McKennon Law Group, Author at McKennon Law Group

If an insured member of your family dies accidentally and you make an accidental death insurance claim as a beneficiary, the insurance company may require proof that the death was accidental before paying the claim. If that happens, you should immediately consult with a California insurance claims attorney.

Accidental death and dismemberment (AD&D or accidental death) coverage may be purchased as a stand-alone policy or as a rider to a life insurance policy (although usually, you must specifically request accidental death coverage when you purchase the policy). These policies are often issued through employers, typically as a group policy.

In our practice, we get the following questions: “Should I have accidental death and dismemberment coverage?” “How is accidental death defined by most life insurance companies?” “How does coverage for accidental death insurance work?”

Keep reading for the answers you may need about accidental death and dismemberment coverage and claims, and you will also learn what steps to take – and where to get help – if an insurer denies your accidental death claim.

How Does AD&D Coverage Work?

Accidental deaths happen in every imaginable scenario, but most are caused by car and bike accidents, falling down stairs or in the home, or similar kinds of occurrences.

Most life insurance policies cover accidental deaths along with deaths from natural causes. But accidental death coverage offers additional advantages to a beneficiary when an insured’s death is accidental because it will typically pay a large death benefit if a death was caused by an accident and it was not caused or contributed to by another cause, such as a medical condition, alcohol, drugs, etc.

Suppose a life insurance policy provides $250,000 of coverage, and you add an accidental death and dismemberment rider that pays a $500,000 benefit for accidental death. If the insured’s death is the result of a heart attack, stroke, or COVID-19, for example, the beneficiary will receive only the $250,000 payout.

Because such a death is deemed “natural” and does not meet the definition of an “accident,” the company will not pay the $500,000 accidental death benefit. However, suppose that the insured suffers a heart attack while driving and runs into a tree, resulting in death. Depending on the policy language and the jurisdiction you are in, such a claim may or may not be covered.

What Is an Accidental Death?

An accidental death is an unnatural death caused by an unintentional and/or unforeseen event, such as a slip and fall, traffic collision, or accidental overdose prescription medication or poisoning. Accidental deaths are distinguished from death by natural causes and from intentional homicides and suicide.

Life insurance companies define accidental death very narrowly. Accidental death insurance does not cover death resulting solely from illness or other natural causes. But some policies cover deaths that result partially from illness or natural causes, if the death was caused by an accident in some manner. Most accidental death policies place considerable limits on what types of accidents are covered.

Some accidental death policies do not cover deaths where the decedent was intoxicated at the time of death, the decedent’s own gross negligence caused death, or the death was caused in whole or part by a medical condition or treatment, even if a medical examiner, a coroner, or a police officer determined the death to be accidental.

For example, if the decedent had a stroke while driving and died in a traffic accident, the life insurance company may deny an accidental death claim by determining that the stroke, rather than the traffic collision, was the cause of or contributing factor in death.

Accidental death and dismemberment coverage also usually excludes suicide, war, criminal activities, and professional athletic injuries. Any dangerous activity, such as auto racing or skydiving, may also be excluded.

How Are Accidental Deaths Investigated?

When an accidental death claim is filed, the life insurance company’s claims department opens an investigation. The insurer typically reviews the death certificate, any medical examiners or coroner’s reports, accident/police reports, and the decedent’s health records.

While a coroner’s report or death certificate may describe a car accident or slip-and-fall fatality as accidental, this is not binding on the insurer, which may determine that the accidental death policy does not cover the death because the coroner’s report or death certificate may also mention that a medical condition also contributed to the accident. The denial of an accidental death claim is often linked to a decedent’s pre-existing medical condition.

What Can You Do If Your AD&D Claim Is Denied?

It may be impossible to prove whether a past event, a pre-existing medical condition, or an accident itself caused death. Many life insurance companies exploit that impossibility to deny accidental death benefit claims. If a life insurance company rejects your accidental death claim, schedule a consultation with a California accidental death claims attorney to discuss your rights and options.

Insurance companies commonly deny accidental death claims by taking the position that there is inadequate evidence that a decedent’s death was “accidental.” A good and experienced California accidental death claims lawyer will obtain witness statements, hire necessary experts, conduct appropriate legal research, review the evidence, and either present a well-prepared appeal to the insurer or file a lawsuit against the insurer.

How Will Your Case Be Handled?

If the accidental death coverage was purchased directly from a life insurance company without employer involvement, and your accidental death claim is denied, the state law in the governing jurisdiction will control what law applies to the accidental death claim, and will be important if you decide to sue the insurance company.

However, if the accidental death coverage was obtained through an employer, it is likely governed by the Employee Retirement Income Security Act of 1974 (ERISA), and you will be required to pursue an administrative appeal before suing the insurance company.

If that administrative appeal fails, a California accidental death claims attorney will file your lawsuit in the United States District Court, as the federal courts have jurisdiction in most cases that involve an employer-sponsored insurance plan.

At your administrative appeal or in a federal or state court, the right California accidental death claims lawyer will present the best possible evidence that the death was in fact accidental, and that the beneficiary is therefore entitled to the full accidental death payout.

How Can the Right Attorney Help You?

Even before submitting an accidental death claim to an insurance company, an California accidental death claims attorney can help you. Let an experienced attorney conduct an investigation as discussed above and prepare your claim or appeal of a denial of a claim to submit to the insurance company.

When your claims attorney prepares an accidental death claim, he can investigate the facts surrounding the decedent’s death, anticipate the reasons the insurance company may deny the claim, and address those reasons, all before submitting the appeal. If the appeal is not needed or if it is denied, an experienced accidental death insurance lawyer will file a lawsuit on your behalf.

How Are Most Insurance Claim Disputes Resolved?

The right accidental death claims lawyer can show the insurance company that the claim has merit and possibly negotiate an acceptable out-of-court settlement for you without having to go through a stressful trial.

Most insurance disputes in California are resolved outside of court, but if no reasonable settlement is possible, your lawyer can take your claim to an administrative appeal or to trial.

The accidental death of a loved one is always difficult. Even so, if your accidental death claim is denied, you should reach out immediately to a California AD&D attorney who will aggressively fight the insurance company on your behalf. Choosing the right attorneys, such as McKennon Law Group PC, can make all the difference in the outcome of your AD&D case.

In the September 23, 2021 issue of the Los Angeles Daily Journal, the Daily Journal published an article entitled “9th Circuit Ruling Expands Relief Under ERISA for Breach of Fiduciary Duties” written by the McKennon Law Group PC’s Managing Shareholder, Robert J. McKennon. The article addresses a recent case by the Ninth Circuit Court of Appeals, Warmenhoven v. NetApp, Inc. The case involved repeated representations by the plan sponsor that it would provide lifetime medical benefits to retirees and their eligible spouses. Despite these representations, the plan sponsor amended the plan to remove these lifetime benefits. The Ninth Circuit found that Warmenhoven was potentially entitled to equitable relief based on the plan sponsor’s breach of its fiduciary obligations. The ruling confirms that ERISA plan beneficiaries may be able to obtain equitable relief when a plan fiduciary misrepresents plan benefits. For a full view of the article, take a look at our blog, HERE.

By: Robert McKennon

It is no secret that employee benefit plan administrators use the Employee Retirement Income Security Act of 1974 to shield themselves from liability for their mistakes and transgressions with respect to employee benefits. They may make misrepresentations about the payment of medical, life, disability or pension benefits upon which plan participants rely. These plan administrators have a fiduciary obligation to the plan and to plan members to act and communicate honestly about the benefits they provide. What happens when a plan administrator unintentionally misrepresents that plan participants will receive medical insurance for life if they retire from their employment in good standing, although the employee plan documents state that the plan does not provide lifetime benefits? Do the plan documents control?

On Sept. 13, the 9th U.S. Court of Appeals issued an important ruling under ERISA in Warmenhoven v. NetApp, Inc., 2021 DJDAR 9537, affirming in part and vacating in part the district court’s summary judgment in favor of defendants on plaintiffs’ claims under 29 U.S.C. Sections 1132(a)(1)(B) and 1132(a)(3). Plaintiffs alleged that termination of the NetApp Executive Medical Retirement Plan violated ERISA because plaintiffs, who were plan participants, had been promised lifetime benefits. The decision is important because it restated 9th Circuit authority that there is no scienter requirement for breach of fiduciary claims and, importantly, continued to expand equitable remedies available for breach of fiduciary claims under ERISA.

The Warmenhoven court held that because there was a genuine dispute of material fact as to whether NetApp incorrectly represented to plan participants that its plan provided lifetime health insurance benefits, Warmenhoven’s fiduciary duty claim survived summary judgment. There was a genuine issue of fact as to whether NetApp, Inc. breached its fiduciary duty by misrepresenting that the plan would provide lifetime benefits even though the terms of the plan included no such guarantee and even though NetApp could normally terminate the plan at any time.

Warmenhoven was the former CEO of NetApp and was CEO from 1994 to 2009 and executive chairman of its board of directors from 2009 to 2014. In 2003, Warmenhoven inquired about the creation of an executive retiree health plan, and such a plan was adopted by the board’s compensation committee in May 2005. In November 2015, the compensation committee decided to close the plan to new participants and in April 2016, it decided to terminate the plan altogether with an amended plan that would reimburse participants for the cost of purchasing health insurance on their own for a limited time. Warmenhoven and other participating retirees opposed the amended plan. This lawsuit followed.

As the court noted, “the default rule under ERISA is that employers my freely terminate welfare benefit plans like the Plan.” Warmenhoven claimed that NetApp had promised him that his health insurance benefits would continue for his lifetime relying primarily on representations made by NetApp in a series of PowerPoint presentations made to plan participants. An April 2005 PowerPoint indicated that the plan would provide certain retiring executives with medical coverage “as a fully insured plan” and represented that any company acquiring NetApp would have to agree to provide equivalent benefits “for the lives of the eligible employees.”

A March 2014 version of the PowerPoint more clearly “promised that the ‘Plan provides medical benefits for the retiree’s lifetime’ and that ‘[n]o retiree contributions [are] required.’” In addition to the PowerPoints, NetApp’s public filings contained disclosures that the plan was required to provide lifetime health care benefits to participants.

The certificates of coverage for the plan were prepared yearly by NetApp’s plan administrator CIGNA from its inception to 2012 and then by CIGNA’s replacement, UnitedHealthcare, from 2013-2016. The certificates of coverage all included at least one provision granting NetApp the authority to terminate benefits under the plan at any time — directly contradicting the promises in the PowerPoints of lifetime benefits.

Warmenhoven and six other retirees brought suit asserting two claims under ERISA: (1) that the PowerPoints themselves operated to vest lifetime benefits and sought recovery under Section 1132(a)(1)(B); and (2) that NetApp had breached its fiduciary duties by misrepresenting that the plan provided lifetime benefits, and plaintiffs were entitled to equitable remedies under Section 1132(a)(3). The district court granted summary judgment in favor of NetApp on both claims. Warmenhoven was the only plaintiff who appealed.

The court quickly dismissed the legal claim under Section1132(a)(1)(B) based on controlling circuit authority which requires that any change to the vesting schedule from the default position such that the plan can be terminated or amended at any time must be in writing in a plan document, citing Cinelli v. Security Pac. Corp., 61 F.3d 1437, 1441 (9th Cir. 1995).

The court then examined Warmenhoven’s equitable claim under Section 1132(a)(3), in which he claimed that if the PowerPoints did not vest lifetime benefits, he was entitled to equitable relief based on NetApp’s misrepresentation of plan benefits.

The court noted that a claim under Section 1132(a)(3) has two elements: (1) that there is a remediable wrong, i.e., that the plaintiff seeks relief to redress a violation of ERISA or the terms of a plan; and (2) that the relief sought is appropriate equitable relief.

The Warmhoven court had no difficulty finding that Warmenhoven had presented evidence of a “remediable wrong” sufficient to overcome summary judgment. Warmenhoven claimed that a named fiduciary misrepresented the terms of the plan by stating that the plan provided lifetime coverage. The court explained that prevailing circuit authority, Barker v. American Mobil Power Corp., 64 F.3d 1397, 1403 (9th Cir. 1995), held that “’fiduciaries breach their duties if they mislead plan participants or misrepresent the terms or administration of a plan.’” The court then examined the U.S. Supreme Court’s ruling in Varity Corp. v. Howe, 516 U.S. 489 (1996), which held that a plan fiduciary violated its fiduciary duties by intentionally deceiving plan beneficiaries to save the plan sponsor money at the expense of the plan beneficiaries.

Although Varity involved an intentional breach of fiduciary duty by a named fiduciary, the court noted that intent to mislead plan participants is not required under current circuit law. The court found that the district court erred in finding that NetApp did not breach a fiduciary duty because it only made honest statements regarding its intention to provide lifetime benefits. The court explained that under King v. Blue Cross & Blue Shield of Ill., 871 F.3d 730, 744 (9th Cir. 2017) and Mathews v. Chevron Corp., 362 F.3d 1172, 1183 (9th Cir. 2004), the fiduciary duty of loyalty is rooted in trust law, not tort law, and accordingly there is no reason to transplant the element of scienter from the law of torts.

The court noted that its decision in Mathews followed a line of cases from other circuits that do not require a showing of intent. Specifically, the Mathews court followed 6th Circuit precedent in James v. Pirelli Armstrong Tire Corp., 305 F.3d 439 (6th Cir. 2002). In James, company management made repeated oral promises to prospective retirees that their benefits would continue unchanged both during retirement and during their lifetimes. After the plaintiffs retired, the company increased the costs of health care benefits. The James court held that the company thereby breached its fiduciary duty under ERISA Section 1104(a)(1). The court did not address whether Warmenhoven would be entitled to appropriate equitable relief to redress the alleged wrong — a requirement of an equitable claim under Section 1132(a)(3) — but instead left that issue for the district court to consider on remand.

Warmenhoven is the latest case from the 9th Circuit to expand equitable relief for plan participants and their beneficiaries under ERISA for breach of fiduciary duties. This case reinforces existing law that imposes upon ERISA plan fiduciaries, such a plan sponsors and plan administrators, potential liability for their misrepresentations to employees who make important decisions based on these representations. This is the right result given that ERISA’s remedies are equitable in nature and drawn from the law of trusts, where strong fiduciary duties are imposed on those who are in a position of trust and responsibility.

Robert McKennon is a shareholder at McKennon Law Group PC. He specializes in representing policyholders in life, health and disability insurance, insurance bad faith, ERISA and unfair business practices litigation. His firm’s California Insurance Litigation Blog can be found at www.californiainsurancelitigation.com.

In its September 7. 2021 issue, the Los Angeles Daily Journal published an article written by the McKennon Law Group PC’s Robert J. McKennon and Larry J. Caldwell. The article addresses McHugh v. Protective Life Insurance Co., a new case in which the California Supreme Court held that the grace and notice periods in Insurance Code Sections 10113.71 and 10113.72 apply to life insurance policies issued and delivered in California before January 1, 2013, as well as to life insurance policies issued, delivered, or renewed after January 1, 2023. McHugh provides significant new protections against loss of life insurance coverage for the policyholders and beneficiaries on all life insurance policies issued or delivered in California prior to or after January 1, 2013. For a full view of the article, take a look at our blog, here.

High Court Clarifies Life Insurance Grace Period Law

By Robert J. McKennon and Larry J. Caldwell

Most insureds pay regular monthly life insurance premiums for years without a problem. Occasionally, a policyholder may miss a premium payment. For example, in the last few months of her life, the policyholder may be so ill or incapacitated that she uncharacteristically fails to pay the monthly premium. If the policyholder misses a premium payment by the due date, or within a grace period following the due date, the policy will lapse, and the insurer will decline to pay death benefits on this basis — even though the policyholder may have paid premiums faithfully for years, or even decades.

In 2012, the California Legislature enacted new statutes to protect life insurance policyholders and beneficiaries from this situation. Insurance Code Sections 10113.71 and 10113.72 require: (1) insurers to provide notice to applicants and annual notice to policyholders of their right to designate someone other than themselves to receive lapse notices (Section 10113.72 (a), (b)); (2) policyholders and any designees to receive notice within 30 days of a missed premium payment, and any termination for nonpayment will not be effective unless insurers send notice to these parties at least 30 days prior (Sections 10113.71 (b)(1), (3), 10113.72 (c)); and (3) all policies have a 60-day grace period, which lines up with the two 30-day notice windows (Section 10113.71 (a)).

The first requirement, only applicable to individual life insurance policies, allows policyholders to designate a person in addition to the policyholder to receive lapse notices, making it less likely non-payment of a premium will cause a loss of coverage. The law took effect on Jan. 1, 2013.

Policyholders and insurers have agreed that the new requirements in Sections 10113.71 and 10113.72 apply to all life insurance policies issued or delivered in California on or after Jan. 1, 2013. But there had been a long-running legal dispute regarding whether these new requirements applied to life insurance policies issued before Jan. 1, 2013 and whether policies “renewed” after this date incorporate these statutory requirements. Policyholders and beneficiaries under life insurance policies (including my firm) argued that these new rules should apply to all life insurance policies, regardless of when first issued or delivered in California. Not surprisingly, insurers argued that these statutory rules should not apply to life insurance policies issued prior to Jan. 1, 2013, because this would be a “retroactive” application of the statutes, and the Legislature only intended the statute to apply prospectively.

A decision by the California Supreme Court, McHugh v. Protective Life Insurance, 2021 DJDAR 9020 (Aug. 20, 2021), settles this legal dispute in favor of policyholders and beneficiaries. In a unanimous decision, the court reversed the California Court of Appeal in holding that the statutory grace period and notice requirements apply to all life insurance policies issued in California, regardless of when they were issued. The court rejected the insurer’s arguments that applying the statutory requirements to life insurance policies issued prior to Jan. 1, 2013, would constitute a “retroactive” application of the statute, even though the Legislature purportedly did not indicate a clear intention for the statute to apply retroactively. The court further held that, in any event, the legislature did intend the statute to apply to life insurance policies in force before Jan. 1, 2013.

In March 2005, Chase Life Insurance Company, the predecessor to Protective Life Insurance Company, issued a $1 million term life insurance policy to William McHugh. He paid annual premium payments through 2012. McHugh missed his annual premium payment due on Jan. 9, 2013. Despite warning notices sent to him, he failed to make the payment during the policy’s grace period. Protective Life then terminated his policy for non-payment of premium. McHugh passed away in June 2013, after the policy was lapsed and terminated.

McHugh’s daughter, Blakely McHugh, the primary beneficiary on the policy, submitted a claim for the death benefit, which Protective Life denied, because the policy was not in force at the time of William McHugh’s death

Blakely McHugh and her mother sued Protective Life for breach of contract and insurance bad faith. At trial, the trial court instructed the jury that Sections 10113.71 and 10113.72 applied to the policy, even though it was issued before Jan. 1, 2013. The jury found that McHugh had either performed or been excused from performing all conditions necessary for Protective Life to pay the death benefit, but nevertheless found against plaintiffs and in favor of Protective Life on both claims for breach of contract and insurance bad faith.

The Court of Appeal affirmed the judgment on the grounds that Sections 10113.71 and 10113.72 did not apply to life insurance policies issued prior to Jan. 1, 2013, thus did not apply to plaintiffs’ life insurance policy, because it was issued prior to this date.

The California Supreme Court reversed the Court of Appeal, holding that sections 10113.71 and 10113.72 apply to all life insurance policies in force when these two sections went into effect, regardless of when the policies were originally issued. The court correctly noted that this interpretation fits the provisions’ language, legislative history, a uniform notice scheme, and it protects policyholders, especially those who are elderly, hospitalized, or incapacitated, ones who may be particularly vulnerable to missing a premium payment. The court explained that this is “consistent with the provisions’ purpose.”

The court based its decision on two primary rationales: that applying the statutory requirements to existing policies does not constitute a “retroactive” application of the statute; and that, in any event, the legislature intended the new requirements to apply to all life insurance policies issued or delivered in California, regardless of when they were issued or delivered.

When interpreting a statute, courts normally begin with a presumption that a statute applies only prospectively in the absence of clear evidence that the legislature intended the statute to apply retroactively. In McHugh, the court emphasized the importance of deciding the threshold issue of whether a statute applies “retroactively,” before proceeding to the presumption. In analyzing alleged “retroactivity,” the Supreme Court “focused on whether the statutory change in question significantly alters settled expectations: by changing the legal consequences of past events, or vitiating substantial rights established by prior law.” The court determined that,

“The grace period and notice obligations added by Sections 10113.71 and 10113.72 do not impact a life insurer’s liability for past, preenactment defaults …. Nor do the changes otherwise impinge on a contracting party’s substantial rights or unfairly upset the bargain memorialized in the insurance policy, for example, by requiring an insurer to provide substantially expanded coverage without also giving it an opportunity to raise premiums.”

Observing that “the arguments offered [by the insurer] fall short of clearly showing how the sections’ new protections constituted a disruptive contract change of the sort that would qualify as ‘retroactive’ under our precedent,” the court determined that applying the new requirements in Sections 10113.71 and 10113.72 to pre-existing life insurance policies is a prospective application.

As a second basis for its ruling, the court also stated that, in any event, the legislature intended Sections 10113.71 and 10113.72 to apply to all existing life insurance policies:

“[T]he statutory sections appear to create a single, unified pretermination notice scheme …. [I]t seems doubtful the Legislature contemplated that insurance companies would, going forward, simultaneously implement two vastly different notice schemes: one applying to pre-2013 policies that requires only 31-day notices before termination and no right to designations, and a post-2013 scheme as described.”

The Supreme Court’s said its decision was motivated by the importance of life insurance coverage:

“Millions of California consumers manage financial risks for their families by purchasing life insurance. Through these policies, Californians ensure that their families and other designated beneficiaries are protected by a financial safety net — and are able to plan for contingencies — in the event of the policy owners’ untimely death.”

McHugh provides significant new protections against loss of life insurance coverage for the policyholders and beneficiaries on all life insurance policies issued or delivered in California prior to or after Jan. 1, 2013. Owners of such policies that have previously lapsed may potentially now have grounds for reinstatement of their policies, whether or not the policy owner is still living. Beneficiaries whose claims for coverage have been denied based upon a lapse in coverage that would have been prevented by these new statutes may now have a basis for seeking reconsideration of denial. They may also have claims for breach of contract and insurance bad faith regarding such denials. Life insurers will lament this decision because it will result in death benefits being paid under numerous previously lapsed life insurance policies, thus preserving thousands of valuable life insurance policies. But, policyholders and their beneficiaries will be consoled in knowing that a single missed premium payment will not necessarily result in the termination of their policies for which they paid premiums for many years without fail.

Robert J. McKennon is a shareholder of McKennon Law Group PC in its Newport Beach office. His practice specializes in representing policyholders in life, health and disability insurance, insurance bad faith and ERISA litigation. He can be reached at (949) 387-9595 or rm@mckennonlawgroup.com. His firm’s California Insurance Litigation Blog can be found at www.californiainsurancelitigation.com.

Larry J. Caldwell is of counsel to McKennon Law Group PC in its Newport Beach office. He has litigated insurance claims for over 35 years and specializes in representing policyholders in ERISA, insurance coverage, and insurance bad faith litigation regarding disability, life, accidental death, pension and health insurance claims.

When an insured under an accidental death and dismemberment policy governed by ERISA dies, coverage often turns on whether the death resulted from an “accident,” which is covered, or from the insured’s own intentional conduct which a reasonable person would have viewed as substantially certain to lead to death, which is not covered. In Wolf v. Life Insurance Co. of North America, 2021 WL 2105316, (W.D. Wash. 2021), the court had to determine whether the death of an insured who drowned after a car wreck was an “accident.” The case turned on whether driving 70-80 miles per hour the wrong way down a one-way road next to a bay, with a .17 blood alcohol level, would have led a reasonable person in the insured’s shoes to view death as substantially certain. While calling it a very close call, the court ruled in favor of the insured in finding the death was accidental, for which insurance benefits were due under the policy.

In the Ninth Circuit Court of Appeals, the standard for determining whether an insured’s intentional conduct leading to death was an “accident” for purposes of an accidental death policy governed by ERISA was decided in Padfield v. AIG Life Insurance Company, 290 F.3d 1121, at 1126–27 (9th Cir. 2002). In Padfield, the insured had died while engaged in autoerotic asphyxiation. The Ninth Circuit first had to decide what standard should apply.

The seminal case on this issue was decided by the First Circuit Court of Appeals, in Wickman v. Northwestern National Insurance Company, 908 F.2d 1077, 1088 (1st Cir. 1990). In Wickman, the First Circuit adopted a two-part test for deciding the issue. First, the court looks at whether the insured has a subjective expectation of death from the conduct. The court is to make the subjective intent analysis “from the perspective of the insured, allowing the insured a great deal of latitude and taking into account the insured’s personal characteristics and experiences.” Second, the court is to apply an objective standard if the court cannot determine whether the insured had a subjective expectation of death, or if the court determines that the insured did not have a subjective expectation of death, the court is to apply an objective test to determine whether the insured’s expectations were reasonable. The objective test adopted in Wickman is “whether a reasonable person, with background and characteristics similar to the insured, would have viewed the injury as highly likely to occur as a result of the insured’s intentional conduct.”

In Padfield, the Ninth Circuit adopted the Wickman two-part test with a modified version of the second part of the test –whether a reasonable person, with a background and characteristics similar to the insured, would have viewed death as “substantially certain” to occur as a result of the insured’s intentional conduct. Padfield, 290 F.3d at 1127. Under this standard, the Ninth Circuit determined that a reasonable person with the insured’s experience would not have viewed death as substantially certain from autoerotic asphyxiation. Indeed, the court held that these facts “fell far short” of the substantially certain to result in death standard. The court found that this insured had engaged in autoerotic asphyxiation without dying in the past and also relied on “the uniform medical and behavioral science evidence indicating that autoerotic activity ordinarily has a nonfatal outcome.” On the other end of the spectrum, the court noted that courts have found that playing Russian roulette does involve a reasonable expectation of a substantial certainty of death, regardless of the insured’s subjective expectations.

The Padfield court noted that courts use various formulations to indicate the degree of certainty with which an insured must expect injury for an injury to be nonaccidental, but concluded that “the ‘substantially certain’ test is the most appropriate one, for it best allows the objective inquiry to ‘serve [ ] as a good proxy for actual expectation.’ ” Id. at 1127 (citing Wickman, 908 F.2d at 1088; Todd v. AIG Life Ins. Co., 47 F.3d 1448, 1456 (5th Cir. 1995)).

In Wolf, the court applied the Ninth Circuit’s two-part standard to Wolf’s behavior leading up to his death. The court found that the evidentiary record was inconclusive regarding Wolf’s subjective expectations, although the court observed that his wearing of a seatbelt and use of emergency flashers possibly indicated a subjective intention that his conduct not be fatal. The court ruled that Wolf’s conduct, while “extremely reckless behavior,” was nonetheless an accident under the substantial certainty of death standard:

Speeding along a one-way road the wrong direction in the dark alongside a body of water does not ‘fall far short’ of what a reasonable person might expect to lead to death, [citation], but neither would a reasonable person . . . view death as “substantially certain” in these circumstances.

In contrast, the court in Wolf gave examples of reckless driving scenarios which a reasonable person would consider substantially certain to lead to death:

driving into oncoming highway traffic or driving alongside a cliff without a guardrail with one’s eyes closed.

In Wolf, the court made its decision under the de novo review standard. It emphasized that these facts would have presented a much closer call for the court under the “abuse of discretion” standard, in which the insurance company’s decision to interpret policy language and make coverage decisions is accorded deference by the court. The court cited to cases holding it was not an abuse of discretion for an administrator to deny coverage for claims involving very similar drunk driving scenarios.

Wolf provides a useful roadmap in how the “substantially certain” standard would be applied to other circumstances in which an insured dies while engaged in intentional conduct that was a cause of the death. For example, dying from jumping off a five-story building would not be an accidental death. But dying from jumping off that same building while bungy jumping, due to an equipment failure, would be.

Wolf shows the advantages to the insured beneficiary of having a court review a denial of benefits under an ERISA governed insurance policy under the de novo standard, rather than under an abuse of discretion standard.

Wolf shows the necessity of an insured seeking coverage under an accidental death and disability policy to hire a knowledgeable ERISA accidental death attorney to carefully analyze the factual circumstances of an insured beneficiary’s death, and to successfully navigate the insurance claim through the ERISA appeals process and, if necessary, litigation.