Dealing with the denial of life insurance or accidental death benefits is incredibly difficult, especially when grieving the loss of a loved one. When these benefits are part of an employer-sponsored plan, the denial often falls under a complex federal law known as the Employee Retirement Income Security Act of 1974 (ERISA). Understanding how courts review these denials and interpret insurance policies is crucial for anyone seeking the ERISA benefits they believe they are owed.
A recent decision from the U.S. Court of Appeals for the Tenth Circuit, Jensen v. Life Insurance Company of North America (LINA), offers valuable insights into two critical aspects of ERISA litigation: the standard of review applied by courts and the methods used to interpret policy language, particularly exclusions. This case highlights the hurdles claimants face and underscores the need for experienced legal counsel, like the team at The Garner Firm, Ltd., when challenging an ERISA benefit denial.
The Jensen Case: A Tragic Death and a Denied AD&D Claim
The case involved Jill Jensen, whose husband, Steven, suffered from chronic pain and anxiety. His doctors prescribed oxycodone for pain and clonazepam for anxiety. Tragically, Steven died in 2019 due to the combined toxicity of these prescribed medications.
Steven was covered under an ERISA-governed employee welfare benefit plan provided by his employer, which included Accidental Death and Dismemberment (AD&D) coverage through a policy issued by LINA. Jensen filed a claim for AD&D benefits, arguing her husband’s death was accidental. LINA initially denied the claim based on two policy exclusions: voluntary ingestion of drugs and medical treatment of sickness. LINA later dropped the voluntary ingestion exclusion but maintained the denial based solely on the exclusion for losses caused by or resulting from “Sickness, disease, bodily or mental infirmity… or medical or surgical treatment thereof”. Jensen sued LINA under ERISA Section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B), to recover the denied benefits.
The Standard of Review: A Critical (But Sometimes Sidestepped) Battle
One of the first major battles in a lot of ERISA litigation is determining the standard of review the court will use to evaluate the insurance company’s (or plan administrator’s) decision to deny benefits. There are generally two possibilities:
- De Novo Review: This means the court looks at the case with fresh eyes, without giving any deference to the administrator’s decision. This is generally more favorable, or at least fairer, to the claimant.
- Abuse of Discretion (or Arbitrary and Capricious) Review: This standard is much more deferential to the administrator, which is often an insurer. The court will only overturn the denial if the administrator’s decision was unreasonable, illogical, or without substantial evidentiary support. This standard applies if the benefit plan documents explicitly grant the administrator discretionary authority to interpret the plan terms and determine eligibility for benefits.
In Jensen, the plan documents granted LINA discretionary authority, which would typically trigger the deferential abuse of discretion standard. However, Jensen argued this clause was unenforceable under a Utah state law prohibiting such discretionary clauses in insurance contracts. LINA countered that the policy chose Delaware law (which allows such clauses) and that federal choice-of-law principles should apply.
This dispute highlights a common tactic in ERISA litigation: claimants often seek to invalidate discretionary clauses to secure the more favorable de novo review. However, the Tenth Circuit in Jensen chose not to resolve this complex issue involving state law, choice-of-law rules, and potential ERISA preemption. Instead, the court took a practical approach : it assumed, for the sake of argument, that the claimant (Jensen) was correct and that de novo review applied. The court reasoned that if LINA’s denial was correct even under the stricter de novo standard, then deciding the standard of review issue was unnecessary. Ultimately, the court affirmed LINA’s denial even under de novo review.
Takeaway: The standard of review remains a critical threshold issue in ERISA benefits cases. While plans often include language triggering deferential review, challenges to these clauses are possible, though courts may sometimes bypass the issue if the denial can be upheld under the claimant-friendly de novo standard anyway.
Interpreting the Policy: When “Treatment” Means No Benefits
With the standard of review set (or assumed) as de novo, the Jensen court turned to interpreting the LINA AD&D policy language. Courts interpreting ERISA plans generally apply federal common law principles, aiming to interpret the policy terms according to their “common and ordinary meaning as a reasonable person in the position of the plan participant… would have understood the words to mean”. Unambiguous terms are applied as written, but ambiguous terms (those reasonably susceptible to more than one meaning) are typically construed against the insurer under the doctrine of contra proferentem.
The core dispute centered on the medical treatment exclusion, which stated benefits would not be paid for loss caused by “Sickness, disease, bodily or mental infirmity, bacterial or viral infection or medical or surgical treatment thereof…”.
1. The Last-Antecedent Rule Argument: Jensen argued the phrase “medical or surgical treatment thereof” only modified the immediately preceding term, “bacterial or viral infection,” because there was no comma before “or medical or surgical treatment thereof”. This grammatical argument relied on the “last-antecedent rule”. If correct, the exclusion wouldn’t apply because Steven’s treatment was for chronic pain and anxiety (sickness/infirmity), not a bacterial/viral infection.
The court acknowledged that a straightforward application of the rule supported Jensen’s reading. However, the court emphasized that interpretive rules like the last-antecedent rule are not absolute and can be overcome by context. Looking at the policy as a whole, the court found overwhelming contextual evidence against Jensen’s interpretation: * The policy cover page stated it “does not pay benefits for loss caused by sickness”. The definition of “covered accident” required an event “not contributed to by disease, [s]ickness, [or] mental or bodily infirmity”. The opined that the purpose of AD&D insurance is typically to cover accidents, distinct from losses arising from illness or its treatment. The court noted the “normal understanding” is that injuries caused by medical treatment belong “with illness, not with accident”.
Based on this context, the court concluded that applying the last-antecedent rule to limit the medical treatment exclusion only to bacterial/viral infections would contradict the clear intent and structure of the policy. It also noted the practical absurdity of excluding treatment for infections but covering treatment for other sicknesses or diseases. Therefore, the court rejected Jensen’s argument that the exclusion unambiguously did not apply.
2. The Ambiguity Argument: Jensen alternatively argued that the exclusion was ambiguous, particularly when read alongside another exclusion for “voluntary ingestion of any narcotic, drug… unless prescribed or taken under the direction of a [p]hysician and taken in accordance with the prescribed dosage”. She contended that the “unless” clause in the voluntary ingestion exclusion seemed to allow coverage for deaths from prescribed medications taken correctly, creating a conflict with the medical treatment exclusion which, under LINA’s reading, barred coverage for deaths resulting from prescribed medications used to treat sickness. If ambiguous, the policy should be interpreted in her favor (contra proferentem).
The court disagreed, finding no conflict or ambiguity. It reasoned that the two exclusions operate on different, though potentially overlapping, circumstances: The Medical Treatment Exclusion applies when the medication is treating sickness, disease, or infirmity. The Voluntary Ingestion Exclusion applies more broadly to drug ingestion but has a carve-out (the “unless” clause) for properly taken prescribed medication.
The court explained that the “unless” clause of the voluntary ingestion exclusion still has meaning because it preserves coverage in situations not covered by the medical treatment exclusion. For example, if someone suffers an accidental injury (which is not a sickness, disease, or infirmity ), is prescribed medication for that injury, takes it as directed, but dies as a result, the voluntary ingestion exclusion wouldn’t bar the claim (due to the “unless” clause), and the medical treatment exclusion wouldn’t apply either (because the treatment wasn’t for sickness/disease/infirmity).
Because Steven Jensen’s medications were prescribed to treat chronic pain and anxiety (sickness/infirmity), his death fell squarely within the unambiguous medical treatment exclusion as interpreted by the court.
Takeaway: Courts interpreting ERISA policies look beyond isolated phrases or grammatical rules. They consider the entire policy context and purpose. Exclusions are often interpreted broadly, and arguments for ambiguity require demonstrating a genuine conflict or multiple reasonable interpretations, not just a potential surface-level tension between clauses.
What Jensen Means for You
The Jensen v. LINA decision serves as a reminder of the challenges inherent in ERISA life insurance and AD&D claims, especially when death results from medical care or prescribed medications:
- Exclusions Matter: Policy exclusions, particularly those related to sickness, medical treatment, and drug use, are powerful tools for insurers denying claims. Careful reading and analysis are paramount.
- Context is King: Courts interpret policy language based on the entire document and the common understanding of terms, not just isolated grammatical rules.
- Standard of Review is Key: While the court sidestepped the issue in Jensen, the applicable standard of review significantly impacts a claimant’s chances of success in ERISA litigation.
- Complexity Requires Expertise: Navigating ERISA regulations, plan interpretations, standards of review, and policy exclusions requires specialized knowledge.
The Garner Firm, Ltd.: Your Advocate in ERISA Litigation
If you or a loved one has faced a denial of life insurance, accidental death, or other ERISA benefits, you need experienced legal counsel to fight for your rights. At The Garner Firm, Ltd., we understand the complexities of ERISA litigation. We regularly help clients challenge benefit denials by scrutinizing policy language, contesting unfavorable interpretations, and navigating the procedural hurdles of ERISA. We work with clients and referring attorneys to pursue the benefits rightfully owed under life insurance and AD&D policies governed by ERISA.
Don’t face the insurance company alone. Contact The Garner Firm, Ltd. today for a consultation on your ERISA benefits claim.