Ferguson v. United of Omaha Life Insurance Company et al
Filing
28
MEMORANDUM. Signed by Judge William M Nickerson on 3/11/14. (hmls, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
TERRY FERGUSON
v.
UNITED OF OMAHA LIFE
INSURANCE COMPANY et al.
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Civil Action No. WMN-12-1035
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MEMORANDUM
This action is brought under the provisions of the Employee
Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq.
Plaintiff Terry Ferguson, on behalf of the estate of his late
brother, Plaintiff John Ferguson,1 seeks to recover accidental
death insurance benefits under a group policy issued by
Defendant United of Omaha Life Insurance Company (United of
Omaha).
Ferguson was pulled, unconscious, from a public
swimming pool on September 15, 2010, and died at a local
hospital on October 1, 2010, having never regained
consciousness.
United of Omaha denied Plaintiff’s claim for
accidental death benefits after concluding that Ferguson had
experienced an epileptic seizure while swimming, which
contributed to his death.
1
In United of Omaha’s view, Ferguson’s
For clarity and ease of reference, Terry Ferguson will be
referred to herein as Plaintiff and John Ferguson will be
referred to simply as Ferguson.
death was not “independent of Sickness and all other causes” and
thus, not covered under the policy.
Before the Court are cross motions for summary judgment,
ECF No. 22 (Defendants’)2 and ECF No. 23 (Plaintiff’s).
motions are ripe for review.
The
Upon review of the briefing, the
administrative record, and the applicable case law, the Court
determines that no hearing is necessary, Local Rule 105.6, and
that Plaintiff’s motion will be granted and Defendants’ denied
in part and granted in part.
I. FACTUAL AND PROCEDURAL BACKGROUND
At the time of his death, Ferguson was 39 years old and a
frequent participant in marathons and triathlons.
To train for
these events, he swam regularly at the North Arundel Aquatic
Center in Glen Burnie, Maryland.
He had also been diagnosed
with epilepsy several years prior and was receiving regular
treatment for his epilepsy from his neurologist, Francis J.
Mwaisela, M.D.
In February of 2010, Ferguson experienced a seizure while
swimming that led to his near-drowning and a three-day
hospitalization.
On March 9, 2010, Ferguson had a follow up
visit with Mwaisela and Mwaisela increased the dosage of his
2
As explained, infra, in addition to United of Omaha, Plaintiff
also named Ferguson’s benefit plan, The ProObject, Inc. Group
Life and Accidental Death and Dismemberment Benefit Plan (the
ProObject Plan), as a defendant.
2
seizure medication.
Ferguson inquired during that visit as to
whether he could continue to swim and Mwaisela told him he had
“no problems in him doing so providing one of his colleagues
will keep eye contact with him throughout the entire time he is
in the water.”
AR 000220.3
At a subsequent follow-up visit on
July 26, 2010, Ferguson reported that he had no seizure-like
episodes since the increased dosage of his medication.
AR
000215.
On the evening of September 15, 2010, at least one life
guard was on duty poolside at the North Arundel Aquatic Center
and at least one other individual, Marc Womeldorf, was swimming
in the pool at the same time as Ferguson.
In a statement given
on May 5, 2011, Womeldorf states that he observed Ferguson
“porpoising,” i.e., “letting himself drift to the bottom into a
crouch position, stay there maybe a minimum of several seconds
in a stopped position and then push off towards the surface.”
AR 000341.
Womeldorf stated that he believed this was a
training technique used to increase an athlete’s tolerance for
lack of oxygen.
At one point, Womeldorf noticed Ferguson in a
“‘prone on elbows position’ with his hands clasped near or under
his chin and stable, not moving.”
Id.
While Womeldorf could
not remember precisely how long Ferguson was in this position
3
Defendant submitted its Administrative Record (AR 000001
through AR 000778) as an exhibit to its motion.
3
before he grew concerned and swam toward him, he stated it was
between 25 and 70 seconds.
Womeldorf swam to Ferguson, pulled
him to the surface, “gave him at least 2 rapid breaths clearing
his mouth out in between after which he threw up twice, passive,
involuntary.
He was not conscious.”
AR 000342.
With the assistance of a life guard, Ferguson was pulled
from the pool and Womeldorf and a life guard started two person
CPR.
An Anne Arundel County Fire Department Medic unit
responded to the scene and continued CPR until he was
transported by ambulance to the Baltimore Washington Medical
Center (BWMC).
An Anne Arundel County police officer who also
responded to the scene stated in his Incident Report that he was
advised that Ferguson was under water for approximately two
minutes before he was pulled out of the water.
The officer also
states in his report that “[e]mployees of the aquatic center
advised that Ferguson swims frequently and tells the staff that
he suffers from epilepsy.”
AR 000085.
When the officer arrived
at BWMC, the charge nurse told him that Ferguson had been
admitted in February 2010 after having a seizure at the aquatic
center.
The officer concludes his report by opining that “[i]t
is believed that Ferguson had a seizure while swimming in the
pool.”
Id.
Ferguson was intubated in the intensive care unit at BWMC
where he was treated for about two and a half weeks but never
4
regained consciousness.
While at BWMC, he was examined by
numerous physicians who consistently included in their notes the
conclusion that Ferguson had a seizure that led to his drowning.
See, e.g., AR 000087 (Discharge Summary of Dr. Ratnakar
Mukherjee - “In summary, the patient was in a pool when he had a
seizure episode.
He subsequently went into respiratory distress
. . . .”); AR 000105 (Consultation Note of Dr. Poorima Sharma –
“This is a 38-year-old gentlemen with a history of seizure
disorder on Tegretol4 who, while swimming, developed a seizure
episode leading to aspiration and drowning.”); AR 000125
(Consultation Note of Dr. Sangjin Oh – Ferguson “presented to
the hospital after a drowning episode secondary to seizure and
then going into cardiac arrest.”).
As his condition continued
to worsen, Ferguson’s family decided that it was better to
“terminally wean[] him off of the ventilator and [he] passed
away with dignity.”
AR 000087.
At the time of his death, Ferguson was covered under a
Group Term Life and AD&D (Accidental Death and Dismemberment)
Policy, Policy No. GLUC-AE2C (the Policy), issued by United of
Omaha to his employer, ProObject, Inc.
In addition to a basic
life insurance benefit, the Policy provided an “AD&D Benefit”5
4
Tegretol is a seizure medication.
5
The AD&D benefit paid in the case of death is an amount equal
to twice the employee’s annual salary. See AR 000017 (defining
5
that, according to the Summary of Coverage, “is paid if an
employee is injured as a result of an Accident, and that Injury
is independent of Sickness and all other causes.”
AR 000017.
The Policy Certificate (which constitutes the Summary Plan
Description, see AR 000048), contains the following definitions.
Accident means a sudden, unexpected, unforeseeable and
unintended event, independent of Sickness and all
other causes.
Accident does not include Sickness, disease, bodily or
mental infirmity or medical or surgical treatment
thereof, bacterial or viral infection, regardless of
how contracted. Accident does not include bacterial
infection that is the natural result of an accidental
external bodily injury or accidental food poisoning.
AR 000038 (emphasis in original).
Injury means an accidental bodily injury which
requires treatment by a Physician. It must result in
loss independently of Sickness and other causes.
AR 000051 (emphasis in original).
Sickness means a disease, disorder or condition, which
requires treatment by a Physician.
Id. (emphasis in original).
The “Exclusion” provision of the Certificate contains the
following exclusion: “We will not pay for any loss which . . .
(g) does not result from an Accident.”
AR 000040.
The “A&D
the Principal Sum as the benefit for a loss of life), AR
FERGUSON-000023 (equating the amount of life insurance in force
with the Principal Sum) and AR 000015 (defining the life
insurance benefit as twice the employee’s annual salary).
6
Exclusions” page of the Summary of Coverage repeats that same
exclusion.
AR 000018 (“We will not pay for any loss which . . .
does not result from an Accident.”).
The beneficiaries under the Policy are Plaintiff and
Ferguson’s sister, Holly McGrath, and on or about October 19,
2010, Plaintiff and Ms. McGrath submitted a claim under the
Policy.
On November 24, 2010, United of Omaha approved the
payment of $179,000 in Basic Life under the Policy.
In a letter
dated January 11, 2011, however, United of Omaha advised
Plaintiff and Ms. McGrath that their claim for Accidental Death
benefits was denied.
AR 000079.
After quoting the definition
of “Accident” set out above, the letter stated, “According to
the information received from the Anne Arundel County Police
Department and the Baltimore Washington Medical Center, John’s
death was not independent of sickness and all other causes.
Therefore, we are unable to allow accidental death benefits.”
Id.
Following that initial denial, counsel for Plaintiff sent
several letters to United of Omaha challenging that decision and
submitting various materials.
In a July 18, 2011, letter, he
summarized and submitted various medical articles about risk of
death and injury for epileptics and also discussed various court
decisions mandating the payment of accidental death benefits
under facts similar to those presented here.
7
AR 000411 –
000415.
An August 5, 2011, letter forwarded additional medical
articles about seizure disorders and inaccuracies in death
certificates and determinations of causes of death, and also
contained additional legal argument challenging the denial of
accidental death benefits.
AR 000376 – 388.
In a September 19,
2011, letter, Plaintiff’s counsel cited additional legal
authority for his position.
AR 000210 – 000211.
By letter dated November 11, 2011, United of Omaha informed
Plaintiff’s counsel that it had completed its review of the
appeal and had determined that its previous decision was
appropriate.
AR 000200 – AR 000202.
The letter stated that the
following materials were reviewed:
Statement of PolicyHolder or Group Administrator
Statements of Beneficiary or Other Claimant
Police Report dated September 15, 2010
Certificate of Death filed October 5, 2010
Medical records from [BWMC] dated September 12, 2010
through October 1, 2010
Medical records from Dr. Mwaisela dated March 9, 2010
through July 26, 2010
Letters from [Plaintiff’s counsel] dated July 18,
2011, August 5, 2011 and September 19, 2011 and the
information provided with those letters, including the
information provided on CD-R
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Reviews by our Physician Consultant.6
AR 000200.
After referencing: (1) Ferguson’s medical history of
seizures; (2) Mwaisela’s instructions regarding his continued
swimming; (3) the death certificate listing of the cause of
death as “drowning due to (or as a consequence of) seizure
disorder;” and, (4) the health care providers at BWMC opining
that “the drowning was the result of a seizure,” the letter
concluded, “[i]n summary, Mr. Ferguson’s death was not
6
Plaintiff provides a litany of reasons as to why the reviews of
United of Omaha’s Physician Consultant, Dr. Thomas Reeder,
should be discounted, including: Reeder is United of Omaha’s
Senior Vice-President and Medical Director and therefore, not in
any sense independent; he has earned his livelihood from
insurance defense practice for years, providing reviews as an
expert for insurance companies in more than 50 decisions; his
reviews were criticized and considered inadequate in two of
those decisions, Crespo v. Unum Life Ins. Co. of America, 294 F.
Supp. 2d 980 (N.D. Ill. 2003) and Epling v. American United Life
Ins. Co., Civ. No. 08-02, 2009 WL 129785 (E.D. Ky. Jan. 20,
2009); and, Reeder is an internist not certified in forensic
pathology and, thus, not qualified to render an opinion as to
cause of death. ECF No. 23 at 28-31. Plaintiff submitted
various materials in support of these assertions, but United of
Omaha argues that the Court cannot consider these “extra-record
materials” because this Court’s review is limited to the
“evidence that was before the ERISA fiduciary when the claim was
denied.” ECF No. 24. One would hope that United of Omaha was
well aware of, and took into consideration, Reeder’s experience,
areas of expertise, potential conflicts of interests, and
criticisms of his previous reviews when it assigned him the task
of reviewing this case. It would be troublesome, indeed, if
this information was not “before the fiduciary” and considered
by the fiduciary. Regardless, because the Court need not reach
the issue on which Reeder opined, it need not determine if these
materials can be considered here.
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independent of sickness and other causes.
Due to this,
accidental death benefits are not payable.”
AR 000201.
Having exhausted his administrative appeals, Plaintiff
timely filed this action.
II. STANDARD OF REVIEW UNDER ERISA7
When reviewing a denial of benefits under an ERISA-governed
plan, a district court must first determine “whether the
relevant plan documents confer discretionary authority on the
plan administrator.”
DuPerry v. Life Ins. Co. of N. Am., 632
F.3d 860, 869 (4th Cir. 2011).
When an ERISA plan vests its
administrator with discretionary authority to construe the terms
of the plan and determine eligibility for benefits, the plan's
eligibility determination is subject to review only for abuse of
discretion.
Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 111
(2008); Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 111–
15 (1989).
The Policy here includes the following provision
regarding the authority to interpret the Policy:
The Policyholder has delegated to Us [United of Omaha]
the discretion to determine eligibility for benefits
and to construe and interpret all terms and provisions
of the Policy. Benefits under the Policy will be paid
only if We decide, after exercising Our discretion,
that the Insured Person is entitled to them. In
making any decision, We may rely on the accuracy and
7
While United of Omaha inserted in its motion two pages
discussing the legal standard for a typical summary judgment
motion, ECF No. 22-2 at 11-13, much of that standard is not
particularly relevant to a review of a benefits determination
under ERISA.
10
completeness of any information furnished by the
Policyholder, and Insured Person or any other third
parties.
AR 000007.
Thus, this Court applies an abuse of discretion
standard to its review.
Under ERISA, the Fourth Circuit has instructed courts to
consider a number of factors in determining whether an
administrator has abused its discretion in denying a claim,
including the administrator's “motives and any conflict of
interest it may have.”
Booth v. Wal–Mart Stores, Inc. Assocs.
Health & Welfare Plan, 201 F.3d 335, 342–43 (4th Cir. 2000).
In
Glenn, the Supreme Court clarified the role that this factor
should play in a court's analysis.
The existence of a conflict
of interest does not alter the standard of review the court
employs; rather, it is “but one factor among many” that a court
should consider in evaluating the administrator's decision.
554 U.S. at 116.
See
Once a conflict of interest has been
identified, “the circumstances of the particular case” determine
“the significance of the factor” to the court's review of the
decision.
Id. at 108.
Here, United of Omaha has acknowledged that it was acting
under a structural conflict of interest in that it was acting as
both the insurer of the benefits and the claims administrator of
said benefits.
ECF No. 22-2 at 15.
United of Omaha also
argues, however, that its dual role “‘should prove less
11
important (perhaps to the vanishing point) where the
administrator has taken active steps to reduce potential bias
and to promote accuracy.’”
U.S. at 117).
ECF No. 24 at 6 (quoting Glenn, 554
While United of Omaha suggests that the
importance of its inherent conflict “can be said [to have]
diminished ‘to the vanishing point,’” it is not clear to the
Court what “active steps” United of Omaha took to reduce the
potential bias.
Id.8
Regardless, because the weight given to
this particular factor does not alter the Court’s final
conclusion, it need not determine how adequately United of Omaha
has addressed its structural conflict.
As to the interpretation of insurance policies under ERISA,
the Fourth Circuit has held that “courts are to be guided by
federal common law rules.”
Johnson v. Gen. Am. Life Ins. Co.,
178 F. Supp. 2d 644, 650 (W.D. Va. 2001) (internal citation
omitted).
In Wheeler v. Dynamic Engineering, Inc., 62 F.3d 634,
638 (4th Cir. 1995), the court held that ERISA plans are to be
interpreted “under ordinary principles of contract law,
enforcing the plan's plain language in its ordinary sense” and a
8
United of Omaha suggests that its conflict of interest was
“neutralized by its thorough investigation of the Plaintiff’s
claim and subsequent appeal.” ECF No. 24 at 6. In light of the
fact that United of Omaha assigned the review of the claim to
its own in-house medical director who is not certified in
forensic medicine and whose objectivity is subject to question,
see supra, n.6, the Court would not view that as an “active
step” to reduce bias.
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court properly looks to “principles of state common law to guide
[its] analysis.”
Similarly, “[a]lleged ambiguities should be
reconciled, if possible, by giving language its ordinary meaning
. . . .”
Glocker v. W.R. Grace & Co., 974 F.2d 540, 544 (4th
Cir. 1992).
The Fourth Circuit, however, has declined “to apply
a strict interpretation of the policy language,” where a
“literal application of such policy language would nullify the
benefits an insured could expect from a policy in a large number
of instances.”
Danz v. Life Ins. Co. of N. Amer., 215 F. Supp.
2d 645, 651 (D. Md. 2002) (citing Adkins v. Reliance Standard
Life Ins. Co., 917 F.2d 794, 796 (4th Cir. 1990)).
In ERISA cases, the insured bears the initial burden of
establishing that the claim falls within the scope of coverage
while the insurer has the burden of proving that an exclusion
applies.
Jenkins v. Montgomery Indus., 77 F.3d 740, 743 (4th
Cir. 1996).
Specifically in the context of AD&D policies that,
as here, require that covered injuries result “directly and
independently of all other causes,” the Fourth Circuit has
refined a “two-step determination: first, whether there is a
pre-existing disease, disposition, or susceptibility to
injuries; and second, whether this pre-existing condition, predisposition, or susceptibility substantially contributed to the
disability or loss.”
Quesinberry v. Life Ins. Co. of N. Amer.,
987 F.2d 1017, 1028 (4th Cir. 1993).
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Finally, in reviewing a plan's determination of coverage
under the deferential abuse of discretion standard, a court is
generally limited to the evidence in the administrative record
before the administrator when the administrator made the
decision under review.
Bernstein v. CapitalCare, Inc., 70 F.3d
783, 788-89 (4th Cir. 1995); Brodish v. Fed. Express Corp., 384
F. Supp. 2d 827, 833 (D. Md. 2005) (“Generally, the Fourth
Circuit defines the administrative record as those facts known
to the administrator at the time the administrator made the
benefits eligibility determination.”).
III. DISCUSSION
A. Was Ferguson’s Seizure a Cause of His Death?
The parties devoted a large portion of their briefing to
the issue of whether or not there was substantial evidence that
Ferguson experienced a seizure while swimming on the evening of
September 15, 2010, and thus, whether it was a seizure that
caused him to drown.
Although the health care providers appear
to have quickly made the assumption that he had, there is no
direct evidence of a seizure.
Significantly, neither of the two
individuals present at the pool at the time - Womeldorf nor the
life guard on duty who was stationed at the pool – stated that
they observed any signs of a seizure.
Plaintiff represents that
this is in sharp contrast to the “open and obvious seizure
activity which was witnessed in February, 2010 at the same
14
facility.”
ECF No. 23 at 18; see also id. at 3 (representing
that the February, 2010 seizure was “obvious to all who were
present”).9
Plaintiff also argues that multiple EEGs performed
at BWMC “did not reveal any evidence of post-epileptic seizure
activity” which, in Plaintiff’s view, “is irrefutable medical
evidence that a seizure did not take place.”
Id. at 3 (emphasis
in original).10
It is fairly apparent from the record that, because the
staff at the aquatic center and the staff at BWMC were aware
that Ferguson previously had a drowning episode that was caused
by a seizure, everyone simply made the assumption that this
second drowning episode was also caused by a seizure.
After
being told by the aquatic center staff that Ferguson had told
them that he suffers from epilepsy, and by the charge nurse that
he was admitted in February 2010 after having a seizure while
swimming, the police officer concluded his report by opining
that “[i]t is believed that Ferguson had a seizure while
swimming in the pool.”
AR 000085 (emphasis added).
While the
9
The Court notes that, while Plaintiff makes this representation
regarding the February 2010 event, he cites nothing in the
record supporting the obvious nature of that seizure event.
10
Several of the interpretations of the Electroencephalograms,
or EEGs, did state that the EEGs were not consistent with the
diagnosis of status epilepticus. See, e.g., AR 000149, AR
000151. As Defendant notes, however, these EEGs were taken days
after the drowning episode. Nothing in the record supports the
conclusion that a seizure on September 15, 2010, would be
reflected in EEGs taken days later.
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conclusion that Ferguson had a seizure episode that led to
drowning and aspiration is repeated time and again in the
medical notes, there is nothing in those notes to explain why
the health care providers believed that he had experienced a
seizure, other than his history of epilepsy and the previous
occurrence of a similar event.11
Ultimately, however, the Court need not decide if it was
reasonable for United of Omaha to conclude that a seizure was a
cause of the drowning, because, in this Court’s view, the
relevant question under the Policy is whether Ferguson’s seizure
disorder was a cause of his death.
Courts interpreting the
language of similar accidental death policies have treated these
two questions independently, and have denied coverage only when
the disease or pre-existing condition was a cause of the death
or injury, not when it was simply the cause of the accident that
led to a death or injury.
One of the leading cases highlighting the importance of
this distinction is Kellogg v. Metropolitan Life Insurance
Company, 549 F.3d 818 (10th Cir. 2008).
In Kellogg, a witness
observed the insured appear to have a seizure immediately before
the insured’s car drove off of the road and crashed into a tree.
11
The Court notes that this assumption is not necessarily
unreasonable. Ferguson was a competitive athlete who swam
regularly. Something unusual must have occurred to cause him to
drown and, in light of his history, a seizure is a possible
explanation.
16
The insured died of a brain hemorrhage, caused by a skull
fracture sustained in the crash.
The coroner also found that
the insured had high post-mortem blood levels of a drug that has
a reported risk factor of causing seizures.
At the time of his death, the insured was covered under an
AD&D policy that provided benefits if the insured sustained an
“accidental injury that is the Direct and Sole Cause of a
Covered Loss.”
Id. at 821.
“Direct and Sole Cause means that
the Covered Loss occurs within 12 months of the date of the
accidental injury and was a direct result of the accidental
injury, independent of other causes.”
Id.
The Certificate of
Insurance also contained an exclusion, “[w]e will not pay
benefits under this section for any loss caused or contributed
to by . . . physical or mental illness or infirmity, or the
diagnosis or treatment of such illness or infirmity.”
The
Summary Plan Description stated that “losses due to . . .
‘physical or mental illness’ were excluded” from coverage.
Id.
The insurer initially denied the claim for accidental death
benefits on the ground that “[u]nder the terms of the plan, AD&D
benefits are not payable if the loss is due to a physical
illness.
The decedent’s physical illness, the seizure, was the
cause of the crash.
Accordingly, we must deny your claim.”
17
Id.
at 823.12
The Tenth Circuit rejected that rationale, concluding
that “the car crash – not the seizure – caused the loss at
issue, i.e., [the insured’s] death, and therefore the
exclusionary clause of the policy does not apply.”
Id. at 829.
The court then cited and discussed numerous cases “reject[ing]
attempts to preclude recovery on the basis that the accident
would not have happened but for the insured’s illness.”
Id. at
831.
One of those cases cited involved an epileptic seizure and
drowning, National Life & Accident Insurance Co. v. Franklin,
506 S.W.2d 765 (Tex. App. 1974).
In Franklin, the insured, who
had a history of epileptic seizures, was found dead in a
12
Before the district court, the insurer argued for the first
time that the plaintiff’s claim failed because the insured’s
death “did not result from an accident ‘independent of other
causes’” and the district court granted summary judgment for the
insurer on that ground. The Tenth Circuit held that it was
error for the district court to grant judgment on a ground not
raised when initially denying the claim. This Court recognizes
that the argument reached by the district court is closer to the
argument advanced by Defendants in this action. The Tenth
Circuit did not reach the merits of that decision and this Court
respectfully disagrees with the reasoning of the district court.
This Court also notes that the district court appears to have
misread the language of the policy. The policy provided that
covered AD&D benefits must arise from “an accidental injury that
is the Direct and Sole Cause of a Covered Loss,” and defines
“Direct and Sole Cause” as “a direct result of the accidental
injury, independent of other causes.” Kellogg v. Metro. Life
Ins. Co., Civ. No. 06-610, 2007 WL 2684536, at *7 (D. Utah Sept.
7, 2007) (emphasis added). In its holding, the district court
inexplicably dropped the word “injury” and concluded that the
insurer was entitled to judgment because the insurer’s “death
was not the direct result of an accident ‘independent of other
causes.’” Id.
18
bathtub.
The insurance policy at issue covered losses resulting
“directly and independently of all other causes, from bodily
injuries effected solely through external, violent and
accidental means,” and contained an exclusionary clause
prohibiting payment for losses that “result[] from or [are]
contributed to by any disease or mental infirmity.”
Id. at 766.
The court held that, even if it was determined that the
insured's epilepsy caused him to lose consciousness and fall
into the bathtub, it did not cause the death.
Id. at 767.
The
court explained, “[t]he epilepsy was merely a cause of a cause
and was therefore too remote to bar recovery.”
Id. (emphasis
added).
Orman v. Prudential Insurance Co., 296 N.W.2d 380 (Minn.
1980), also involved a fall into a bathtub caused by a disease,
in this case, the bursting of a cerebral aneurysm which caused
the insured to lose consciousness.
While the policy at issue in
Orman excluded losses “caused or contributed to by bodily
infirmity or disease,” id. at 381, and the aneurysm would be
considered a disease under the policy, the court held that the
exclusion did not apply because the aneurysm did not cause the
death:
It was a mere fortuity that the decedent stood
over a bathtub full of water at the time the aneurysm
burst and rendered her unconscious. In other words,
the aneurysm may have contributed to the accident, but
it did not contribute to the death. In such
19
circumstances, the aneurysm is simply too remote to be
deemed a direct or contributing cause of death.
Id. at 382 (emphasis added).
The Kellogg court also quoted a decision written by
President William Howard Taft when he served as a judge on the
Sixth Circuit, Manufacturers' Accident Indemnity Co. v. Dorgan,
58 F. 945 (6th Cir. 1893).
In Dorgan, the insured went fishing
and was found dead, submerged in a brook.
There was some
evidence that he had previously suffered from dizziness caused
by a defect in his heart.
In denying coverage, the insurer
argued, inter alia, that the insured “died in consequence of
disease, and that his death was not caused by any accident or
accidental injury which was the proximate and sole cause of his
death.”
Then-Judge Taft wrote:
[I]f the deceased suffered death by drowning, no
matter what was the cause of his falling into the
water, whether disease or a slipping, the drowning, in
such case, would be the proximate and sole cause of
the disability or death, unless it appeared that death
would have been the result, even had there been no
water at hand to fall into. The disease would be but
the condition; the drowning would be the moving, sole,
and proximate cause.
Id. at 954 (emphasis added).
Cases following Kellogg have come to similar conclusions.
In Pavicich v. Aetna Life Insurance Company, Civ. No. 09-818,
2010 WL 3854733 (D. Colo. Sept. 27, 2010), a case brought under
ERISA, the insured fell while having a seizure believed to be
20
caused by his anti-depression medications.
He suffered a
cervical spine injury as a result of the fall and underwent a Cspine fusion.
After the surgery, he developed high fevers and
other complications and he died in the hospital about a week
after the fall.
The insurer denied accidental death benefits,
relying on language in the policy that provided: “This coverage
is only for losses caused by accidents.
No benefits are payable
for a loss caused or contributed to by: a bodily or mental
infirmity, a disease ... [or] medical treatment.”
Id. at *5.
The insurer reasoned: “the death was caused by complications
resulting from a cervical spinal cord injury which resulted from
a fall, that the fall was a direct result of a generalized
tonic-clonic seizure likely related to medications to treat
depression and bipolar disorder and, consequently, the loss was
caused or contributed to by a bodily or mental infirmity and
medical treatment.”
Id. at *4.
Reviewing the insurer’s denial of coverage determination
under an abuse of discretion standard, the court found that
denial to be arbitrary and capricious.
Id. at *10.
The court
concluded that:
[the insured’s] hospitalization and death were
directly caused by an accident — his fall — which
caused a severe cervical spine injury. Although the
parties dispute whether the [insured’s] fall was
caused by a seizure and/or any medication that he may
have been taking, the Court finds that such dispute is
not material. Seizure activity or the taking of the
21
prescribed medication were not but-for causes of [the
insured’s] hospitalization and subsequent death;
rather, his accidental fall was. . . .
Further, the Plan does not exclude
resulting from accidents caused by
infirmity” or “medical treatment,”
Rather, the Plan excludes coverage
resulting from such infirmities or
coverage for deaths
“a bodily or mental
such as medication.
for deaths
medical treatment.
Id. (first emphasis added, other emphasis in original).13
District courts in the Fourth Circuit addressing similar
claims under ERISA have also looked to Kellogg.
In Genal v.
Prudential Insurance Company of America, Civ. No. 11-182, 2012
WL 2871777 (D.S.C. July 12, 2012), the insured had suffered from
multiple sclerosis (MS) for approximately 25 years and was using
a motorized scooter to ambulate.
After he was found
unresponsive on the ground in his back yard with his scooter
nearby, it was determined that he died of environmental heat
exposure.
He apparently fell from the scooter and, because of
his MS, was unable to get up or crawl into his house.
The
insured had an AD&D policy that provided an accidental death
benefit if “[t]he person sustains an accidental bodily Injury
while a Covered Person” and “[t]he Loss results directly from
that Injury and from no other cause.”
13
Id. at *1.
The policy
The court opined that, “[the d]efendant could have written the
policy in such a way to exclude accidents caused by bodily or
mental infirmities or medical treatments, but it did not.” Id.
While Defendant here may have attempted to write such a policy,
for the reasons explained, infra, this Court concludes it also
did not.
22
also contained an exclusion which provided that “[a] Loss is not
covered if it results from . . . Sickness whether the Loss
results directly or indirectly from the Sickness.”
Id.
The
insurer denied the beneficiary’s accidental death claim,
concluding: “it was the Decedent's MS, not an accidental bodily
injury, that prevented him from getting up after he fell ...
and, as a result, he was exposed to the heat for approximately
two days, which caused his death.
Therefore, his death did
result directly and/or indirectly from his multiple sclerosis,
as sickness.”
Id. at *3.
In reversing the denial of benefits, the district court
noted that “the evidence indicates that the cause of the
Decedent’s death was initially triggered by the fall from the
scooter and not his illness.
While the fall by itself may not
have caused Decedent's death, but for the fall, Decedent would
not have died.”
Id. at *4.
The court also observed,
but for the heat exposure, Decedent
have died. If he had fallen inside
his MS still may have prevented him
he would not have been subjected to
heat exposure. The court concludes
did not substantially contribute to
Id.
would also not
his house, while
from getting up,
the environmental
that Decedent's MS
his death.
The court also concluded that the exclusion for losses
resulting “from any Sickness whether the Loss results directly
or indirectly from the Sickness” did not apply.
In reaching
that conclusion, the court quoted Kellogg for the proposition
23
that “‘[a] reasonable policyholder would understand this
language to refer to causes contributing to the death, not to
the accident.’”
Id. at *5 (quoting Kellogg, 549 F.3d at 832)
(emphasis added);
see also Chapman v. Life Ins. Co. of N. Am.,
Civ. No. 08-699, 2013 WL 1314541, at *2, *6 (M.D.N.C. Mar. 28,
2013) (quoting that same language from Kellogg in a decision
interpreting an AD&D policy that defined “Covered Accident” as a
“sudden, unforeseeable external event that results, directly and
independently of all other causes” and that excluded losses
which “directly or indirectly, in whole or in part, is caused by
or results from . . . Sickness, disease, bodily or mental
infirmity”).
In light of this substantial line of cases, the question
then becomes, in the case sub judice, whether the Policy
excludes losses caused by a disease or losses caused by
accidents that were caused by a disease.
Before returning to
the language of the Policy to resolve that question, the Court
notes that United of Omaha makes no argument that Ferguson’s
seizure, if he had one, was a direct cause of his death.
That
is, there is no suggestion, and there is certainly not
substantial evidence, that, had the alleged seizure not occurred
while he was in the water, the seizure would have resulted in
his death.
Just as the insured in Genal had the misfortune of
falling outside, which led to heat exposure, Ferguson, assuming
24
he had a seizure, had the misfortune of having that seizure
while swimming, which led to his drowning.
Turning to the language in the Policy, United of Omaha
relies on the definition of “Accident” which excludes “sudden,
unexpected, unforeseeable and unintended event[s]” that are
“independent of Sickness and all other causes.”
(emphasis added).
AR 000038
As written, this definition would appear to
eliminate the possibility of any event ever being considered an
accident.
If the insured slips and falls on an icy sidewalk, it
would not be an accident under this language because the
presence of ice on the sidewalk would be a cause of the event.
Describing the efforts of insurance companies to manufacture
reasons to deny accidental death coverage, the Fourth Circuit
has opined that, “[a]t one extreme, insurance companies can be
characterized as proffering an interpretation of policy
provisions in which ‘accidental death’ coverage applies only on
facts ‘which [are] the equivalent of a truck dropping from the
skies, striking squarely and killing instantly a perfectly fit
human specimen clutching a just-issued physician's clean bill of
health.’”
Hall v. Metro. Life Ins. Co., 259 F. App’x 589, 594
(4th Cir. 2007) (quoting Collins v. Metro. Life Ins. Co., 729
F.2d 1402, 1404 (11th Cir. 1984)).
Under United of Omaha’s
definition of “Accident,” not even this extreme scenario would
result in coverage because whatever caused the truck to fall
25
from the sky would be deemed a cause of the event, excluding
coverage.
The only reasonable interpretation of the Policy is the
interpretation United of Omaha itself gave in its Summary of
Coverage.
According to that document, an AD&D Benefit “is paid
if an employee is injured as a result of an Accident, and that
Injury is independent of Sickness and all other causes.”
000017 (emphasis added).
AR
See Kellogg, 549 F.3d at 833 (noting
that the plain meaning of the policy at issue was supported by
the employer’s own interpretation of the coverage in the Summary
Plan Description).
Under this language in the Summary of
Coverage, the Injury, not the Accident, must be independent of
Sickness and all other causes.
This is also consistent with the
definition of “Injury,” which states that the Injury “must
result in loss [in this case, death] independently of Sickness
and other causes.”
AR 000051.
In its letter denying benefits,
the reason given by United of Omaha for that denial was that
Ferguson’s “death was not independent of sickness and all other
causes,” AR 000077 (emphasis added).
It did not claim to base
its decision on a conclusion that the accident was not
independent of sickness.
Significantly, after reciting the
language of the Policy in their briefing, Defendants summarize:
“Accordingly, the Plaintiff has the burden of proving that his
brother’s pre-existing seizure disorder did not substantially
26
contribute to his death,” not to his drowning.
ECF No. 22-2 at
22.14
Most of the cases relied upon by Defendants are
distinguishable on their facts.
The court in Genal specifically
distinguished the case before it from Danz v. Life Insurance
Company of North America, 215 F. Supp. 2d 645 (D. Md. 2002), the
only case from this Circuit cited by Defendants that was decided
on even remotely similar facts as those presented here.
In
Danz, the insured, a truck driver, suffered a heart attack while
driving his rig, the rig drifted off the roadway, through a
guardrail, down an embankment, and overturned in a ditch.
insured was found dead in the cab of his truck.
The
The
beneficiaries argued that the injuries suffered in the accident
were the cause of his death.
The insurer, however, denied the
claim on the ground that his preexisting cardiac condition
substantially contributed to his death and the policy at issue
only covered “loss[es] from bodily injuries caused by an
14
While United of Omaha places that burden on Plaintiff,
Plaintiff contends that United of Omaha has the burden of
establishing the applicability of an exception to coverage. The
Court agrees that the burden properly falls on United of Omaha.
The Policy has essentially defined the scope of coverage by
including an exclusion within the definition of that coverage,
i.e., while losses caused by accidents are covered, if Sickness
or any other cause contributes to that loss, coverage is
excluded. Here, however, where there is absolutely no evidence
that Ferguson’s seizure, if he had one, contributed to his death
and not just to the accident, it is ultimately immaterial which
party carries the burden.
27
accident . . . which, directly and from no other causes, result
in a covered loss.”
Id. at 647-48.
In support of this denial,
the insurer’s expert witness offered clear, cogent, and
unimpeachable testimony that the insured “suffered sudden
cardiac death while driving and that he was clinically dead at
the time of impact.”
Id. at 653, 655.
Thus, unlike Ferguson,
whose seizure would not have killed him were he not swimming at
the time, the insured in Danz would have died from his cardiac
event even had he not been driving.
Several of the other cases on which Defendants rely are
similarly distinguishable.
In Honican v. Stonebridge Life
Insurance Company, 455 F. Supp. 2d 662 (E.D. Ky. 2006), a 75
year old insured fell, broke a hip, had successful surgery on
the hip, but died of a massive stroke one day later.
The court
observed that, in this type of accidental death policy, there is
no coverage “‘where death is due both to the accident and to the
disease.’”
455 F. Supp.2d at 667 (quoting Commonwealth Life
Ins. Co. v. Byck, 268 S.W.2d 922, 925 (Ky. 1953)) (emphasis
added in Honican).
The court upheld the denial of benefits
based on compelling evidence that the insured’s prior health
problems, which included, “among other things, minor heart
failure, possible pneumonia, a urinary tract infection, coronary
artery disease, diabetes type II, hypertension, edema, dementia,
and left-sided weakness from a stroke,” had “played a part, if
28
not a primary role, in her death.”
Id. at 663, 668.
Defendants
do not even argue that Ferguson’s alleged seizure was a similar
direct cause of death.
In Puszkarewicz v. Prudential Insurance Company of America,
which was quoted at length by Defendants, the insured had an
epileptic seizure while in the bathtub and was found dead with
his head submerged, face down, in the water.
(Pa. Super. Ct. 1947).
not from drowning.
Id.
55 A.2d 431, 431
It was conceded, however, that death was
The coroner testified that the seizure
caused massive hemorrhages in the lungs which precluded their
functioning.
The family physician testified on direct that he
believed the hemorrhaging was caused by the insured’s attempt to
breath under water while unconscious from the epileptic attack.
On cross examination, however, the family physician admitted
that the hemorrhaging could have been “induced by the violence
of the seizure itself, (inferentially), without suffocation from
the immersion of decedent’s head in the water of the tub.”
at 502.
Id.
The court found the evidence was “in equal balance as
to the occurrence or non-occurrence of an accident” and that the
plaintiff had failed to meet her burden of proof.
Here, there
is no similar evidence that Ferguson’s death was directly caused
by anything other than drowning.
The Court is aware that other cases cited by Defendants
would appear to support the conclusion that, to deny an
29
accidental loss claim, United of Omaha need only show that a
pre-existing condition caused the accident which caused the
loss.
See, e.g., McGuire v. Reliance Standard Life Insurance
Company, 205 F.3d 1341 (6th Cir. 2000) (table, unpublished
disposition); Southern Farm Bureau Life Ins. Co. v. Moore, 993
F.2d 98 (5th Cir. 1993).
To the extent that those cases stand
for that proposition, this Court finds them inconsistent with
the teaching of the Fourth Circuit that insurance policies
should not be so strictly interpreted that they nullify the
benefits that the insured reasonably expects from such a policy.
See Danz, 215 F. Supp. 2d at 651 (citing Adkins, 917 F.2d at
796).
Here, Ferguson died of an accidental drowning.
Whether
the cause of the drowning was a seizure, a slip and fall into a
pool, being swept off a boat, or any other cause, is simply not
material.
See Pavicich, 2010 WL 3854733, at *10.
B. Was Ferguson’s Seizure an “Unexpected” or
“Unforseeable” Event?
In its motion for summary judgment, Defendants also argue
that Plaintiff’s claim was properly denied because Ferguson’s
death by drowning was “foreseeable.”
ECF No. 22-2 at 39-41.
Although Defendants argue otherwise, this rationale for denying
the claim was clearly not given in United of Omaha’s initial
letter denying coverage.
AR 000077.
The letter did recite the
entire definition of “Accident,” which is quoted above, and that
30
definition does include the word “unforeseeable.”
Id.
Immediately following that definition, however, United of Omaha
stated, “[a]ccording to the information received from the Anne
Arundel County Police Department and the Baltimore Washington
Medical Center, John’s death was not independent of sickness and
all other causes.
death benefits.”
Therefore, we are unable to allow accidental
Id.
That is the sole reason given and United
of Omaha included nothing in that letter to suggest that the
claim was also being denied because the accident was somehow
foreseeable.
It is well established that, under ERISA, “judicial review
[is] ‘limited to whether the rationale set forth in the initial
denial notice is reasonable.’”
Hall v. Metro. Life Ins. Co.,
259 F. App’x 589, 593 (4th Cir. 2007) (quoting Thompson v. Life
Ins. Co. of N. Am., 30 F. App’x 160, 164 (4th Cir. 2002) and
collecting cases) (emphasis added in Hall).
This rule is based
upon the premise that to allow the insurer to present new
arguments for the first time on judicial review would deny the
insured the “full and fair” review procedural safeguards that
ERISA and its implementing regulations require.
See Ellis v.
Metro. Life Ins. Co., 126 F.3d 228, 236–37 (4th Cir. 1997).
Therefore, this court “may not” and will not “consider a new
reason for claim denial offered for the first time on judicial
review.”
Thompson, 30 F. App'x at 164.
31
C. Is Plaintiff Entitled to Statutory Administrative
Penalties?
In the Complaint, Plaintiff alleges that Plaintiff’s
counsel sent a request for “all summary plan documents,
governing claims manual provisions or handling instructions
under which this claim was reviewed,” Compl. ¶ 18, and
Defendants failed to produce those requested documents.
19.
Plaintiff then prayed for penalties in the amount of $110
per day pursuant to 29 C.F.R. §§ 2560.502–1(g) et seq.
22.
Id. ¶
Id. ¶
Defendants suggest that this failure to produce documents
claim is the only reason that Ferguson’s benefit plan, the
ProObject Plan, was named as a defendant.
In Defendants’
motion, they observe that the administrative record reveals that
Plaintiff’s counsel promptly received all of the documents that
he requested.
ECF No. 22-2 at 42-47.
In his cross-motion and opposition to Defendants’ motion,
Plaintiff makes no direct response on this issue.
He does
complain that United of Omaha violated ERISA violations by
failing to provide Reeder’s medical review before denying the
claim.
ECF No. 23 at 32.
In making that argument, Plaintiff
relies, in part, on Abram v. Cargill, 395 F.3d 882 (8th Cir.
2005).
32
To the extent that this is the basis for Plaintiff’s
administrative penalties claim, it fails.
The holding in Abram,
on which Plaintiff relies, was subsequently abrogated by changes
in the regulations implementing ERISA.
See Midgett v.
Washington Group Int’l Long Term Disability Plan, 561 F.3d 887,
895 (8th Cir. 2009).
In recognizing that abrogation, the Eighth
Circuit in Midgett looked to the reasoning of the Tenth Circuit
in Metzger v. UNUM Life Ins. Co. of Am., 476 F.3d 1161 (10th
Cir. 2007), where that court observed that “‘requiring a plan
administrator to grant a claimant the opportunity to review and
rebut medical opinions generated on administrative appeal ‘would
set up an unnecessary cycle of submission, review, resubmission, and re-review.’ . . .
Such a cycle ‘would
undoubtedly prolong the appeal process . . . .’”
Id. (quoting
Metzger, 476 F.3d at 1166).
This Court finds that United of Omaha was not obligated to
produce Reeder’s medical review prior to issuing its benefit
determination.
Accordingly, the Court concludes that Plaintiff
is not entitled to administrative penalties.
In addition, the
ProObject Plan will be dismissed as a defendant.
D. Is Plaintiff Entitled to Attorney’s Fees?
Under ERISA, a district court “in its discretion may allow
a reasonable attorney's fee and costs of action to either
party.”
29 U.S.C. § 1132(g)(1).
33
The Supreme Court has
clarified that a fee claimant need not even be a “prevailing
party” to be eligible for an attorney's fees award under §
1132(g)(1).
Hardt v. Reliance Standard Life Ins. Co., 560 U.S.
242, 252 (2010).
Instead, a claimant may be entitled to fees
“if the court can fairly call the outcome of the litigation some
success on the merits without conducting a lengthy inquiry into
the question whether a particular party's success was
‘substantial’ or occurred on a ‘central issue.’”
Id. at 255
(quoting Ruckelshaus v. Sierra Club, 463 U.S. 680, 688 (1983)).
Here, Plaintiff has prevailed on his primary claim and, thus,
has achieved significant success on the merits.
In the Fourth Circuit, however, the court, in deciding
whether to exercise its discretion to grant attorney's fees,
must also analyze the factors set forth in Quesinberry v. Life
Insurance Company of North America, 987 F.2d 1017, 1028-29 (4th
Cir. 1993), which are “general guidelines” and not a “rigid
test.”
See Williams v. Metro. Life Ins. Co., 609 F.3d 622, 635
(4th Cir. 2010) (noting the continued viability of the
Quesinberry approach after Hardt).
These factors are: “(1)
[the] degree of opposing parties' culpability or bad faith;
(2)[the] ability of opposing parties to satisfy an award of
attorneys' fees; (3) whether an award of attorneys' fees against
the opposing parties would deter other persons acting under
similar circumstances; (4) whether the parties requesting
34
attorneys' fees sought to benefit all participants and
beneficiaries of an ERISA plan or to resolve a significant legal
question regarding ERISA itself; and (5) the relative merits of
the parties' positions.”
Id. (quoting Quesinberry, 987 F.2d at
1029).
The Court finds Plaintiff’s entitlement to fees a close
question.
As to the first factor, United of Omaha’s culpability
or bad faith, the Court disagrees with Plaintiff’s assertion
that United of Omaha improperly withheld Reeder’s medical review
during the administrative process.
On the other hand, United of
Omaha’s decision, in the first instance, to assign the review to
an individual who is not a forensic specialist and is one with
doubtful subjectivity was questionable, at best.
Furthermore,
the Court finds somewhat disingenuous United of Omaha’s attempt
to represent at this stage of the proceedings that it had denied
coverage because Ferguson’s drowning was “foreseeable.”
This
factor weighs slightly in favor of awarding fees.
As to the second factor, there is no dispute that United of
Omaha has the ability to satisfy the award.
As to the third factor, both sides acknowledge that this
factor hinges on the first factor, in that, unless there is a
finding of some culpability or bad faith, there is no conduct to
be deterred.
Hopefully, the award of fees in this case would
encourage United of Omaha to select a more appropriate medical
35
reviewer in a case of this sort and to refrain from injecting
post-hoc justifications for its determination when those
determinations are challenged in court.
The Court finds that the fourth factor tips in neither
direction.
Plaintiff brought this action primarily to obtain
benefits for himself and his sister and not all plan
participants.
While there may be some incidental benefit to
other participants, this was not the goal of this litigation.
The final factor, the relative merits, ultimately weighs in
favor of Plaintiff, but not unconditionally.
While the Court
found merit in Plaintiff’s arguments regarding the
interpretation of the Policy, Plaintiff made some spurious
arguments on some other issues.
Most notably, Plaintiff, in his
motion, appeared to fault United of Omaha for not conducting an
autopsy as part of their benefit determination.
2, 18.
ECF No. 23 at
Defendants appropriately responded to that argument by
noting that Ferguson died on October 1, 2010, and the claim for
benefits was not submitted until October 19, 2010.
Defendants
opined that to suggest that United of Omaha was obligated to
exhume the body to conduct an autopsy is “not only unreasonable,
but highly outrageous and extremely insulting.”
9.
ECF No. 24 at
Rather than concede the point, Plaintiff retorted that any
argument relying on the fact that an autopsy would require
exhuming the body “should fall on deaf ears” and that Defendants
36
were “utilizing drama for drama’s sake in order to cover for
their purposeful avoidance of acquiring evidence that undermines
their position.”
ECF No. 25 at 6.
While the Court finds this
and other arguments advanced by Plaintiff to be of questionable
merit, the Court believes that this should go not to whether
Plaintiff is entitled to attorney’s fees, but perhaps to the
amount of fees that should be awarded.
On balance, the Court finds that the Quesinberry factors
weigh in favor of the award of fees.
Accordingly, the Court
will instruct Plaintiff to submit a brief accompanied by
affidavits and exhibits in support of a motion for reasonable
attorney’s fees within 14 days.15
That motion can then be
briefed consistent with Local Rule 105.2.
IV. CONCLUSION
For the above stated reasons, the claims against Defendant
ProObject will be dismissed, as will Plaintiff’s claim for
statutory administrative penalties.
Defendants’ motion will be
otherwise denied and Plaintiff’s motion for summary judgment
will be granted.
The Court finds that Plaintiff is entitled to
accidental death benefits under the Policy.
A separate order
will issue.
15
Plaintiff failed to submit a proposed order with his crossmotion for summary judgment. Plaintiff is instructed to also
submit a proposed order with his motion for fees which addresses
the amount of benefits due under the policy and any other issues
related to interest or other recovery.
37
____________/s/___________________
William M. Nickerson
Senior United States District Judge
March 11, 2014
38
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