10th Circuit Court of Appeals validates MetLife's accidental death and dismemberment denial

Verla Hancock participated in a group benefit plan sponsored by her employer, Intermountain Healthcare. The plan’s claim fiduciary was Metropolitan Life Insurance Co. (MetLife). Under the plan, Verla obtained basic life insurance, supplemental life insurance and accidental death and dismemberment coverage (AD & D).

The plan stipulated that in order to benefit from the AD & D coverage, the policy holder had to be:

1. Injured in an accident;
2. The accident had to be the sole cause of injury;
3. The accident had to be the sole cause of death;
4. The death had to occur within 365 days of the accident.

The District Court found that policy beneficiary Terri Hancock had failed to demonstrate that she had a claim against MetLife for accidental death and dismemberment in her mother’s death.

Would Terri Hancock’s appeal be successful? Let’s look at the facts surrounding Verla Hancock’s death.

On November 18, 2004, Terri became concerned because she hadn’t heard from her mother for several days. When she went by her mother’s home to check on her, she found her sprawled on the floor of the bathroom. It was apparent that she had been dead for several days.

Because the police found eight different prescription drugs in the home, including a bottle of OxyContin by her body, and she had previously overdosed on OxyContin and Lortab in August 2003, the medical examiner suspected an overdose of OxyContin. But the coroner’s exam showed no evidence of excess Oxycontin or any other intoxicant. The examiner could find no other explanation for her death either. The death certificate stated that the cause of death was undetermined.

As Verla Hancock’s beneficiary, Terri Hancock applied to MetLife for the life insurance and AD & D benefits on January 20, 2005. MetLife approved the life insurance claims under both the basic and optional coverage portions of the plan, but it denied accidental death and dismemberment benefits. MetLife explained in their denial letter of March 22 that because the coroner had been unable to establish that the death was caused accidentally, Ms. Hancock was ineligible for the accidental death and dismemberment benefits.

Ms. Hancock appealed on May 19 providing both her own observations of the death scene, and the observations of the investigating detective, who had concluded that her mother had slipped, fallen and struck her head hard enough to render her unconscious, but not hard enough to fracture her skull. The medical examiner felt that this was a plausible explanation of what had happened.

MetLife responded by September 1, saying that her evidence added up to mere conjecture. For this reason, they reiterated that the evidence did not prove that her mother’s death had been caused by an accident. They denied her appeal.

When Ms. Hancock appealed again on February 6, 2006, she did so under advisement of counsel. This time she submitted copies of the police report, police photographs of the scene, autopsy documents and an investigative report prepared by MRA Forensic Sciences. While MetLife agreed to conduct another administrative review, they had not reached a decision by June 27. Her counsel advised MetLife that if they did not pay AD & D benefits within 10 days, Hancock would sue. She finally did so on September 12 in Utah state court. She received a letter next day reaffirming denial of the AD & D benefits.

Her case was removed from state court to federal court on December 10, 2007, where Hancock moved for partial summary judgment on the standard of review. She claimed that the court should review MetLife’s denial of benefits de novo, citing Utah Insurance Rule 590-218 as depriving MetLife of discretionary authority, and its right to judicial deference.

MetLife in response moved for a bench trial on the papers on February 8, 2008. MetLife argued that its decision was reasonable and that it was supported by substantial evidence.

Hancock then moved for summary judgment about two weeks later. She described MetLife’s denial of benefits as an “attempt to invoke the policy exclusion, presumably that there was insufficient evidence to support the claim.” She argued that MetLife should have the burden of establishing the factual basis for excluding her receipt of benefits. And she accused MetLife of having a conflict of interest and using irregular procedures in handling her claim.

The District Court found that ERISA preempted rule 590-218, which meant that MetLife was entitled to review under the arbitrary and capricious standard of review. The court disagreed that it was MetLife’s responsibility to prove her entitlement to the benefits. So as a result, the District Court dismissed Hancock’s claims and upheld MetLife’s decision to deny accidental death and dismemberment benefits.

In her case before the United States Court of Appeals, 10th Circuit, Hancock raised two issues:

1. Was MetLife entitled to deferential review?
2. Would MetLife’s decision survive a de novo review?

The first question before the court was to determine whether MetLife had discretionary authority to determine eligibility for benefits and to interpret the terms of the plan. In the plan provisions, MetLife clearly had discretionary authority. Unless procedural irregularities could be demonstrated, the proper standard of review would be the arbitrary and capricious standard. Because ERISA preempted state law upon review of the law in question, this would be the only grounds upon which Hancock would be able to secure a de novo review.

Hancock claimed that MetLife’s denial letters failed to include information required by ERISA regulations. When the Court reviewed the denial letters, they disagreed. They found the denial letter explained that both the death certificate and the autopsy report stated that the cause of death was undetermined. As a result, accidental death had not been established. The letter gave her specific instructions on how to enable MetLife to give her “appeal proper consideration.” It described exactly what information Hancock needed to provide in order to perfect her claim. They made it clear that she had to supply evidence that an accidental death had occurred as required by the AD & D provision.

She also claimed that MetLife did not provide a full and fair review of her appeal. She claimed that MetLife ignored her evidence, including the forensic expert’s opinion, and failed to conduct an independent investigation into her mother’s death. MetLife’s agreed that it had rejected the detective’s discussion with Hancock as mere conjecture. As the detective had deferred judgment on the cause of death to the medical examiner, when the examiner did not change the death certificate, MetLife continued to consider the discussion conjecture.

The forensic expert’s opinion, while suggesting a high probability that a slip-and-fall accident could have caused the senior Hancock’s death, it too, only amounted to conjecture. MetLife maintained its position that none of the evidence proved death by accident.

The court’s conclusion

After reviewing all the correspondence between MetLife and Hancock, the Court found that MetLife had given Hancock a full and fair review. There was no proof that MetLife had ignored her evidence. And the court found it reasonable for MetLife to seek more conclusive evidence before paying accidental death and dismemberment benefits.

The court also found it unreasonable to expect MetLife to conduct an independent investigation when police records demonstrated that a proper investigation had already occurred. The court found no serious conflict of interest could be demonstrated. Ultimately, based on the government reports and Hancock’s own submissions, the court felt that MetLife had been reasonable in concluding that she had not proven her mother’s death was accidental.

In this case, the Court of Appeals affirmed the judgment of the District Court. Hancock will not receive an accidental death and dismemberment payout from her mother’s policy.