:: Determining The Burden Of Proof Under Accidental Death Policies

. . “[i]t is a basic rule of insurance law that the insured carries the burden of showing a covered loss has occurred” that entitles the insured to benefits, and that this burden must be met before the burden shifts to the insurer to show that an exclusion applies.

Hancock v. Metro. Life Ins. Co., 2008 U.S. Dist. LEXIS 58259 (D. Utah Aug. 1, 2008)

The nuances that attend defining the complex of circumstances which may be deemed “accidental” have served as a staple defense in the denial of claims under accidental death insurance policies. Though the fact patterns of these cases are frequently interesting (at least compared to our standard fare as readers of ERISA cases), Hancock v. Metro. Life Ins. Co presents the issue with more intrigue than most.

The Facts

Terri Hancock became concerned when she was unable to reach her mother Verla Dean Hancock (V.D. Hancock) by telephone. She went to her mother’s house and found the front door of the house partially open. Entering the home,

. . . she heard one of her mother’s dogs barking behind the closed bathroom door. Hancock opened the bathroom door to discover her mother lying on the bathroom floor with her head under the toilet. V.D. Hancock was dead.

The police were summoned.

Officer Wells was the first on the scene.

Officer Wells arrived first at V.D. Hancock’s home. In his police report, Officer Wells stated that when he found V.D. Hancock, she was lying on the floor with her head under the toilet. Her pants were pulled down and there was what appeared to be feces on the floor and also on her back, staining her shirt. There was a shower chair in the bathroom that had been knocked over and one leg of it was lying across the right side of her face and there was an open storage container that was lying next to her body with misc[ellaneous] items scattered around the floor. There was also a prescription bottle of what was later identified as Oxycontin next to her right hand. It appeared to have fallen out of the storage container.

Detective Frank Johnson also conducted an investigation.

Hancock told Detective Johnson that V.D. Hancock suffered from “chronic pain in her back and legs”; that her mother had become “addicted to pain medication such as Percocet, Oxycontin, Lortab, etc.”; and that “in August 2003, she found [V.D. Hancock] unconscious” due to an “overdose[] on Oxycontin and Lortab.” Hancock stated that she did not know whether the overdose was an attempted suicide or an accidental overdose. Hancock noted that at the time of her mother’s death, her mother had just begun a drug abuse rehabilitation program and had suffered some depression due to her inability to work, her finances, and her health.

The coroner examined the body.

Dr. Todd C. Grey, Utah Chief Medical Examiner, performed an autopsy on V.D. Hancock, determining that there were “no anatomic or toxicological abnormalities sufficient to explain death,” nor any evidence of hemorrhaging in V.D. Hancock’s head or injuries to her neck, face, scalp, or head. In his report of examination, Dr. Grey stated:

This 61[-]year[-old] white female, [V.D.] Hancock, died as a result of undetermined causes. . . . No evidence of natural disease, injury or intoxication sufficient to explain death is found at autopsy. [V.D. Hancock] had a history of prescription narcotic misuse and findings at the scene were highly suggestive of death due to an overdose of Oxycontin. However, toxicologic testing reveals no evidence of excessive amounts of Oxycontin or other intoxicants.

And so, after all the reports were in, the evidence showed no toxicological or anatomic abnormalities. The case of death was, in a word, “undetermined”, and this is what appeared on the death certificate.

Who Goes First?

The plaintiff argued that MetLife should bear the burden of proof in denying accidental death benefits for two reasons.

#1 Hancock contended that MetLife has failed to prove that a Plan exclusion applies and neglected to demonstrate that its benefit denial decision was reasonable.

#2 Regarding the latter alleged failure, Hancock asserted that because a conflict of interest exists and a procedural irregularity occurred, the burden of proof shifted to MetLife to show that its decision was reasonable.

The court disagreed on both counts.

As to the first contention [#1]

MetLife contends, and the record reflects, that it did not invoke a policy exclusion. Hancock does not point the court to any evidence indicating that MetLife invoked a policy exclusion. Instead, Hancock claims that MetLife’s decision to deny benefits constitutes an exclusion in itself. The court does not agree and thinks that such a decision would render exclusion clauses superfluous. Under Hancock’s logic, an insurer would invoke an exclusion any time it denied benefits, consequently eradicating an insured’s burden to prove entitlement to benefits.

And, as to the second [#2], the court found the recent Supreme Court decision in MetLife v. Glenn relevant, stating:

The court also disagrees with Hancock’s contention that the burden of proof shifted to MetLife to prove the reasonableness of its decision because of serious procedural irregularities or because the company had an inherent conflict of interest due to its dual role as insurer and plan administrator. Hancock is correct that in Fought v. Unum Life Insurance Co. of America, 379 F.3d 997 (10th Cir. 2004), the Tenth Circuit Court of Appeals stated that if a plan administrator operates under an “inherent conflict of interest” or “when a serious procedural irregularity exists,” the court decreases the amount of deference given the benefits decision, and “the plan administrator bears the burden of proving the reasonableness of its decision pursuant to this court’s traditional arbitrary and capricious standard.” Id. at 1006. The sliding-scale and burden-shifting approach explained by the court in Fought is, however, uncertain after the Supreme Court’s recent decision in Metropolitan Life Insurance Co. v. Glenn, 128 S. Ct. 2343 (2008).

In any event, the court opined that the case presented no “procedural irregularity” that would invoke the scrutiny suggested by the prior Tenth Circuit precedent.

But the court need not reach the issue because it concludes that MetLife’s failure to hire an independent investigator to determine the cause of V.D. Hancock’s death did not, under the circumstances present here, constitute a serious procedural irregularity.

Here, the Chief Medical Examiner conducted an autopsy and concluded that V.D. Hancock died of “undetermined causes.” Because the medical examiner, an undisputed independent evaluator, did not conclude V.D. Hancock’s death was accidental, and Hancock’s expert suggested only that the potential existed that V.D. Hancock’s death was an accident, the court declines to hold that a serious procedural irregularity occurred in MetLife’s failure to hire its own independent expert.

Note: The district court noted the recent decision of the court that Utah’s prohibition on discretionary clauses is preempted by ERISA. (The Utah prohibition differs from the regulations that have been sustained in other courts.)

Burden Of Proof – The extent of the plaintiff’s burden of proof on the issue of accident can be a perplexing issue. For example, if the insured drowns, but had a history of epilepsy, must the plaintiff prove that the drowning did not occur because of a seizure? See, Hughes v. Standard Life Ins. Co., 139 F. Supp. 490 (D. La. 1956). And, in the Hancock case, MetLife hedged its bet by arguing that the death may have been caused by sleep apnea.

It is possible, of course, to place the burden on the plaintiff to negate all explanations other than an accident. This likely defeats the expectations of insureds when they acquire coverage, and this rule would often substantiate claim denials. Under the First Circuit Wickman approach, so often referred to in this context, the Hancock plaintiff would appear to have the upperhand, but the court did not consider that approach in making its decision. See, Wickman v. Northwestern Nat’l Ins. Co., 908 F.2d 1077, 1088 (1st Cir. 1990).

The cases cited by the district court from the commercial insurance context do not seem appropriate inasmuch as the determination of accident or occurrence in such cases does not turn on the significance and reasonableness of actions by a deceased, but critical, witness to the central question of fact.

Coroner’s Reports – Some states prohibit the use of coroner’s reports as indicative of cause of death in civil proceedings. The rationale, from a Arkansas state court opinion:

Under our statute the coroner’s jury makes an ex parte investigation of supposed crime resulting in homicide for the purpose of aiding in the administration of the criminal laws of the state. Other persons having property interests depending upon the cause of the death are not allowed to participate in the hearing before the coroner’s jury with a view to establish rights by the verdict. While the coroner’s inquest is made on behalf of the state and a record of it is required to be made and kept, it cannot, on any well-grounded principle of American common law, become evidence in another suit as to the cause of the death investigated.

Of course, in ERISA cases, the federal courts are free to determine evidentiary issues without constraint of state law