Losing a loved one to an accidental death can be devastating. That devastation can be compounded further when an insurance company refuses to pay accidental death and dismemberment (AD&D) benefits. A common practice of insurers is to deny AD&D claims based on exclusions contained in the policy, like an intoxication or a self-inflicted injury exclusion. Insurers often attempt to interpret such exclusionary provisions more broadly than allowed for by the policy language and more broadly than the law allows. The Eighth Circuit Court of Appeals recently addressed this issue in Yates v. Symetra Life Insurance Company, — F.4th –, 2023 WL 2174840 (8th Cir. February 23, 2023).

After her husband died of a heroin overdose, Terri Yates, the Plaintiff, made a claim with Symetra Life Insurance Company for accidental death benefits under an ERISA plan. Symetra denied her claim, and she sued. First, the court found that Plaintiff’s suit was not barred because she failed to exhaust administrative remedies under ERISA. A discussion of how and why the court found that Plaintiff was not precluded from suing for failure to exhaust administrative remedies is found in a separate article found on our blog here. Next, the court analyzed Symetra’s denial of Plaintiff’s claim based on an exclusion in the policy which stated that Symetra will not pay for any loss caused by “intentionally self-inflicted injury.”

Symetra’s reasoning in denying Plaintiff’s claim was that her husband had died of a heroin overdose, and because he had intentionally consumed the heroin, his resulting death was therefore also intentional. The court disagreed and found that Symetra’s denial of Plaintiff’s claim was erroneous. First, the court established that because Symetra’s denial was based on an exclusion to coverage, it had the burden of proving that the exclusion applied. Nichols v. Unicare Life & Health Ins. Co., 739 F.3d 1176 (8th Cir. 2014).

The court then identified the issue: whether Plaintiff’s husband’s overdose “injury” “intentionally self-inflicted.” Yates v. Symetra, supra, at 11. The court cited a case in which the decedent had a blood-alcohol level in excess of the legal limit when he died in a motorcycle accident. King v. Hartford Life & Accident Insurance Co., 141 F3d 994 (8th Cir. 2005). In King, the court found that it was unreasonable for Hartford to apply the policy’s “intentionally self-inflicted injury” exclusion because the most natural reading of the exclusion was that it did not include “injuries that were unintended by the [plan] participant, but which were contributed to by alcohol intoxication.” Id. at 1004. The court reasoned that the proper inquiry was not whether drinking alcohol to the point of intoxication was intentionally self-inflicted, but rather, whether the injuries resulting from the motorcycle crash were intentionally self-inflicted. Id. The court found that because the decedent “did not intend to injure himself by driving his motorcycle,” the injuries were not intentionally self-inflicted. Id. Applying this reasoning to Yates, Symetra needed to demonstrate that Plaintiff’s husband not only intentionally used the heroin that caused him to overdose, but also that he intended to cause his own death by using the heroin.

The court discussed Symetra’s argument that the exclusion applied because Plaintiff’s husband “purposely” used heroin. The court reasoned that “just because the act of using an illegal substance was purposeful does not mean that an injury stemming from the act, including a fatal overdose, was too.” Id. (emphasis original)(citing Kovach v. Zurich Am. Ins. Co., 587 F.3d 323, 339 (6th Cir. 2009)). The court acknowledged that “using heroin is undoubtedly risky, much like driving while intoxicated.” Yates, supra¸ at 13. However, the issue the court found to be determinative was that “whether an ‘intentionally self-inflicted injury’ exclusion applies depends on whether the injury in question was indeed intentional.” Id. The court found that “it does not depend on whether the injury was generally foreseeable or even likely, or whether the injury-causing conduct was risky or even reckless.” Id. at 14. Rather, the court found that for such an exclusionary clause to bar Plaintiff from receiving AD&D benefits, Symetra must demonstrate that the decedent in fact intentionally caused his own death. Since Symetra could not demonstrate that, the court found in Plaintiff’s favor.

You may still be entitled to benefits even if an insurer has denied your AD&D claim based on a policy exclusionary provision. If an insurer has denied your claim for AD&D benefits, the experienced life and accidental death insurance claim attorneys at McKennon Law Group PC can assist you to determine whether the insurer has properly applied an exclusion or is improperly invoking exclusionary language to avoid paying you the benefits to which you are entitled.

If an insurer has denied your claim for benefits under an ERISA group accidental death insurance policy, you may be left wondering what to do next, whether to appeal the denial or to sue the insurance company. Often, the prospect of appealing an ERISA claim denial to the same company that denied the claim to begin with can feel like a futile measure that will only delay your ability to recover your benefits. On the other hand, the insurer’s denial letter states that you must appeal the denial before pursuing a claim in court. In Yates v. Symetra Life Insurance Company, — F.4th –, 2023 WL 2174840 (8th Cir. February 23, 2023) the Eighth Circuit Court of Appeals recently found that an ERISA plan participant may file a lawsuit in federal court to recover benefits denied by the insurer without exhausting the insurer’s administrative remedies by first appealing the denial of benefits with the insurer where no such requirement is set forth in the plan documents, even if the insurer’s denial letter in fact describes such a review process.

After her husband died of a heroin overdose, the Plaintiff, Terri Yates, sought accidental death benefits under an ERISA plan insured by Symetra Life Insurance Company. Symetra denied her claim, and Plaintiff sued, without appealing Symetra’s denial. The district court granted summary judgment in the Plaintiff’s favor. Symetra appealed, arguing that the Plaintiff’s suit was barred by her failure to exhaust internal review procedures and that her husband’s death was excluded from coverage. The Eighth Circuit ultimately affirmed the district court’s decision and found for the Plaintiff on the merits. A discussion of how and why the court affirmed the judgment in favor of the Plaintiff by finding an exclusion inapplicable is found in a separate article on our blog here. However, prior to reviewing the merits of the Plaintiff’s claim, the court first analyzed Symetra’s argument that the Plaintiff was precluded from bringing the ERISA suit because she had failed to exhaust her administrative remedies by not appealing Symetra’s denial of benefits before filing suit.

Symetra essentially argued that because its denial letter to the Plaintiff provided that she could request a review of its decision by submitting a written appeal within 60 days of receipt of the letter, and that she had the right to file a civil action following Symetra’s completion of the appeals process, she was therefore required to make such an appeal prior to bringing a legal action under ERISA. Importantly, the district court found that the Employee Benefits Insurance Certificate and a Group Insurance Policy issued to the policyholder (the Plaintiff’s husband’s employer), constituted the “plan documents.” Neither the Certificate nor the Policy mentioned that a claimant had the right, or was required, to make an internal appeal of a denial of benefits before taking legal action. The district court concluded that the Plaintiff was not required to exhaust administrative remedies suing, and Symetra appealed.

The court acknowledged that an ERISA claimant generally must exhaust the administrative remedies required under her plan, except where pursuing such administrative remedies would be futile or there are no administrative remedies to pursue. Symetra took the position that it described the administrative remedies in its denial letter, and therefore the Plaintiff needed to exhaust those remedies before suing. However, the court agreed with the district court’s conclusion that because the written plan documents (i.e., the Certificate and the Policy, but NOT the denial letter) did not mention any appeals process or administrative remedies, Plaintiff was therefore not subject to the requirement of exhausting administrative remedies.

The court provided four pillars supporting its conclusion.

First, the requirement that a claimant must exhaust her administrative remedies before filing an ERISA lawsuit has consistently been premised on those remedies being expressly prescribed in the written plan documents, which did not include Symetra’s denial letter to the Plaintiff. The requirement to exhaust administrative remedies precludes an ERISA lawsuit only if a claimant “fails to pursue and exhaust administrative remedies that are clearly required under a plan.” McKennan v. Meadowvale Dairy Emp. Benefit Plan, 973 F.3d 805, 808 (8th Cir. 2020) (emphasis added). Thus, because the written plan documents did not prescribe such administrative remedies, the fact that the Plaintiff did not appeal Symetra’s denial of her claim did not bar her from suing.

Second, the court noted that “one of ERISA’s central goals is to enable beneficiaries to learn their rights and obligations at any time” by “examining” their written plan documents. Wallace v. Oakwood Healthcare, Inc., 954 F.3d 879, 887 (6th Cir. 2020) (quoting Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 83 (1995). Essentially, a tenet of ERISA is that a plan beneficiary like the Plaintiff should be able to completely understand her rights and obligations, including prior to making a claim, by reading the written plan documents. For Symetra to introduce an appeals requirement only when denying her claim therefore diminishes ERISA’s purpose.

Third, the court emphasized ERISA’s requirement that the terms of a plan be committed to written plan documents, specifically for the purpose discussed above, that a participant or beneficiary can review those documents to “learn her rights and obligations under the plan at any time.” Curtiss-Wright Corp., supra, 514 U.S. at 83. Thus, requiring the Plaintiff to exhaust internal review procedures that she would not be able to find in the plan documents, such as appealing Symetra’s denial of her claim, would mean that the plan documents are unreliable. The court noted that Symetra was essentially asking it to impose a requirement that was not in the contract between the parties, and it declined to do so.

Fourth, the court found that not requiring the Plaintiff to exhaust administrative remedies is consistent with ERISA’s implementing regulations. 29 C.F.R. Section 2560.503-1(a) dictates that a plan’s appeal procedures are reasonable only if it describes those procedures in a summary plan description, which must describe, inter alia, “[t]he procedures governing claims for benefits[,] . . . applicable time limits, and remedies available under the plan for the redress of claims which are denied in whole or in part.” 29 C.F.R. Section 2520.102-3(s). Because Symetra’s written plan documents did not provide for post-denial remedies, they therefore do not satisfy these requirements.

Symetra argued that its denial letter triggered a requirement that the Plaintiff exhaust administrative remedies, but the court found this argument lacking. Symetra cited a previous decision by the court in which it held that exhaustion of administrative remedies is required even when a denial letter does not expressly notify a beneficiary that appeals must be exhausted prior to bringing an ERISA suit. Kinkead v. Se. Bell Corp. Sickness & Accident Disability Benefit Plan, 111 F.3d 67, 69 (8th Cir. 1997). However, the court pointed out that the plan documents in Kinkead “contain[ed] provisions . . . establishing an internal procedure for further review” of denied claims. Id. at 69-70. Kinkead did not address the present situation of whether a beneficiary is required to exhaust non-contractual review procedures that are not included in the written plan documents.

Symetra also cited a case in which the court had rejected the argument that exhaustion was not required where plan contract language suggested that an appeal of a denied claim was “optional rather than mandatory.” Wert v. Liberty Life Assurance Co. of Boston, Inc., 447 F.3d 1060, 1061 (8th Cir. 2006). The court distinguished its decision in Wert, that an exhaustion requirement applies if a beneficiary “has notice of” the administrative remedies made available in the written plan documents, even if the documents “do not explicitly describe” those remedies “as mandatory or as a prerequisite to suit.” Id. at 1063. The vital distinction is that whereas the decision in Wert contemplates a beneficiary having notice of remedies that are included in the plan documents, here Symetra was arguing for such a requirement despite the Plaintiff’s plan documents not mentioning any such remedies.

If your insurance company has denied your ERISA accidental death insurance claim for benefits, you may be required to appeal the decision, but not necessarily; you may be able to immediately file a lawsuit to recover your benefits. The experienced life and accidental death insurance attorneys at McKennon Law Group PC can assist you to determine whether you are required to exhaust your administrative remedies before suing the insurer to recover your benefits.

In this several-part blog series titled The Basics of an ERISA Life, Health, and Disability Insurance Claim, we discuss the basics of an ERISA life, health, accidental death & dismemberment, and disability claims, from navigating a claim to handling a claim denial, through the subsequent appeal and litigation. In Part Eighteen of this series, we discuss misrepresentations about employee benefits. Employee benefit plans are complicated. Every employer offers its own unique set of benefits to its employees, the plan participants. Plan participants naturally develop a wide variety of questions about their benefits. They will seek out the answers to those questions from whatever sources seem natural to them. Naturally, plan participants then rely on this information when making significant life plans. Unfortunately, the information relied upon may not always be correct. If that misinformation harms the employee, then a significant legal battle can arise. The question naturally becomes: What sources of information is an employee legally entitled to rely on?

As an initial matter, certain entities – ERISA fiduciaries – have a fiduciary duty not to provide misinformation to a plan participant. When they provide misinformation to a plan participant, the participant may have a meritorious claim against the ERISA fiduciary for breach of fiduciary duty. See Barker v. Am. Mobil Power Corp., 64 F.3d 1397, 1403 (9th Cir. 1995); In re Unisys Corp. Retiree Medical Benefits ERISA Litigation, 579 F.3d 220 (3d Cir. 2009). ERISA fiduciaries are usually the employer as the plan sponsor and administrator and an insurance company as the claims administrator who exercise discretion in making decisions regarding the plans or the claims under the plan. These entities are legally responsible for managing the employee benefits plan and any claims for benefits made thereunder. If a plan participant sues an ERISA fiduciary for breach of fiduciary duty and is successful at trial, they can often receive the promised benefits regardless of what the plan actually provides. See Warmenhoven v. Netapp, Inc., 13 F.4th 717 (9th Cir. 2021); McCravy v. Metro. Life Ins. Co., 690 F.3d 176, 180 (4th Cir. 2012). The court will use a variety of equitable remedies, including surcharge, equitable estoppel, reformation, and waiver, to award the promised benefits. See id.

Certain sources of information are or may be deemed reliable as a matter of law. Oral representations made over a period of time can be enough to constitute misinformation that breaches a fiduciary duty. Thus, where a plan administrator or claim administrator misrepresents that an insurance policy provides coverage for a certain event or that a death benefit is at a certain amount that conflicts with the plan language, this can constitute a breach of fiduciary duty giving rise to equitable relief. See, e.g., Sullivan-Mestecky v. Verizon Commc’ns, Inc., 961 F.3d 91, 104-05 (2d Cir. 2020) (noting that a series of oral promises over a period of time could give rise to the plan administrator breaching its fiduciary duties by making misrepresentations about the amount of the death benefit of a life insurance policy).

Another source of reliable information is written communications that come directly from the Plan Administrator. Plan administrators usually offer means of contacting them directly about plan benefits. Because of the obligation not to provide misinformation, misinformation from this source can give rise to legal liability and a meritorious breach of fiduciary duty claim. If the plan administrator provides the misinformation orally, and a legal conflict arises, the plan administrator’s employee who provided the misinformation will undoubtedly claim that they actually said something different from what the plan participant remembers. Plan participants should avoid this when possible. If a plan participant seeks information about their benefits, they should attempt to get the answer to their question in writing. If the answer comes via email to a work email address, the plan participant should forward the email to a personal email address in case they lose access to the work email account. In most jurisdictions, receiving misinformation directly from the plan administrator’s representative triggers serious legal repercussions for the plan administrator, who will have breached its fiduciary duties to the plan participant.

Another potential source of information is official employer or insurer Websites. Most employee benefit plans for large employers have some form of online website that the employee logs onto to check on the status of their benefits. The website’s information comes from the plan administrator. If a dispute over the benefits arises, the value of this representation in court is usually strong if it is the website the creates the misinformation. The case law addressing these forms of representations is not fully developed, and a plan participant should contact the plan administrator and receive confirmation of the information from a person.

Even though the above sources of information all involve the plan administrator, many plan participants receive information about employee benefits from different sources, such as their employer’s human resources department. The legal implications of misinformation from an employer depend on the particular employee benefit plan. As noted above, many times, the employer is the plan administrator. When that is the case, the above information likely applies to the employer. However, for some particularly large corporations, the plan administrator may be a different legal entity. Under these circumstances, the employer’s misrepresentations could become more problematic. That entity will usually be a plan fiduciary and if it makes misrepresentations, then it may breach fiduciary duties owed to the plan participant. If it is unclear whether an entity is a fiduciary under ERISA, then plan participant would potentially include a state-law claim for negligent misrepresentations.

The relevant information may also come from the claims administrator. The claims administrator determines when a person is entitled to benefits under the plan. The claims administrator, usually an insurance company, is also an ERISA fiduciary. However, it may not have fiduciary obligations for all aspects of its interactions with the plan participant. See Salyers v. Metro. Life Ins. Co., 871 F.3d 934, 941-42 (9th Cir. 2017). Ultimately, this aspect of the law is extremely complicated. When a claims administrator provides misinformation, this will likely be a breach of fiduciary duty. However, the individual facts will decide whether a breach occurred.

Given the complicated nature of breach of fiduciary duty claims under ERISA, it is important to confer with an ERISA attorney. Consulting with knowledgeable ERISA attorneys, such as those at the McKennon Law Group PC, is critical if you want to receive the benefits that you are entitled to under the applicable law.