McKennon Law Group, Author at McKennon Law Group

We all pay a substantial amount for insurance. If you become disabled, or if a loved one dies accidentally or otherwise, you expect your insurance company to approve your disability claim or accidental death/life insurance claim quickly.

The policy you hold is a promise from your insurer to be there with the coverage its policy promises when coverage is needed. When you pay for a policy, the company is legally obligated to provide the coverage as it is stated in the policy terms. It is also obligated to handle your claim in a reasonable manner and resolve in good faith any claim you make.

If your insurer does not act in good faith, do not allow it to take advantage of you or to continue to act in bad faith when it handles your claim. By law, insurers cannot avoid their obligation to make a payout on a covered claim or to offer a reasonable and legitimate reason for denying the claim.

How Is Bad Faith Defined?

If your insurance company does not take its legal obligations to you seriously by not handling your claim in a reasonable manner, you may have sufficient grounds for a lawsuit alleging insurance bad faith. A simple denial of your claim is not enough. A bad faith lawsuit must be based on an insurance company’s specific acts or failures.

In California, as in most states, insurers have an obligation to handle all claims reasonably and to pay all legitimate claims. But in practical terms, what does this mean? Below are listed some – but not all – of the reasons why an insurance company may be targeted with a lawsuit that claims bad faith:

Failure to investigate or negotiate your claim in good faith;
Failure to share with you important information;
Failure to provide an explanation for a claim’s denial;
Failure to offer a reasonable settlement in a case where the liability is reasonably clear;
Failure to act on a claim within a reasonable time-frame;
Offering a settlement amount that is less than the value of your claim;
Hiring biased experts to review claims;
Failure to conduct an adequate investigation before denying a claim.

Bad faith insurance practices include prolonging a claim investigation needlessly, coercing or intimidating you into taking an insufficient payout amount, or rejecting your claim for a fabricated or disingenuous reason.

Will a Letter to the Insurance Company Help?

Sending the insurance company a letter – or asking your attorney to send a letter – might be enough to generate some action from the company. When an insurance company knows that you have taken the matter to an attorney, the company is much more likely to begin treating you right.

The potential for legal action may compel an insurance company to make a settlement offer that is reasonable, because if you prevail in court with a bad faith claim, the company may have to pay your attorney’s fees and additional damages over and above the original claim amount. In other words, you will have some leverage with an experienced disability, life or accidental death insurance bad faith attorney involved. As can be seen by our success stories, we have had many successes in taking on insurance companies after we have been hired.

How Can You Help Your Bad Faith Case?

If your case goes to court, you and your insurance attorney will have to offer specific instances of an insurance company’s bad faith. You can help your case by making copies of the pertinent insurance documents and copies of any letters or emails to or from the insurance company.

Also, be sure to maintain a record of any conversations with the company. Take notes that include the time, date, and the name and job title of the individual who spoke with you.

If your case goes to court, you and your insurance attorney will have to prove that by denying your claim, the insurance company was not merely making an honest mistake but was acting unreasonably in making its decision. If you can show that the insurer acted with fraud, oppression or malice, punitive damages may be available.

How Will Your Attorney Prove Your Bad Faith Claim?

A California bad faith insurance attorney will ask your insurance company for the documents and records related to your claim and for other documents detailing the company’s procedures and policies.

The insurance adjuster or another representative of the company may be subpoenaed for a deposition or to testify in a court hearing. In certain cases, an insurance claims attorney may ask an insurance expert to make a statement or testify about insurance industry practices and that expert may be able to comment on whether in his or her opinion, the insurer’s actions were unreasonable and/or violated appropriate industry standards. Case law and State insurance statutes and regulations, such as California’s Fair Claims Regulations, will often provide the appropriate reasonable standards that insurers are required to follow.

If the company did not comply with these standards or even its own practices, procedures, and guidelines, a qualified and experienced bad faith insurance claims lawyer will be able to prove these bad faith claims practices, likely leading to success in your bad faith insurance lawsuit.

When Should You Speak to an Insurance Claims Attorney?

How can you find out if you are dealing with bad faith insurance practices? You could send a complaint to the California Department of Insurance, but we found that our clients who have done so have received no real help.

Realistically, you must consult a California bad faith disability, life, and accidental death insurance lawyer to know if you have sufficient grounds for a bad faith lawsuit and to know if the denial of your claim can be overturned. Schedule a consultation as soon as you suspect that you are dealing with insurance bad faith.

As mentioned above, in the State of California, a plaintiff who succeeds with a bad faith lawsuit may recover attorney fees and compensatory damages (including emotional distress damages), in addition to payment of the original claim. Your first consultation with an attorney is free and entails no obligation.

Do Not Be a Victim Twice

If you have made a claim on an insurance policy, you may be at a difficult point in your life. You may have lost a loved one accidentally, or you may have sustained a severe personal injury that disabled you or you may have become sick and needed medical attention for which you expect to be covered. You should not have to be victimized a second time by an insurance company’s bad faith.

As a policyholder, you have the right to be dealt with in good faith by your insurance company.
If you believe you are the victim of an insurer’s bad faith practices, contact McKennon Law Group PC for a free consultation.

What if you file an insurance claim, and instead of simply denying your claim, your insurance company informs you that your policy has been rescinded? The company may be operating in bad faith. You should arrange to discuss the matter at once with a California insurance claims attorney.

In what circumstances may an insurance company legally rescind your insurance policy? If you believe that your insurance claim was legitimate, do you have any legal recourse against the insurance company? Is there still any way for you to receive the payout the company owes you?

If you continue reading this brief discussion of rescinded insurance policies and bad faith insurance practices, these questions will be answered, and you will learn more about your legal rights as an insurance policyholder in California.

What Is “Rescinding” an Insurance Policy?

When an insurance company “rescinds” a policy, it treats the policy as if it never existed. In practical terms, it means the company is no longer obligated to pay claims for health insurance, life insurance, accidental death insurance, long-term disability insurance, or long-term care insurance.

Insurance companies may rescind an insurance policy in order to deny an insurance claim, but rescinding a policy is different from simply denying a claim. Determining that a policy, in effect, never existed compels the insurance company to refund any premiums that you have already paid.

Why Are Insurance Policies Rescinded?

Rescinding a policy can boost an insurance company’s profits. Rescinding policies eliminates policyholders who seek payouts while the company accepts payments from policyholders who are not seeking payouts. This could leave you with no coverage at precisely the time you need it.

By rescinding a policy, the company is claiming that the policy was invalid from the beginning. California insurance companies may rescind a policy if a policyholder made a false statement on the initial policy application, meaning that the policy was based on a “material falsehood.”

The company may claim, for example, that you denied being a smoker or that you failed to list DUI convictions when you completed the application. When a policy is rescinded, the company must send the policyholder a rescission notice and return the premiums or offer to do so.

When You Purchase a Policy, Take All the Time You Need

If you have purchased a life, accidental death, or disability insurance policy, you know how much paperwork is involved, including policy applications, supplemental applications, personal history questionnaires, policy notices, and medical documents.

You will answer dozens of questions when you purchase a policy. Take all the time you need to consider the questions thoughtfully, and get the answers right. Presume that anything you tell an insurance company could be used against you to deny a claim.

California insurance law requires all questions on disability, life or accidental death insurance applications to be clear, specific, and understandable. You can indicate if you are unsure of or cannot remember the answer to a particular health history or other question.

What Are Your Rights If Your Life, Accidental Death, or Disability Policy Is Rescinded?

Your insurance policy cannot be rescinded if the purportedly false statement made on the application was trivial or irrelevant, or if you did not know that you suffered from a latent medical condition, or if you did not understand the significance of your response at the time.

A policy is rarely rescinded unless you have made a claim. If an insurance company unlawfully rescinds your policy to avoid making a payout that the company owes you, that insurance company is operating in bad faith, and you should consult a lawyer about taking legal action.

Typically, a California insurance claims lawyer will write a letter on your behalf to the insurance company and demand a detailed explanation for the rescission of your policy. Simply by having a lawyer on the case, you will compel some insurance companies to reverse course.

How Will an Life, Accidental Death, or Disability Insurance Claims Attorney Handle Your Case?

If a letter from an insurance claims attorney does not change the insurer’s position, you may be able to take legal action against the insurance company for breach of contract and breach of the implied covenant of good faith for attempting to rescind your insurance policy.

When you turn to your insurer for a payout that you need – and you have faithfully paid the premiums – a denial of coverage that uses rescinding the policy as an excuse can be catastrophic, particularly if you have lost a loved one, if you are in poor health, or if you need long-term disability coverage.

Insurance bad faith laws provide that an insurance company cannot rescind a policy merely to get out of its legal obligation to pay a legitimate insurance claim. When an insurance company does not take its obligation to you seriously, you may have sufficient grounds for legal action.

How Can You Know If You Are an Insurance Bad Faith Victim?

You may submit a complaint about your policy’s rescission to the California Department of Insurance, but only a California insurance claims attorney will be able to tell you if the insurance company was operating in bad faith and whether you have grounds for taking legal action.

A California insurance claims lawyer will provide you with a free, no-obligation initial case evaluation. You will be able to receive the detailed, personalized legal advice that you’ll need, and you’ll be able to make a more informed decision about moving forward with a legal action.

Most insurance claims attorneys in California work on a contingency fee basis, which means that you pay no attorney’s fees until and unless the matter is resolved in your favor. In many bad faith cases, the insurance company will also be ordered by the court to pay your attorney’s fees.

When Should You Contact an Insurance Claims Lawyer?

Particularly if you have lost a loved one or if you are recovering from accidental injuries or from a serious illness, the last thing you need is your insurance company dealing with you in bad faith, complicating your life, and making your days even more difficult.

Some insurance companies in California are operated professionally and provide the services they are supposed to provide, but there are still many insurance companies that place profits above the legitimate claims of their policyholders.

If your insurance policy has been wrongfully rescinded, or if your life, accident, or disability insurance claim has been unreasonably denied, you should fight for the coverage you are owed. Contact an insurance claims lawyer at once to review your options or to begin the legal process.
If you believe you are the victim of an insurer’s bad faith practices, contact McKennon Law Group PC for a free consultation.

You file a claim as the beneficiary of a life insurance policy, which the insurance company denies. What are your rights in this situation? What legal recourse is available to you? First, you should immediately schedule a consultation with a California life insurance claims attorney.

A beneficiary who faithfully pays life insurance premiums for years has a right to expect a full payout. The death of a loved one can cause financial difficulty, and rejection of a life insurance claim can be utterly devastating.

If you are a life insurance beneficiary and your claim has been denied, a California life insurance claims lawyer can determine what legal claims you may have against the insurance company.

Retaining a lawyer allows you to negotiate a settlement with the insurance company, or if it refuses to pay a reasonable settlement amount, to sue it and ask a court to order the payment of your claim.

What Happens When A Life Insurance Claim is Denied?

If you are a beneficiary, the life insurance company may notify you of a denial by letter or phone. A letter from the insurance company may explain a denial by quoting policy language and listing documents it reviewed in the decision-making process.

If the insurance company calls to notify you over the phone that it has denied your claim, request written notification of the denial indicating the date the decision was made and reasons for denial, and ask whether you can appeal the decision. A written decision on the denial of your life insurance claim is required by law.

What Reasons Are Given for Claim Denials?

The reasons an insurance company might give for denying a life insurance claim include but are not limited to:

The policy lapsed or was canceled due to a missed payment.
There was a material misrepresentation of fact on the life insurance application.
The policy was provided through an employer, and coverage was terminated when the employment ended or the employer switched to a different insurance provider.
The policy was for accidental death only, and the death was not accidental.
An exclusion in the policy excludes coverage.

If Your Claim is Denied, Follow These Steps

When an insurance company denies a claim, it is required to send the claimant a letter spelling out in detail the specific reasons for the denial. However, life insurance companies often send denial letters that provide only vague reasons, or none at all, for the denial.

If you receive such a letter, contact the company and request a written list of each specific reason for the denial. Also, ask how to appeal the decision. You may need to gather documents such as medical records, the autopsy report, or receipts for premium payments.

How Will an Insurance Claims Lawyer Handle Your Case?

The next step is contacting a highly qualified life insurance attorney who will review the policy, the stated reasons for denial, and any other pertinent documents.

The attorney will discuss with you how the law applies to your case and will explain your options, which may include appealing the denial decision and/or suing the insurance company. However, many life insurance policies and Employee Retirement Income Security Act of 1974 (ERISA)-governed life insurance policies require at least one administrative appeal before an insured or his/her designated beneficiary may file a lawsuit.

For an administrative appeal, your lawyer will present a case based on the facts and supported by the law. Even if the insurance company upholds the denial, the administrative appeal provides an opportunity for you and your lawyer to begin preparing your case for litigation.

Let an Insurance Claims Lawyer Help You Fight Back

Many insurance companies examine life insurance claims with the intent of paying as little as possible on claims. While some deaths genuinely warrant suspicion, many do not and a significant portion of claims made are valid. If the insurance company acts in bad faith or wrongly delays or denies benefits, the right life insurance lawyer can help.

A life insurance claims lawyer can help you avoid being taken advantage of by a life insurance company. Assessing your insurance situation accurately while you are grieving a loved one’s death can be difficult, and the right lawyer will provide the candid advice and insights you need.

Life insurance claim denial cases are often resolved quickly when your lawyer presents the insurance company with the right documents, evidence and applicable laws. A well-constructed appeal letter also informs the company that you are serious and willing to litigate your claim.

What About Employer-Sponsored Life Insurance?

ERISA is the federal law that regulates life insurance policies provided through employers, and these cases are handled by U.S. District Courts in the federal court system. If the policy you made a claim on was provided through the decedent’s non-government employer, select a lawyer with a record of success handling ERISA claims.

However, if the life insurance policy was not purchased through an employer, a lawsuit against the insurance company will be handled by the state court system and favorable state law will apply. California is especially favorable to life insurance claimants.

The ERISA statutes provide guidelines for how ERISA cases are handled. For example, when you sue under ERISA, your damages may be limited to the amount of your claim, pre-judgment interest and attorney’s fees, and will not include bad faith or punitive damages. Your case will be heard by a federal judge as opposed to a jury.

What Is Insurance Bad Faith?

If the life insurance company mishandles your claim, intentionally or negligently, it may be held accountable for acting in bad faith. Bad faith allegations arise from an insurance company’s specific acts or failures to act. Insurance bad faith includes but is not limited to:

Delaying an investigation for no apparent reason and delaying payment of the life insurance claim.
Denying a life insurance claim for clearly false or fabricated reasons.
Denying a life insurance claim based on an inadequate investigation.
Tricking or intimidating a claimant to take a settlement offer for less than the life insurance claim is worth.

Bringing the Matter to Its Best Possible Conclusion

Your life insurance lawyer may ask the insurance company to produce all documents it has that are pertinent to your claim, and may depose or subpoena a representative of the company.

Your life insurance claims lawyer may also ask an insurance industry expert to make a statement or testify on your behalf regarding standard life insurance procedures and practices. The right attorney will do what it takes to bring the matter to its best possible conclusion.

If your legitimate life insurance claim has been wrongly denied or delayed because an insurance company is acting in bad faith or is simply trying to avoid paying a claim, discuss your claim – at once – with a California life insurance claims lawyer who will help you seek justice.

If you believe you are the victim of an insurer’s bad faith practices, contact McKennon Law Group PC for a free consultation.

Private sector, employer-sponsored insurance plans are regulated by the Employee Retirement Income Security Act of 1974 – ERISA. ERISA is the federal law that establishes the minimum standards for group insurance plans that are offered through private-sector employers. Should your claim for ERISA disability benefits be denied, you will need to have a California ERISA claims attorney challenge that denial on your behalf.

However, under ERISA, before you may bring a lawsuit against an insurance company for denying your claim, you are required to pursue one or more “administrative” appeals through the company. If the appeals fail, only then may you bring a lawsuit challenging the claim denial.

If your own ERISA life, health or disability insurance claim has been denied, and if your administrative appeal does not succeed, what happens when you file a lawsuit to overturn the denial and to obtain your disability insurance benefits?

As we discuss below, there are different review standards used by the courts in these cases, and you will also learn where to turn for the legal help you may need if your own ERISA life, health or disability claim is rejected.

What Is a Standard of Review?

When a lawsuit against an employer or insurance company for denying an ERISA life, health or disability claim gets to court, there is no jury, and even if you can convince the judge that the insurance company was wrong, in some states, your lawsuit still may not prevail – because of the “standard of review.”

Two standards of review may be used by a court in these cases: the “de novo” standard and the “abuse-of-discretion” standard. A court will use one of these review standards when it hears your lawsuit:

To succeed with a lawsuit in a court that uses the abuse-of-discretion review standard, a judge must determine that the insurer was wrong to deny your claim, and the judge also must determine that the company abused its discretion by denying your claim.
To succeed with a lawsuit in a court that uses the de novo standard, the judge, reviewing the administrative record with “fresh eyes,” essentially determines if the insurance company was right or wrong to deny the claim for disability insurance benefits.

In other words, to win under the abuse-of-discretion standard of review, the judge must find that the insurance company’s denial of your life, health or disability claim was so unreasonable that it constituted an abuse of the company’s discretion. This standard of review gives a decided advantage to employers or insurers who deny life, health or disability claims.

But under the de novo review standard, a judge simply decides if the company was right or wrong to deny your claim. This standard of review gives neither party any advantage going into the courtroom. But, a life, health or disability claimant always has the burden of proof.

Why Do Insurance Companies Prefer the Abuse-of-Discretion Standard?

Under the abuse-of-discretion review standard, a court must agree with the employer’s or the insurance company’s denial of your disability claim and its denial of your administrative appeal – unless the company actually “abused” its discretion when it rejected your claim or your appeal.

In recent years, fewer states are allowing insurance companies to hide behind the abuse-of-discretion standard. California and other states now have laws that require courts to use only the de novo standard of review.

If you are seeking ERISA disability or life insurance benefits in California, and if your claim was denied and your appeal also failed, you will in most instances receive a de novo review of your claim if you and your attorney file a lawsuit against your employer or insurance company.

What Does the De Novo Standard Mean?

Even under a de novo review standard, if you have a California life, health or disability ERISA claim, you and your California ERISA claims lawyer still must prove that you are entitled to the ERISA life, health or disability insurance benefits you were denied. The de novo standard, however, lets the court make its determination more fairly and independently than if the abuse-of-discretion review standard applied.

In other words, under a de novo review, the court may consider both the legal and the factual issues about your entitlement to life, health or disability insurance benefits, and the court is not required to give any deference to the plan administrator’s or insurance company’s decision to deny benefits.

This all means that states that have required a de novo review through legislation, such as California, allow courts to make their own decisions in these cases, thus allowing the courts to substitute their own discretion rather than giving deference to the decision of an insurance company or plan administrator who have obvious biases toward denying life, health or disability insurance claims that negatively affect their financial interest.

What is the “Default” Standard of Review and What Standard is Now Used in Most Courts?

The de novo standard of review is the “default” national standard, and it has been since 1989, when the United States Supreme Court held (in Firestone Tire & Rubber Co. v. Bruch) that, by default, claimants are entitled to de novo reviews of ERISA life, health or disability insurance benefit denials.

However, the court also held that the abuse-of-discretion standard may apply if the language of the ERISA-governed plan unambiguously grants the plan administrator or insurance company full “discretionary authority” to determine benefits or to fully interpret the plan’s terms and conditions.

How Does the De Novo Standard Benefit California Consumers?

As explained above, California law prohibits the inclusion of discretionary authority clauses in life, health, and disability plans. The effect of that prohibition is to require California courts to use only the de novo standard of review in all cases that involve fully-insured plans.

Thus, in the words of the Ninth Circuit Court of Appeals (in Abatie v. Alta Health Life Insurance, 2006), the court “must conduct an independent, thorough analysis of the entire administrative record” and “evaluate the persuasiveness of conflicting testimony.”

In fact, to conduct an adequate de novo review, the court may take additional evidence into account by allowing the parties to augment the administrative record to evaluate the credibility of medical opinions or to hear claims that the medical reports in the case are inaccurate. For example, if a disability claimant received a favorable disability opinion from Social Security Administration, courts will typically allow disability claimants to augment the record to include them.

When Do You Need an ERISA Attorney’s Advice and Services?

Would you go to a knee surgeon if you had cancer? Of course not. You need to consult with an experienced ERISA attorney who knows ERISA life, health or disability insurance inside and out. A workers’ comp or personal injury attorney will almost certainly not be familiar with ERISA. You must be represented by a California ERISA life, health or disability insurance claims attorney who has considerable experience advocating for clients who are seeking ERISA insurance benefits.

If you are applying for ERISA life, health or disability insurance benefits – or if your claim has been rejected – you should have the specific and personalized advice that only a lawyer who is familiar with ERISA can provide.

ERISA lawyers usually provide your initial legal consultation at no cost and with no obligation. Your first consultation is your opportunity to obtain the personalized advice you need and to learn how the law applies to your own case and circumstances.

If you are disabled and you are applying for ERISA life, health or disability insurance benefits, or if your claim has been denied, act now. To initiate legal action – or if you need to learn more – contact California ERISA claims lawyers McKennon Law Group PC as quickly as possible.

When a VGLI death benefit is denied or delayed, it can be increasingly frustrating to try and figure out why. That’s why at McKennon Law Group, our lawyers work hard to represent beneficiaries who are unable to access benefit money that they rightfully deserve. Read on to learn more about what you can do if your VGLI death benefits were denied or delayed, and contact our law firm right away if you have questions or need help.

What Is VGLI?

VGLI stands for Veterans Group Life Insurance, life insurance policies that are designed to protect United States military veterans and to give financial security and peace of mind to their beneficiaries and loved ones after the veterans have passed away. These policies are technically contracts between the veteran, who is the insured party, and the insurer. As with any life insurance policy, the VGLI policies designate beneficiaries who are entitled to receive the money from the policy when the veteran has passed away– as long as the conditions of the veteran’s passing does not break the contract or conditions of the insurance policy.

Sometimes, however, insurers delay in paying out these policies, or deny them altogether. Read on to learn more about VGLI benefits and what you can do if they were denied or delayed. If you are experiencing a situation where your benefits are being denied, our law firm is here to help you get through it.

What Are Some Common Reasons Why VGLI Benefits Can Be Denied?

Before we break down many reasons why these benefits can be denied, it is important to realize that many times denied claims are illegitimate. Any time a life insurance claim is denied, whether it is a veteran’s life insurance policy or a standard one, you should always hire a lawyer so that they can thoroughly examine this denial or the delay. Always remember that claim denials can often be overturned or appealed, but it can be difficult to do so without the help of a lawyer.

Commonly, lawyers will see benefits denial due to misrepresentation on application. If there is missing information on your application for Veteran’s life insurance coverage, or if some of the information you supplied is incorrect on purpose, the claim may be denied. Sometimes, VGLI claims can be delayed for quite some time if there are insufficient supporting documents provided with the application. If there are any disputes with your application or the conditions of the insurance policy, this can significantly affect how long it takes to receive your VGLI death benefits.

In other cases reasons for denial are much more simple. Maybe the insurer is claiming that the veterans life insurance policy was canceled prior to the veteran passing away. Sometimes denials can be chalked up to simple accidents, either on the insurer’s behalf of the insured.

We have also seen some families fail to convert SGLI benefits (Servicemembers Group Life Insurance) To VGLI once a service member gets their veteran status. If the insurance company perhaps approved SGLI coverage, but then denied VGLI coverage, it is possible that this claim was wrongfully denied.

How Can A Lawyer Help Me With A Denied Or Delayed VGLI Death Benefit Claim?

Our attorneys are skilled in helping people just like you recover your wrongfully denied or delayed VGLI payout. Our life insurance attorneys understand how frustrating it could be to be denied the claim that you rightfully deserve. Our attorneys are skilled, hard-working and compassionate professionals and will get you the resources you need to get to the bottom of this. We have extensive experience appealing unfairly denied claims and looking into reasons why the VGLI claim could be delayed on your behalf.

Additionally, we can settle any disputes that arise regarding the distribution of money to beneficiaries, including handling firsthand any litigation that arises when beneficiaries are receiving their money. And, to mitigate the risk of a denied or delayed claim, we can even help our clients through the process of submitting the VGLI claim before they even submit it.

Schedule A Free, No Obligation Consultation With Our VGLI Lawyers Today

If your VGLI death benefits were delayed or denied, contact our lawyers today for a free consultation of your situation. We can help you appeal a wrongful denial, or handle all communications with the insurer to figure out why your claim is being denied. Dealing with the insurance company all on your own can be a daunting process, so we aim to make the experience as simple and stress free for you as possible.

If you have life insurance providing for Accidental Death and Dismemberment (AD&D) benefits, your policy includes various exclusions which, if any apply, may allow the insurer to avoid paying you benefits. For example, an insurer may refuse to pay benefits if the person covered under the policy was killed or dismembered while committing a felony. Or, an insurer may refuse to pay benefits if the person died in an accident while intoxicated based on the policy’s intoxication exclusion. Naturally, some exclusions will apply such that an insurer will not pay benefits. The Southern District of California has provided some guidance to Californians relating to exclusions in accidental death cases. Ciberay v. L-3 Commc’ns Corp. Master Life & Acc. Death & Dismemberment Ins. Plans, 2013 WL 2481539 (S.D. Cal. 2013).

Mr. Ciberay was carrying some dishes through his home when he fell down a flight of stairs and broke his pelvis. He was highly intoxicated at the time – his blood alcohol content (BAC) was .422%, over five times the legal limit for driving. He had a history of chronic alcohol dependence. Mr. Ciberay did not undergo any surgical procedures, but stayed in the hospital following his fall. On the third day in the hospital, he developed a high fever, and the doctors determined that he had bacterial infections that had stopped responding to antibiotic treatment. On his ninth day in the hospital, he died. The medical examiner’s report listed the cause of death as complications following pelvic fractures, with other significant conditions of hypertensive cardiovascular disease, alcohol abuse, obesity, and diabetes mellitus. The manner of death was characterized as an “accident.”

The Plaintiff, Mrs. Ciberay, submitted a claim under the ERISA-governed AD&D policy, which was denied based on an exclusion stating that the policy “does not cover any loss caused in whole or in part by, or resulting in whole or in part from the following … (5) the Insured Person being under the influence of drugs or intoxicants, unless taken under the advice of a Physician.” The claims administrator, Chartis, sent Mrs. Ciberay a denial letter which stated it had determined Mr. Ciberay’s death “was caused in whole or in part by, or resulting in whole or in part from [Mr. Ciberay] being under the influence of intoxicants.”

To support its denial, Chartis cited the report provided by a forensic pathologist it had hired, which stated:

In essence, Mr. Ciberay came to medical attention because, while he was intoxicated, he fell down the stairs and fractured his pelvis.

The pre-hospital factors that played a role in Mr. Ciberay’s death were pelvic fractures from the fall, acute alcohol intoxication, chronic alcoholism, diabetes, and hypertension. Complicating factors that developed in the hospital were aspiration pneumonia, small bowel obstruction, and renal failure (of note, his creatinine already appeared slightly elevated at admission). Based on the echocardiogram, it appears that the complication most closely linked to causing his death was a massive pulmonary embolism.

I would agree with the amended death certificate that the complications of the pelvic fractures from the fall were the direct cause of Mr. Ciberay’s death. [T]he apparent presence of a massive pulmonary embolism would most likely have been a result of the decreased mobility that occurred as a result of the fractures. Mr. Ciberay’s alcoholism was clearly a very significant factor in causing his death. His very high blood alcohol level at the time of admission would have to be regarded as playing a role in causing his fall. His chronic alcoholism very clearly and significantly complicated the medical management of his fractures – so much so that his discharge/death summary stated, “most of his admission was for alcohol withdrawal concerns.”

Mrs. Ciberay sued Chartis, arguing that Chartis abused its discretion because it relied on an unenforceable exclusion and ignored controlling law, and Mr. Ciberay’s intoxication at the time of his fall was not the cause of his death nine days later. Because, with fully insured plans, California statutes governing insurance are not preempted by ERISA, the court applied California Insurance Code Sections 10369.1 through 10369.12, which apply to AD&D claims. Section 10369.1 provides in relevant part:

No disability policy delivered or issued for delivery to any person in this State shall contain provisions respecting the matters set forth in Sections 10369.2 to 10369.12, inclusive, unless such provisions are in the words in which the same appear in such sections; provided however, that the insurer mar, at its option, use in lieu of any such provision a corresponding provision of different working approved by the commissioner, which is not less favorable in any respect to the insured or the beneficiary. (Emphasis added.)

The court explained that Section 10369.12 is one of eleven standard provisions that must be directly inserted into insurance policies delivered in California unless the insurer gets approval from California’s insurance commissioner to use alternate, though not less favorable, wording. The court then stated that Section 10369.12, the intoxication exclusion, must supplant the Policy’s intoxication exclusion language, which provides:

Intoxicants and controlled substances: The insurer shall not be liable for any loss sustained or contracted in consequence of the insured’s being intoxicated or under the influence of any controlled substance unless administered on the advice of a physician. (Emphasis added.)

Applying Section 10369.1, the Court concluded the language of Section 10369.12 differs from the Policy’s intoxication exclusion because, while Section 10369.12 excludes “any loss sustained or contracted in consequence of the insured’s being intoxicated,” the Policy excludes “any loss caused in whole or in part by, or resulting in whole or in part from, […] the Insured Person being under the influence of drugs or intoxicants.”

In analyzing whether the Policy language was less favorable than the statutory language, the court stated:

A loss that is caused/resulting “in whole or in part” from the insured’s being intoxicated is more expansive than a loss that is “in consequence of” the insured’s being intoxicated. Accordingly, under the Policy’s language, Defendant is able to deny more claims than it would be able to under the statutory language.

Importantly, the court held that “This conclusion alone dictates a finding that Defendant abused its discretion by failing to consider the appropriate standard in considering Plaintiff’s claim.”

The court went on to analyze how to interpret Section 10369.12’s “in consequence of” language and relied on California law to interpret this statutory language, Olson v. American Bankers Ins. Co., 30 Cal.App.4th. 816. 828 (1994), stating:

The [Olson] trial court instructed the jury that the statutory language of Section 10369.12 applied and that it should interpret the term “in consequence of” to mean “the proximate cause.” The California Court of Appeal approved the trial court’s interpretation. [ ] Thus, in applying the language of Section 10369.12, the Court will interpret the “in consequence of” term to require the insured’s intoxication to be the “efficient proximate cause” of the loss in order for the loss. to be excluded.

The court then cited Sabella v. Wisler, 59 Cal.2d 21 (1963), stating that:

The California Supreme Court has explained that the “efficient proximate cause” is the cause “that sets the others in motion.” It is the “cause to which the loss is to be attributed, though the other causes may follow it, and operate more immediately in producing the disaster.” Thus, “where there is a concurrence of different causes, the efficient cause – the one that sets the other in motion – is the cause to which the loss is to be attributed, though the other causes may follow it, and operate more immediately in producing the disaster.

The court also referred to Garvey v. State Farm Fire & Casualty Co., 48 Cal.3d 395, 257 Cal.Rptr. 292, 770 P.2d 704 (1989), stating that “[s]till, ‘the fact that an excluded risk contributed to the loss would not preclude coverage if such a risk was a remote cause of the loss.’” The court also looked to other federal courts in its causation analysis, and stated:

Other federal courts have interpreted policy exclusions to require proof of a causative connection between an insured’s excluded state (e.g., intoxication, illness, etc.) and the insured’s loss.

The court cited multiple United States Courts of Appeals cases: First, in Hastie v. J.C. Penney Life Insurance Company, 115 F.3d 895 (11th Cir. 1997), the Eleventh Circuit rejected the insurer’s argument that the insured’s status as intoxicated triggered the relevant exclusion and required some proof of a causal connection between the insured’s intoxication and his death. Second, the court cited to Kellogg, supra. The Ciberay court noted that the Kellogg court relied on Vickers v. Boston Mutual Life Insurance Co., 135 F.3d 179 (1st Cir. 1998), in which the insured had a heart attack while driving, crashed into a tree, and died. The First Circuit held that while the heart attack caused the crash, the crash was the sole cause of death, and the illness exclusion thus did not apply. Finally, the court cited Johnson v. Life Investors’ Insurance Co., 98 Fed. Appx. 814 (10th Cir. 2004), in which the insured, who had muscular dystrophy and a history of falls, fell down stairs, broke his neck, and was taken to the hospital, where he later developed pneumonia and died. While the immediate cause of his death was “pneumonia due to, or as a consequence of, a cervical spine fracture, and the underlying cause of death [w]as myotonic dystrophy,” the Tenth Circuit held that his death was undisputedly caused by a fall, and it was irrelevant under the policy terms whether the fall was caused by the myotonic dystrophy.

In analyzing the intoxication exclusion, the court reasoned:

[T]he record contains insufficient evidence for Defendant to have reasonably concluded that Mr. Ciberay’s death was “in consequence” of his intoxication. In the first instance, there is insufficient evidence to reasonably conclude that Mr. Ciberay’s intoxication caused his fall. But, even assuming there was sufficient evidence to reach that conclusion, Mr. Ciberay’s intoxication was too remote from his death to reasonably conclude his intoxication was the efficient proximate cause of his death.

Mr. Ciberay very likely died of a pulmonary embolism. The pulmonary embolism was very likely due to Mr. Ciberay’s decreased mobility. Mr. Ciberay’s decreased mobility was due to his pelvic fractures. Mr. Ciberay’s pelvic fractures were due to his fall. And while one may argue, as Defendant does here, that Mr. Ciberay’s intoxication was the efficient proximate cause of his death because it began the chain of events leading to his death, there is simply insufficient evidence to reasonably conclude Mr. Ciberay’s intoxication caused him to fall.

Other than a generic list of the typical effects associated with a blood alcohol level similar to that of Mr. Ciberay’s at the time of his fall – which, importantly, appears to be entirely contradicted by Mr. Ciberay’s activity before falling and by his disposition when paramedics arrived [ ] – one may only speculate as to what actually caused Mr. Ciberay to fall. (Emphasis added).

The court ultimately concluded that “Defendant could not have reasonably decided if Mr. Ciberay’s intoxication was the efficient proximate cause of his death.”

The upshot of the Ciberay holding is that where an insurer wants to deny a claim based on a policy exclusion in California, the language of the exclusion in the policy must be at least as favorable to the insured as the language in the corresponding California Insurance Code section, otherwise the Code language supplants the policy language. Whereas insurers could previously use extremely broad language in their policies to justify applying exclusions, under Ciberay and other later cases, policy exclusionary language in California will be construed only as broadly as the Code language. Therefore, insurers are held to demonstrating an actual and substantial causal connection between the excluded condition and the loss. Since insurers know they must connect the exclusion to the loss to legitimately apply the exclusion, we would hope that fewer claims will be denied based on overbroad exclusionary language in the first instance. However, we continue to find that insurers are applying their own very broadly worded exclusions and not applying the applicable California statutory language. This is why it is important to contact the highly experienced California accidental death attorneys at McKennon Law Group PC if you have a denied AD&D claim.