscribed to Life Insurance Company of North
America’s (“LINA”) Group Policy No. COA 002533 (the “Policy”). A.R. at 323. The Policy
provided accidental death and dismemberment benefits. A.R. at 327. Ingram paid for the basic
employee benefit, which amounted to two times the employee’s salary. A.R. at 295. Mr. Thies
opted to increase this coverage in the amount of ten times his salary, providing a total benefit of

$768,000.00 and burial benefits in the amount of $5,000. Id.
Following Mr. Thies’s death, Plaintiffs filed a claim for benefits on October 5, 2006,
which was received by LINA on October 18, 2006. A.R. 295-97. The claims examiner, James
Macom, reviewed the Proof of Loss form, Mr. Thies’s death certificate, the coroner’s report, and
the Kentucky Boating Accident Report. A.R. at 273. Mr. Thies’s death certificate indicates that
Mr. Thies died from drowning as a result of injuries caused by a jet ski accident. A.R. at 320.
The death certificate also lists blunt force injuries from a jet ski accident and acute alcohol
intoxication as other significant conditions contributing to his death. Id. The coroner’s report
lists the cause of death as drowning caused by a jet ski accident and lists acute alcohol
intoxication as a contributing factor. A.R. at 212. Both documents classify the manner of death
as an “accident.” A.R. at 212, 320.
The Kentucky Boating Accident Report, submitted on June 9, 2006, indicates that the
boating accident involved “Collision with Fixed Object” and “Falls Overboard.” A.R. at 198-99.
It also lists excessive speed, alcohol use, and operator inattention as other contributing factors.
A.R. at 198. The report notes that Mr. Thies did not use a personal flotation device and
drowned. A.R. at 199. At the bottom of the report, alcohol use is listed as the primary cause of
the accident and operator inattention is listed as the secondary cause. Id. A Toxicology Report
dated June 2, 2006, and attached to the boating report found a BAC of 0.223. A.R. at 202.
On November 10, 2006, Mr. Macom denied Plaintiffs’ claim, finding Mr. Thies’s death
was not a “Covered Accident” and the exclusion for intentionally self-inflicted injuries applied:
Evidence obtained in the claim file supports that Mr. Thies died of drowning, as a
consequence of injuries sustained in a jet ski crash. The crash occurred on
05/28/2006 at 7:00 PM. According to the Kentucky Boating Accident Report,
there was no evidence of inclement weather or poor visibility. The report
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indicated that Mr. Thies was operating his jet ski close to shore, and that he struck
an underwater rock, causing him to strike another rock, causing injuries that
contributed to his drowning. The report concluded that excessive speed, operator
inattention, and alcohol use contributed to the accident. The Toxicology report
confirms that Mr. Thies’ blood alcohol concentration was .223%.
In Kentucky, it is illegal to boat while intoxicated. A person is considered to be
intoxicated with a blood alcohol level of 0.08% or higher. Toxicology testing
reveals that Mr. Thies had a blood alcohol concentration of 0.223%. This is over
2.5 times the legal limit.
The hazards of boating, or operating any motorized vehicle, while intoxicated are
widely known an [sic] publicized. It is well known that doing so could result in
bodily harm or death. The evidence on file supports that Wade Thies made a
conscious decision to consume alcohol to a level that exceeded the legal limit in
the State of Kentucky (0.08%). This was an intentional act. The evidence
supports that this level of intoxication contributed to the jet ski crash that
eventually led to his death.
The policy specifically excludes the payment of benefits in cases involving
intentionally self-inflicted injuries. Having reviewed the available information,
there is evidence to support that Mr. Thies’ death was contributed to by his
voluntary ingestion of alcohol. This was an intentional act, and that act
contributed to his jet ski crash, that lead to the drowning that caused his death.
In addition, we have determined that the crash does not meet the definition
of Covered Accident. As stated above, a Covered Accident must be an
unforeseen event. The hazards of boating or operating a motorized vehicle while
intoxicated are widely known and publicized. Because of this, the jet ski crash
that led to Mr. Thies’ death was not unforeseeable, and therefore does not qualify
as a Covered Accident as defined by the policy.
A.R. at 273-74 (emphasis added). Plaintiffs were provided a copy of the Policy provisions and
informed of their right to appeal the decision. A.R. at 272, 274-75.
Plaintiffs filed their appeal on January 5, 2007. A.R. at 191. Plaintiffs’ attorney
submitted the Kentucky Boating Accident Report, the coroner’s report, the Western Kentucky
Regional Medical Examiner’s Office Final Diagnosis, and supporting caselaw. A.R. at 191-230.
Renee Worst, Technical Specialist for LINA, responded on January 17, 2007, advising Plaintiffs

3

that their appeal was received. A.R. at 189. Worst requested any additional information be
submitted by February 2, 2007. Id.
Plaintiffs’ claim was sent to Michael Grimes for legal review on March 26, 2007. A.R. at
10-11. On April 11, 2007, Ms. Worst wrote to Plaintiffs informing them that their claim had
been denied on appeal. A.R. at 183. Ms. Worst wrote:
The information in our file indicates that Wade Thies died May 29, 2006 when he
was involved in a jet ski crash in which the jet ski he was operating struck an
underwater rock, causing him to strike another rock, causing injuries that
contributed to his death. The death certificate states that Mr. Thies’ cause of
death was drowning. Other significant conditions which contributed to death but
not resulting in the underlying cause of death were blunt force injuries from jet
ski accident, acute alcohol intoxication.
According to the Kentucky Boating Accident Report, the primary cause of the
accident was alcohol use. The secondary cause of the accident was operator
inattention. No jet ski or environmental factors were noted to contribute to the
collision.
We reviewed the autopsy report form [sic] the Medical Examiner’s Office. There
was no evidence of any medical condition that would have contributed to the
crash. The toxicology report shows that Mr. Theis’ [sic] blood screen produced a
blood alcohol level of .223%. In the State of Kentucky, it is illegal to operate any
vessel, water skis, surfboard or similar devices while under the influence and on
the waterways of Kentucky.
According to the information on file, Wade Thies was involved in a single vessel
crash on May 28, 2006. According to the Kentucky Boating Accident Report
there were no adverse weather conditions or vehicle mechanical malfunctions that
would have contributed to the crash.
We have confirmed that Mr. Theis’ [sic] blood alcohol level was 0.223%, which
is over twice the legal limit for the State of Kentucky (0.08%).
A review of the file indicates that Mr. Thies worked as a River Boat Captain.
There is no information to support the fact that Mr. Thies would have been unable
to understand the risks involved in drinking and operating a jet ski.
Any reasonable person could have foreseen that Mr. Thies’ drinking and
operating a jet ski might cause injury or death. Mr. Thies’ voluntary actions
4

placed him in a position where he would be at risk to personal injury or death.
Since Mr. Thies’ death was the foreseeable result of his own voluntary actions,
we have concluded that his death was not accidental. This policy, as quoted
previously, pays a benefit if the insured dies as a result of an accident. Rather, we
have determined that Mr. Thies’ death was the result of his own self inflicted
injuries, which is specifically excluded from this policy. Since we have
concluded that Mr. Thies’ death was not an accident, we have determined that no
Accidental Death benefits are payable under the terms of policy COA 2533.
A.R. at 184-85. Ms. Worst advised Plaintiffs that they had exhausted their administrative levels
of appeal and no further appeals would be honored. A.R. at 185.
Plaintiffs responded by sending a final demand for payment on May 11, 2007. A.R. at
181. Plaintiffs questioned whether LINA reviewed the submitted caselaw, but did not submit
any additional caselaw or evidence. Id. Plaintiffs indicated that if they did not receive an
agreement from LINA to pay the claim in full by May 21, 2007, they would pursue their claim in
court. Id. Accident Claims Manager Brian Billeter responded to Plaintiffs’ letter on May 18,
2007, and indicated that the claim had been forwarded to the Home Office for review. On May
24, 2007, Mr. Billeter sent a follow-up letter acknowledging that LINA had reviewed all aspects
of the appeal, including the submitted caselaw, and again advised Plaintiffs that their
administrative remedies had been exhausted. A.R. at 177-78. Plaintiffs attempted to submit
additional evidence in May of 2009, but because this evidence was not presented until two years
after the final denial of benefits, LINA would not consider it.1 Plaintiffs filed suit in this Court
on June 3, 2009, pursuant to the Employee Retirement Income Security Act of 1974, 29 U.S.C. §
1001 et seq. (“ERISA”).

1

Plaintiffs’ additional evidence consisted of expert medical opinions from Henry A.
Spiller, MS, and George R. Nichols, M.D., an investigator affidavit from James Malone, and
research articles on the origins of blood alcohol in decomposing bodies. A.R. at 22.
5

STANDARD
To begin with, the Court recognizes that “in an ERISA claim contesting a denial of
benefits, the district court is strictly limited to a consideration of the information actually
considered by the administrator.” Killian v. Healthsource Provident Adm’rs, Inc., 152 F.3d 514,
522 (6th Cir. 1998). This administrative record includes all documentation submitted during the
administrative appeals process “because this information was necessarily considered by the plan
administrator in evaluating the merits of the claimant’s appeal.” Kalish v. Liberty Mut., 419 F.3d
501, 511 (6th Cir. 2005).2
Generally, courts “review a plan administrator’s denial of ERISA benefits de novo.”
Moon v. Unum Provident Corp., 405 F.3d 373, 378 (6th Cir. 2005) (citing Firestone Tire &
Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). However, when “a plan vests the administrator
with complete discretion in making eligibility determinations, such determinations will stand
unless they are arbitrary or capricious.” Id. “The arbitrary and capricious standard is the least
demanding form of judicial review and is met when it is possible to ‘offer a reasoned
explanation, based on the evidence, for a particular outcome.’” Admin. Comm. of the Sea Ray
Employees’ Stock Ownership & Profit Sharing Plan v. Robinson, 164 F.3d 981, 989 (6th Cir.
1999) (citation omitted). “Consequently, a decision will be upheld ‘if it is the result of a
deliberate principled reasoning process, and if it is supported by substantial evidence.’” Evans v.
UnumProvident Corp., 434 F.3d 866, 876 (6th Cir. 2006) (citations omitted).
Still, while the arbitrary and capricious standard is deferential, it is not “‘without some

2

Because Plaintiffs’ evidence regarding the origins of blood alcohol in decomposing
bodies was not timely submitted to the Plan Administrator and was not considered in evaluating
the merits of Plaintiffs’ claim or appeal, the Court will not consider this evidence.
6

teeth.’” McDonald v. W.-S. Life Ins. Co., 347 F.3d 161, 172 (6th Cir. 2003) (citation omitted). A
court’s obligation to review the administrative record “inherently includes some review of the
quality and quantity of the medical evidence and the opinions on both sides of the issues.” Id.
As the Sixth Circuit has noted, without such a review “courts would be rendered to nothing more
than rubber stamps for any plan administrator’s decision as long as the plan was able to find a
single piece of evidence– no matter how obscure or untrustworthy– to support a denial of a claim
for ERISA benefits.” Id.
Although Plaintiff argues that the Court should adopt a de novo standard of review, the
Policy in this case provides as follows:
The Plan Administrator of the Employer’s employee welfare benefit plan (the
Plan) has selected the Insurance Company as the Plan fiduciary under federal law
for the review of claims for benefits provided by this Policy and for deciding
appeals of denied claims. In this role the Insurance Company shall have the
authority, in its discretion, to interpret the terms of the Plan documents, to
decide questions of eligibility for coverage or benefits under the Plan, and to
make any related findings of fact. All decisions made by the Insurance
Company in this capacity shall be final and binding on Participants and
Beneficiaries of The Plan to the full extent permitted by law.
A.R. at 340 (emphasis added). Because Defendant is granted complete discretion in regard to
eligibility determinations, the arbitrary and capricious standard applies to this Court’s review.
DISCUSSION
Plaintiffs’ Complaint raises two claims for relief. Count I alleges that Defendant
wrongfully denied benefits under ERISA. Count II alleges that Defendant breached its fiduciary
duty under ERISA. The Court considers these claims separately.
I.

Denial of Benefits
In support of their position that Defendant wrongfully denied accidental death benefits,

7

Plaintiffs rely heavily on Kovach v. Zurich American Insurance Co., 587 F.3d 323 (6th Cir.
2009). In Kovach, the plaintiff drove his motorcycle while intoxicated and, after running a stop
sign, collided with another vehicle resulting in the amputation of his left leg below the knee. Id.
at 326. The plaintiff filed a claim for accidental dismemberment benefits under his policy with
Zurich American Insurance Company. Id. Zurich denied the plaintiff’s claim, reasoning that his
injury was not due to an “accident” under the terms of the policy since he had been driving while
intoxicated. Id. at 327. “Zurich thus reasoned that the injury was a reasonably foreseeable
consequence of driving while under the influence of alcohol and possibly drugs.” Id. Zurich
also concluded that the policy’s self-inflicted injury exclusion would apply. Id.
Although the district court upheld Zurich’s denial of benefits, the Sixth Circuit Court of
Appeals reversed and remanded the case for judgment in favor of the plaintiff. Id. at 326. The
court first noted that “drunk driving is ill-advised, dangerous, and easily avoidable. But . . . so
are many other activities that contribute to wrecks that a typical policyholder would consider
‘accidental.’” Id. at 330. “We must thus refrain from allowing our moral judgments about drunk
driving to influence our review of Zurich’s interpretation of the relevant Plan provisions.” Id.
The court then determined that it was arbitrary and capricious for the insurer to deny
benefits by finding that Kovach’s injury did not meet the definition of “accidental.” Id. at 338.
The court examined whether the insurer’s interpretation of the term “accidental” was reasonable.
Id. at 332 (citing Morrison v. Marsh & McLennan Cos., 439 F.3d 295, 300 (6th Cir. 2006)).
Relying on the Webster’s dictionary definition of “accidental,” the court noted that Kovach
clearly did not intend or expect to hit another vehicle. Id. at 333. Moreover, the insurer had
referred to the wreck as an accident several times in its own documentation. Id.

8

Next, the Kovach court examined the insurer’s reliance on caselaw in making its
decision. The court noted that the cases relied upon were district court cases which “do not
uniformly support Zurich’s position.” Id. at 334. The Kovach court also noted that the statistics
regarding the deaths of impaired drivers does not support a conclusion that Kovach’s injury was
“reasonably foreseeable.” Id. at 335. The court found that the insurer’s “definition of
‘accidental,’ which excludes activities that render the risk of serious injury ‘reasonably
foreseeable,’” might also serve to deny benefits to policyholders who were texting or sleepdeprived while driving. Id. at 335-36.
Finally, the court reasoned that the insurer could have easily added an exclusion for
driving while intoxicated to the policy. Id. at 336. Noting that the policy already had exclusions
for sky-diving, parasailing, hang gliding, bungee-jumping, and other similar activities, the court
argued that if the insurer truly applied a “reasonably foreseeable injury” definition of accident,
these exclusions “would be unnecessary and redundant because all of the listed activities involve
a reasonably foreseeable risk of injury.” Id.
The Kovach court adopted “a uniform standard for determining whether an injury is
‘accidental’ in ERISA cases where the word is not otherwise defined in the applicable policy.”
Id. at 336-37. This standard asks “‘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 337 (quoting Wickman v. Northwestern Nat’l
Ins. Co., 908 F.2d 1077, 1088 (1st Cir. 1990)).
Defendant asserts that the present case is more closely analogous to Lennon v.
Metropolitan Life Insurance Co., 504 F.3d 617 (6th Cir. 2007). In Lennon, a divided Sixth

9

Circuit panel held that an insurer’s decision to deny personal accident insurance benefits to a
drunk driver with a BAC of .321 driving the wrong way down a one way street at a high rate of
speed was not arbitrary and capricious. Id. at 618-19. The insurer had concluded that the
insured’s decision to drive impaired rendered his injury reasonably foreseeable and therefore not
accidental. Id. at 620. The lead opinion noted that the insured’s behavior amounted to gross
negligence and cited the various factors involved in the insured’s death as crucial to its
determination:
This case involved facts – Lennon’s extremely high-blood alcohol content, the
manner in which Lennon’s car flew off the road, the lack of an alternative
explanation for the death, and Lennon’s driving the wrong way down the street –
that rendered at least reasonable MetLife’s conclusions that Lennon did not die as
a result of an ‘accident’ under the Plan.
Id. at 622. The court declined to “reach the question of whether a fiduciary can reasonably deny
‘accidental’ benefits for injury that results from any negligent or any illegal behavior, or from
driving while only somewhat impaired.” Id. at 624.
Kovach distinguished Lennon and held that it was not controlling. 587 F.3d at 331. The
Kovach court first remarked on the difference between a BAC of .148 versus .321, arguing that
at a BAC of .321 someone is “drunk to the point of semi-consciousness,” while at .148 someone
may be considered only somewhat impaired. Id. Additionally, Lennon engaged in other risky
behaviors, including driving down a one-way street in the wrong direction and driving at
excessive speeds to the point that “the vehicle is on the verge of becoming airborne.” Id. In
contrast, “the only other out-of-the-ordinary thing that Mr. Kovach did was run a stop sign,
something done with unfortunate frequency by sober drivers.” Id. Although the dissent in
Kovach also recognized driving a motorcycle and testing positive for opiates as two factors

10

establishing Kovach’s behavior was as risky as Lennon’s, the lead opinion noted that these
factors were not considered in the administrator’s decision, and were therefore irrelevant. Id. at
331-32 (“[I]n making its coverage decision, Zurich did not rely on the fact that Mr. Kovach was
on a motorcycle when the accident occurred, so whether a motorcycle is a particularly dangerous
form of transportation is irrelevant to our analysis.”).
Although the parties rely on these two cases, the present case differs in that the Court
does not need to determine the definition of “accidental” in this case. In Kovach, the policy
included the following definition of an “injury”: “Injury means a bodily injury directly caused by
accidental means which is independent of all other causes, results from a Hazard, and occurs
while the Covered Person is insured under this Policy.” Id. at 326 (emphasis added); accord
Lennon, 504 F.3d at 619 (“accidental bodily injuries”). The term “accidental” was not defined
in the Kovach policy. Id. Thus, the Kovach court had to determine whether the insurer’s
interpretation of the term “accidental” was reasonable. If it was not reasonable, the insurer’s
decision was arbitrary and capricious.
In contrast, the Policy in this case defines a “Covered Injury” as “[a]ny bodily harm that
results directly and independently of all other causes from a Covered Accident.” A.R. at 333. A
“Covered Accident” is defined as
A sudden, unforeseeable, external event that results, directly or independently of
all other causes, in a Covered Injury or Covered Loss and meets all of the
following conditions:
1.

occurs while the Covered Person is insured under this
Policy;

2.

is not contributed to by disease, Sickness, mental or bodily
infirmity;

11

3.

is not otherwise excluded under the terms of this Policy.

A.R. at 333. Accordingly, the present case specifically defines what is considered an “accident.”
It must be a “sudden, unforeseeable, external event.” A.R. at 333. Thus, this case differs from
Kovach and Lennon, which both seek to interpret the term “accidental.”
Defendant asserts that Mr. Thies’s wreck was not “unforeseeable,” a term which is not
defined by the Policy. “In interpreting a plan, the administrator must adhere to the plain
meaning of its language as it would be construed by an ordinary person.” Morgan v. SKF USA,
Inc., 385 F.3d 989, 992 (6th Cir. 2004) (citation omitted). The Court “must accept a plan
administrator’s rational interpretation of a plan even in the face of an equally rational
interpretation offered by the participants.” Id. (citation omitted). “‘[A]n insured should not have
to consult a long line of case law or law review articles and treatises to determine the coverage
he or she is purchasing under an insurance policy.’” Kovach, 587 F.3d at 332-33 (quoting Walker
v. Metro. Life Ins. Co., 24 F. Supp. 2d 775, 780 (E.D. Mich. 1997)).
Defendant references the “unforeseeable” nature of Mr. Thies’s injury in its internal
memos and denial letters. For instance, Michael Grimes of the Member Claim Litigation Unit
notes:
Although the Sixth Circuit Court of Appeals, whose precedent governs here, has
not itself directly ruled on whether an alcohol-induced boating accident
constitutes a “Covered Accident,” there is sufficient precedent from the district
courts within the Sixth Circuit examining a like provision under an ERISAgoverned policy. Specifically, in Cates v. Metropolitan Lief Ins. Co., Inc., 14 F.
Supp. 2d 1024 (E.D. Tenn. 1996), affirmed 149 F.3d 1182 (6th Cir. 1998), it was
held that an insured’s death in an automobile accident while intoxicated did not
constitute an “accidental death” under the ERISA Plan. Significantly, the Cates
court even noted that “several federal courts reviewing ERISA cases have
recognized that foreseeable harm resulting from an insured’s intentional actions is
not accidental.” Id. at 1027. The Cates court thus stated that “it is neither
unreasonable nor irrational in light of the plan’s provisions for Metropolitan to
12

conclude the act of driving while [intoxicated at BAC 00.18] rendered the
infliction of serious injury or death reasonably foreseeable and, hence, not
accidental as contemplated by the plan.” Id. Since a “Covered Accident” under
the LINA plan must also be “unforeseeable,” we believe that coverage has
been properly denied. See also Eckelberry v. Reliastar Life Insurance
Company, 469 F.3d 340, 344 (4th Cir. 2006) (noting “federal courts have found
with near universal accord that alcohol-related injuries and deaths are not
‘accidental’ under insurance contracts governed by ERISA”).
A.R. at 10 (emphasis added). The first denial letter sent to Plaintiffs also discusses the
foreseeability of Mr. Thies’s injury:
As stated above, a Covered Accident must be an unforeseen event. The hazards
of boating or operating a motorized vehicle while intoxicated are widely known
and publicized. Because of this, the jet ski crash that led to Mr. Thies’ death was
not unforeseeable, and therefore does not qualify as a Covered Accident as
defined by the policy.
A.R. at 274. Plaintiffs appealed this decision, and Defendant’s denial of this appeal offered
additional discussion of the foreseeable nature of Mr. Thies’s injury:
Any reasonable person could have foreseen that Mr. Thies’ drinking and
operating a jet ski might cause injury or death. Mr. Thies’ voluntary actions
placed him in a position where he would be at risk to personal injury or death.
Since Mr. Thies’ death was the foreseeable result of his own voluntary actions,
we have concluded that his death was not accidental.
A.R. at 184-85. Defendant’s first denial letter thus indicates that something is foreseeable if the
hazards of such an action are “widely known and publicized.” A.R. at 274. In the denial of
Plaintiffs’ appeal, Defendant states that something is foreseeable if a reasonable person could
have foreseen that such action might cause injury or death. See A.R. at 184.
A.

Categorical Per Se Rule

The Court finds that Defendant applied a categorical per se rule that any injury or death
resulting from the operation of a motor vehicle and intoxication above the legal limit is
foreseeable. “Courts have consistently rejected such as per se rule . . . .” LaAsmar v. Phelps
13

Dodge Corp. Life, Accidental Death & Dismemberment & Dependent Life Ins. Plan, 605 F.3d
789, 802 (10th Cir. 2010) (citing Stamp v. Metro. Life Ins. Co., 531 F.3d 84, 91 & n. 9 (1st Cir.),
cert. denied, 129 S. Ct. 636 (2008); Lennon, 504 F.3d at 621; Eckelberry v. Reliastar Life Ins.
Co., 469 F.3d 340, 345, 347 (4th Cir. 2006); Cozzie v. Metro. Life Ins. Co., 140 F.3d 1104, 1106,
1110 (7th Cir. 1998); Danouvong ex rel. Estate of Danouvong v. Life Ins. Co. of N. Am., 659 F.
Supp. 2d 318, 326-27 (D. Conn. 2009)). In Danouvong, for instance, the District of Connecticut,
analyzing the same policy provision applicable here, rejected as arbitrary and capricious
“LINA’s application of a categorical per se rule that could, on its terms, easily be used as a de
facto exclusion in the guise of an inclusion – and thereby impose on a claimant a burden that is
rightfully the insurer’s . . . .” 659 F. Supp. 2d at 329.
While the denial letters in this case contain a summary of the facts, the substance of
Defendant’s determination does not rely upon any facts other than that Mr. Thies was intoxicated
and operating a jet ski. Defendant’s statements that “[t]he hazards of boating or operating a
motorized vehicle while intoxicated are widely known and publicized” is presented without
authority or citation to the administrative record. See Loberg v. Cigna Group Ins., No.
8:09CV280, 2011 WL 612059, at *7 (D. Neb. Feb. 10, 2011) (“When the plan administrator
merely notes the decedent’s elevated BAC and makes an ‘ipse dixit pronouncement[ ], without
citation to either the record or to authority, that the hazards of driving while intoxicated are
widely known and publicized,’ the administrator has improperly used a per se rule to deny the
benefits claim.” (quoting Danouvong, 659 F. Supp. 2d at 326)). Defendant’s interpretation, as
written in the denial letters, would require the Court to conclude that in every instance where
someone is legally intoxicated and operates a jet ski, without regard to the individual facts of

14

each case, any policyholder injured or killed as a result of these activities would be denied
benefits because injury or death was foreseeable. This is essentially inserting an unwritten
exclusion into the Policy. See Kovach, 587 F.3d at 336.
B.

Failure to Consider the Relevant Facts

Defendant’s analysis in general fails to address the specific facts of this case. For
instance, Defendant fails to explain how it was foreseeable that, because of Mr. Thies’s
intoxication, he would hit an underwater rock. The denial letters both acknowledge that Mr.
Thies hit an underwater rock but fail to explain how an intoxicated jet ski operator was more
likely to hit this rock than any other jet ski operator.3 This is perhaps the most troubling part of
Defendant’s determination. In this instance, an underwater rock is equally hidden from impaired
and sober drivers. Moreover, even if Mr. Thies was driving at an excessive rate of speed, the
likelihood of hitting an underwater rock would have been the same if he had been speeding while
sober. The Court would be somewhat astonished if Defendant were to conclude that a sober jet
ski operator who was negligently operating a jet ski (by speeding, for instance) was not covered
under the policy, as a typical policyholder would expect coverage under such circumstances. See
Kovach, 587 F.3d at 335; Wickman, 908 F.2d 1077, 1088 (“Generally, insureds purchase
accident insurance for the very purpose of obtaining protection from their own miscalculations
and misjudgments.”).
In addition to Defendant’s failure to consider the foreseeability of an underwater rock,
Defendant’s denial letters neglect to discuss how operator inattention or excessive speed, two

3

As the Sixth Circuit noted in Kovach, the insured in that case ran a stop sign, which is
something also done frequently by sober drivers. 587 F.3d at 331.
15

other issues cited as contributing factors along with intoxication, may have played a role in the
accident. Defendant also fails to discuss Mr. Thies’s failure to wear a personal flotation device
and his location in a rocky area, although defense counsel relies heavily on these facts in arguing
that the decision was not arbitrary and capricious. Finally, Defendant does not refute the
classification of the incident as an “accident” in various reports. Instead, Defendant simply
states that Mr. Thies placed himself in a position where there was a potential for personal injury
or death as a result of his drinking and operating a jet ski, which satisfied the foreseeability
standard. Because the denial letters show a complete absence of consideration of the relevant
circumstances, the Court believes Defendant’s determination was arbitrary and capricious.
C.

Interpretation of “Unforeseeable”

Defendant’s denial letters are unclear in defining the term “unforeseeable.”4 But the
application of a per se categorical approach to alcohol-related deaths is inconsistent with the
plain meaning of the term and how it would be construed by an ordinary person. See Kovach,
587 F.3d at 332 (citing 29 U.S.C. § 1022(a); Morgan, 385 F.3d at 992). As noted in Kovach, the
statistics do not support Defendant’s notion that death is a foreseeable result of drinking and
driving. See Lennon v. Metro. Life Ins. Co., 504 F.3d 617, 629 (6th Cir. 2007) (Clay, J.,

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The first denial letter concludes that Mr. Thies’s accident was not unforeseeable because
the hazards of operating a boat while intoxicated are “widely known and publicized.” A.R. at
274. The second denial letter notes that “[a]ny reasonable person could have foreseen that Mr.
Thies’ drinking and operating a jet ski might cause injury or death.” A.R. 184. As noted by
Plaintiff, this last standard is similar to the Wickman standard adopted by the Sixth Circuit in
Kovach, in which “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.” Wickman, 908 F.2d at 1088. Defendant’s stated
standard is less stringent, as it merely requires a reasonable person to foresee that an injury might
occur, not that it is highly likely to occur.
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dissenting) (“Statistically speaking, legally intoxicated motorists arrive safely at their destination
without incident more often than not. Of those that do not, police apprehend and arrest a great
many legally intoxicated motorists. Comparatively, the number of legally intoxicated motorists
either injured or killed in crashes linked to alcohol is rather small.”); accord Danouvong, 659 F.
Supp. 2d at 327.
Applying Defendant’s relaxed “might cause injury or death” standard is certainly a broad
interpretation of the term that appears inconsistent with the remainder of the Policy. Any
reasonable person might conclude that death could occur in a number of situations in which an
insured would ordinarily expect coverage, such as texting while driving or driving while sleepdeprived. See Kovach, 587 F.3d at 335-36. Yet incidents occurring as a result of these voluntary
actions would be classified as “accidents.” See id. Moreover, Defendant’s standard would
render some exclusions superfluous or redundant. For example, it is certainly foreseeable that
one might suffer injury or death if they board an aircraft above the Earth’s surface, attempt to
commit a felony, or actively participate in a riot. A.R. at 338; accord Kovach, 587 F.3d at 336.
D.

Lack of a Specific Exclusion

The Sixth Circuit in Kovach noted the ease with which an insurance company could add a
driving while intoxicated exclusion to a policy. See 587 F.3d at 336. “The sheer number of
court cases nationwide involving disputes over claims by drunk drivers certainly would have put
[the insurance company] on notice that it would likely face claims under its AD & D policies
based on injuries sustained in alcohol-related collisions.” Id. Similarly, in this case, Defendant
could have added such an exclusion, and Plaintiffs have demonstrated that Defendant includes
alcohol-related exclusions in many of its other policies. See Pl. Mot. for Judg., DN 67, p. 13-15.

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Instead, Defendant’s interpretation of the Policy adds an additional eligibility requirement which
is not contained in the Policy. This case is not an approval of drinking and driving, but an
evaluation of coverage on the terms of the existing Policy.
E.

Intentionally Self-Inflicted Injury Exclusion

In addition to determining that Mr. Thies’s crash was not a “Covered Accident,”
Defendant also stated that the incident was subject to the “intentionally self-inflicted injury”
exclusion. Plaintiffs assert that the “intentionally self-inflicted injury” exclusion was improperly
applied to Mr. Thies’s death. The Policy states:
[B]enefits will not be paid for any Covered Injury or Covered Loss which,
directly or indirectly, in whole or in part, is caused by or results from any of the
following unless coverage is specifically provided for by name in the Description
of Benefits Section:
1.

intentionally self-inflicted injury, suicide or any attempt thereat while sane or
insane . . . .

A.R. at 338 (emphasis in original). Plaintiffs assert that because there was no alcohol exclusion
in the Policy and Mr. Thies’s injury was not intentional, benefits were wrongfully denied.
Defendant’s first denial letter notes that the intentionally self-inflicted injury exclusion
applies to Mr. Thies’s crash because he voluntarily ingested alcohol and alcohol contributed to
his jet ski crash which then resulted in his death. The Sixth Circuit addressed this argument in
Kovach, noting:
The Eighth Circuit, sitting en banc, rejected an identical argument in King v.
Hartford Life & Accident Insurance Co., 414 F. 3d 994 (8th Cir. 2004) (en banc).
There, the insured had died in a motorcycle accident with a BAC of .19. Id. at
997. That court held, and we agree, that “[t]he most natural reading of the
exclusion for injuries contributed to by ‘intentionally self-inflicted injury . . .’
does not include injuries that were unintended by the participant, but which were
contributed to by alcohol intoxication.” Id. at 1004. Although Mr. Kovach acted
intentionally in drinking to excess and then riding his motorcycle, nothing in the
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record indicates that he did so with a mind towards harming himself. Zurich's
interpretation of the exclusion in question conflates intentional actions with
intentional results. Mr. Kovach's injuries, in other words, were the result of the
collision, not simply a consequence of his acts of drinking and driving. After all,
“[o]ne rarely thinks of a drunk driver who arrives home safely as an ‘injured’
party.” Id. Mr. Kovach's intoxication likely contributed to the collision, but to
define his excessive drinking as a “purposely self-inflicted wound” would be an
illogical and “startling construction.” Id. Zurich's denial of the Kovaches' claim
on this basis was therefore arbitrary and capricious.
587 F.3d at 338-39; accord Jessen v. Cigna Group Ins., No. 09-12280, 2011 WL 2516157, at
*14 (E.D. Mich. June 21, 2011). In this case, Mr. Thies’s injuries were a result of his jet ski
collision. Nothing in the record indicates that he became intoxicated with the intent to do harm
to himself. Thus, the Court finds that Kovach is controlling on this issue and holds that
Defendant’s application of the “intentionally self-inflicted injury” exclusion was arbitrary and
capricious.
F.

Conflict of Interest

Finally, the Court must consider potential conflicts of interest, including situations where
the plan administrator is also the payer of plan benefits. Metro. Life Ins. Co. v. Glenn, 554 U.S.
105, 112 (2008); Cooper v. Life Ins. Co. of N. Am., 486 F.3d 157, 165 (6th Cir. 2007). A conflict
of interest is just one factor considered in the Court’s determination; it does not change the
standard of review. Glenn, 554 U.S. at 116-17. The Supreme Court ruled in Glenn that a
conflict of interest is of greater importance where there is “a history of biased claims
administration . . . .” Id. A conflict should not be a substantial factor, however, if the insurer has
taken steps to reduce bias, such as “walling off claims administrators from those interested in
firm finances, or by imposing management checks that penalize inaccurate decisionmaking . . . .”
Id. The First Circuit has interpreted these statements to mean that “courts are duty-bound to

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inquire into what steps a plan administrator has taken to insulate the decisionmaking process
against the potentially pernicious effects of structural conflicts.” Denmark v. Liberty Life
Assurance Co. of Boston, 566 F.3d 1, 9 (1st Cir. 2009).
Because Defendant decides which claims to pay and is also responsible for paying those
benefits, a conflict of interest exists. Defendant has not provided the Court with details
regarding its claims administration process or steps taken to reduce bias. Instead, Defendant
merely notes in a footnote in its brief that the conflict of interest is one factor to be weighed in
the Court’s decision. Thus, the Court considers this conflict of interest as another factor
weighing slightly in favor of finding that Defendant’s determination was arbitrary and
capricious.
G.

Remand and Instructions

Based on the foregoing, the Court finds that Defendant’s benefits determination was
arbitrary and capricious because of (1) the application of a categorical per se rule, (2) the overly
broad interpretation of the term “unforeseeable,” (3) failure to consider the facts and
circumstances of this case, (4) unreasonable application of the self-inflicted injury exclusion and
(5) an inherent conflict of interest. The Court believes that these factors support a finding that
Defendant failed to engage in a “deliberate principled reasoning process . . . supported by
substantial evidence.” Evans v. UnumProvident Corp., 434 F.3d 866, 876 (6th Cir. 2006)
(citations omitted). However, the Court does not believe the record clearly establishes that
Plaintiffs are entitled to benefits. Therefore, this case is remanded to Defendant to conduct a full
and fair review. See, e.g., Elliott v. Metro. Life Ins. Co. of N. Am., 473 F.3d 613, 622 (6th Cir.
2006) (remand to MetLife appropriate where the Court did not find that the plaintiff was “clearly

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entitled to benefits”)).
The Court directs Defendant to apply the Wickman standard, as adopted in Kovach, on
remand in order to determine whether Mr. Thies’s injury was unforeseeable. See Wickman v.
Northwestern Nat’l Ins. Co., 908 F.2d 1077, 1088-89 (1st Cir. 1990). Furthermore, the Court’s
ruling prevents Defendant from applying the intentionally self-inflicted injury exclusion to this
matter. Defendant should consider all facts and circumstances of the case. In the interests of
justice, and in order to facilitate a full and fair review, both parties may submit any additional
relevant evidence on remand.
II.

Breach of Fiduciary Duty
ERISA allows a participant in a covered plan to bring a private right of action “against a

person that qualifies as a fiduciary” and breaches that duty under the plan’s terms. 29 U.S.C. §
1132(a)(3); see Allinder v. Inter-City Prods. Corp., 152 F.3d 544, 551 (6th Cir. 1998), cert.
denied 525 U.S. 1178 (1999). Who qualifies as an ERISA fiduciary can be determined in one of
two ways: the plan can designate an individual/entity as a fiduciary, or the individual/entity can
“‘exercise[ ] discretionary control or authority over the plan’s management, administration or
assets.’” Mich. Affiliated Healthcare Sys., Inc. v. CC Sys. Corp. of Mich., 139 F.3d 546, 549 (6th
Cir. 1998) (quoting Mertens v. Hewitt Assocs., 508 U.S. 248, 251 (1993)). Neither party
disputes that Defendant is a fiduciary.
Plaintiffs allege that Defendant breached its fiduciary duty by failing to establish
reasonable claims procedures and refusing to provide relevant claims guidelines to participants
and beneficiaries. But Plaintiffs’ claim for breach of fiduciary duty under 29 U.S.C. §
1132(a)(3) is barred. “[A] participant cannot seek equitable relief for a breach of fiduciary duty

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under the catchall provision of [§ 1132(a)(3)] if the alleged violations are adequately remedied
under other provisions of [§ 1132].” Marks v. Newcourt Credit Group, Inc., 342 F.3d 444, 454
(6th Cir. 2003). Because § 1132(a)(1)(B) provides a remedy for Plaintiffs to recover benefits,
there is no cause of action permitted for breach of fiduciary duty pursuant to § 1132(a)(3). See
Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 615 (6th Cir. 1998) (citing Varity Corp. v.
Howe, 516 U.S. 489, 512, 515 (1996)). Accordingly, this claim is dismissed.
III.

Attorney’s Fees and Costs
Plaintiffs seek an award of attorney’s fees and costs incurred in this litigation. The

Court, in its discretion, may award attorney’s fees and costs to a beneficiary under 29 U.S.C. §
1132(g)(1). The Sixth Circuit requires consideration of five factors in determining whether to
award attorney’s fees in an ERISA case:
(1) the degree of the opposing party’s culpability or bad faith; (2) the opposing
party’s ability to satisfy an award of attorney’s fees; (3) the deterrent effect of an
award on other persons under similar circumstances; (4) whether the party
requesting the fees sought to confer a common benefit on all participants and
beneficiaries of an ERISA plan or resolve significant legal questions regarding
ERISA; and (5) the relative merits of the parties’ positions.
Gaeth v. Hartford Life Ins. Co., 538 F.3d 524, 529 (6th Cir. 2008) (quoting Moon v. Unum
Provident Corp., 461 F.3d 639, 642 (6th Cir. 2006)). No single factor is determinative. Moon,
461 F.3d at 642-43.
Neither party fully addressed the issue of attorney’s fees and costs in their briefs.
Accordingly, the Court will allow Plaintiffs to file a separate motion for attorney’s fees and costs
within thirty (30) days of the filing of this Memorandum Opinion and the accompanying Order.
Plaintiffs also seek prejudgment interest. “Awards of prejudgment interest ‘are not
punitive, but simply compensate a beneficiary for the lost interest value of money wrongly
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withheld from him or her.’” Perrin v. Hartford Life Ins. Co., No. 06-182-JBC, 2008 WL
2705451, at *2 (E.D. Ky. July 7, 2008) (quoting Ford v. Uniroyal Pension Plan, 154 F.3d 613,
618 (6th Cir. 1998)). Because the Court is remanding this matter instead of entering judgment in
Plaintiffs’ favor, an award of prejudgment interest on past due accident benefits would be
inappropriate.
CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiffs’ Motion for Judgment on Count
I. Count II of the Complaint is DISMISSED. This matter is REMANDED to Defendant for a
full and fair review in light of the Court’s discussion and instructions.
An appropriate order shall issue.

August 16, 2011

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