Employee benefits law - drunk driving fatality determined not accidental under ERISA-governed insurance plan - Stamp v. Metropolitan Life Insurance Co.

• Author: Dolan, Jeffrey E.

Employee Benefits Law--Drunk Driving Fatality Determined Not Accidental Under ERISA-Governed Insurance Plan--Stamp v. Metropolitan Life Insurance Company, 531 F.3d 84 (1st Cir. 2008)

Federal common law governs claims arising out of employee benefit plans covered by the Employee Retirement Income Security Act of 1974 (ERISA). (1) The Court of Appeals for the First Circuit created an approach for interpreting the ambiguous word "accident" in ERISA-governed plans in Wickman v. Northwestern National Insurance Co. (2) In Stamp v. Metropolitan Life Insurance Co. (3), the First Circuit used the Wickman framework to address, for the first time, whether the administrator of an ERISA-governed plan could reasonably conclude that the death of an insured party who was killed in a single-car accident when driving drunk was not accidental for purposes of his life insurance policies. (4) The First Circuit reviewed the administrator's decision under an arbitrary and capricious standard and upheld the decision as both reasonable and supported by the evidence on the record. (5)

In the early morning of August 3, 2002, Steven Stamp was killed in a single-car accident when his car went off the road and crashed into a tree in Johnston, Rhode Island. (6) Mr. Stamp's blood alcohol content (BAC) at the time of his death was .265 percent, more than three times Rhode Island's legal limit of .08 percent. (7) Stamp's wife, Karen Stamp, submitted a claim for benefits as the beneficiary of Mr. Stamp's life insurance policies to the claim fiduciary, Metropolitan Life Insurance Company (Metlife). (8) Metlife paid the claim for Basic Life Insurance benefits, but denied Mrs. Stamp's claims under the Basic and Voluntary Accidental Death and Dismemberment (AD & D) policies. (9) Mrs. Stamp submitted an appeal to Mr. Stamp's employer and administrator of the plan, Exxon Mobil Chemical Company (Mobil). (10) Mobil denied the appeal of the Basic and Voluntary AD & D benefits after concluding that Mr. Stamp's death was not the result of an "accident" as defined in his AD & D policies. (11)

After Mobil denied her appeal, Mrs. Stamp filed suit in district court, and the suit was treated as an enforcement action under ERISA. (12) The district court granted summary judgment in favor of Metlife and Mobil after affirming the reasonableness of the determination that Mr. Stamp's death was not the result of an accident. (13) Mrs. Stamp then appealed to the Court of Appeals for the First Circuit, asserting that Mobil unreasonably determined that her husband's death was not accidental. (14) Upon reviewing the federal common law pertaining to ERISA, the First Circuit affirmed the district court's decision and upheld Mobil's determination that Mr. Stamp's death was not an accident. (15)

Congress enacted ERISA in 1974 to protect the rights of employees and their beneficiaries and to provide access to federal courts when these rights are violated. (16) A participant or beneficiary of a plan covered by ERISA may bring a civil action "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." (17) ERISA claims are federal questions and preempt any state-law claims relating to employee benefit plans. (18) Accordingly, federal common law controls claims regarding ERISA-governed plans. (19)

In the landmark case of Wickman v. Northwestern National Insurance Company, the Court of Appeals for the First Circuit established a procedure for interpreting the ambiguous word "accident" in ERISA-regulated plans. (20) The Wickman test uses the expectations of the insured at the time the policy was purchased as a starting point for determining whether an injury was accidental. (21) If the fact-finder determines that the insured party did not have a subjective expectation of sustaining a similar injury, the fact-finder must then determine whether it was reasonable for the insured party to not have this expectation. (22) If the fact-finder determines that the insured party was unreasonable in not expecting such an injury, the court will not deem the injuries accidental. (23) However, if the fact-finder decides that there is insufficient evidence to determine the subjective expectations of the insured, he or she must analyze whether a reasonable person with the background and characteristics of the insured would have viewed the injury as "highly likely to occur" as a result of his intentional conduct. (24)

If a plan administrator possesses discretionary authority to determine eligibility under an ERISA plan, courts will review the administrator's decision under an arbitrary and capricious standard. (25) Under this standard of review, the relevant inquiry is "whether the aggregate evidence, viewed in the light most favorable to the non moving party, could support a rational determination that the plan administrator acted arbitrarily in denying the claim for benefits." (26) Several federal circuit courts of appeals have applied a form of the Wickman framework along with the arbitrary and capricious standard of review to uphold plan administrators' determinations that deaths resulting from drunk driving incidents were not accidental. (27) Meanwhile, other circuits have used the Wickman framework with a strict interpretation of the objective prong to determine that certain unintentional deaths were, in fact, accidental for the purposes of ERISA claims. (28)

In Stamp v. Metropolitan Life Insurance Co., the First Circuit reviewed Mobil's denial of benefits under an arbitrary and capricious standard and, after determining that the denial was reasoned and supported by substantial evidence, upheld the district court's judgment. (29) The First Circuit applied the Wickman framework in order to determine whether Mobil's decision to deny AD & D benefits was arbitrary and capricious. (30) The Stamp court began their analysis by examining Stamp's expectations at the time of his death because it concluded that, under the Wickman analysis, there was no "necessary inconsistency" between his state of mind when he purchased the policy and at the time of his death. (31) The court concluded that Mr. Stamp's plan to meet his family the next day along with the reports of his phone calls that night did not sufficiently establish his subjective state of mind at the time of his death because many hours had elapsed after the phone calls were made and Mr. Stamp had continued drinking. (32)

The court applied the objective prong of Wickman after deciding that Mr. Stamp's subjective expectation could not be determined and held that Mobil's denial of benefits was appropriate because Mr. Stamp "reasonably should have expected death or serious injury when he drove with a BAC of more than three times the legal limit." (33) The court rejected the notion that the objective prong of Wickman required statistical probability that death would result from the insured's actions. (34) Instead, the court held that the objective component of the Wickman analysis looked to what a reasonable person would expect to be the outcome of the intentional conduct in...