486 F. App'x 398
5th Cir.2012Background
- Jimenez sued Sun Life (ERISA claims fiduciary) and two employees seeking long-term disability benefits under Smith International’s plan funded by Sun Life; district court granted Jimenez partial summary judgment on coverage; Sun Life appeals; court reverses and remands for further proceedings.
- Policy (Texas-law) provides LTD coverage; exclusion for losses due to illegal acts; Sun Life denied benefits citing DUI-related intoxication.
- Jimenez had BAC 0.15 at time of accident; police suspected alcohol; Jimenez indicted for DUI and careless operation; he was intoxicated per hospital staff; all evidence supported denial under the exclusion.
- Policy grants Sun Life discretion to interpret terms and determine eligibility; Sun Life invoked a 45-day extension and then denied after review; ERISA governs; choice-of-law analysis triggers Texas law for the policy.
- Court addresses whether Sun Life’s discretionary interpretation is reviewed for abuse of discretion; choice-of-law enforcement under federal common law; whether Texas or Louisiana law governs the exclusion; ultimately, Texas law applied and Sun Life’s denial sustained.
- Remand for proceedings consistent with opinion; court holds ERISA preemption and that Sun Life did not abuse discretion in applying the illegal acts exclusion under Texas law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard of review for Sun Life’s denial | Jimenez argues de novo review; Sun Life had no discretion | Sun Life had discretion to construe policy terms and determine eligibility | Abuse of discretion review applies (discretion found) |
| Governing law for the Policy | Louisiana law governs due to location and policy public policy | Texas law per policy clause; want uniform ERISA interpretation | Texas law governs to the extent not preempted by ERISA |
| Meaning of 'illegal acts' exclusion | Exclusion cannot bar coverage absent explicit intoxication exclusion; ambiguity | Exclusion covers acts contributing to disability; DUI fits 'illegal act' and contributed to accident | Sun Life’s interpretation reasonable; 'due to' includes contributing conduct; substantial evidence supports denial |
| Substantial evidence supporting denial | No sufficient link between DUI and disability; causation not proven | Record shows DUI, BAC, indictment, expert suggesting impairment; reasonable link | Substantial evidence supports denial; no abuse of discretion |
Key Cases Cited
- Corry v. Liberty Life Assurance Co. of Boston, 499 F.3d 389 (5th Cir. 2007) (review of ERISA claim under substantial evidence standard)
- Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (S. Ct. 2008) (conflict of interest to be weighed in abuse-of-discretion review)
- Wildbur v. ARCO Chem. Co., 974 F.2d 631 (5th Cir. 1992) (plan discretion to interpret terms; deference applies)
- Conkright v. Fromert, 130 S. Ct. 1640 (U.S. 2010) (plan administrator discretion not disturbed if reasonable)
- Durham Auctions, Inc. v. Great Lakes Reinsurance (UK) PLC, 585 F.3d 236 (6th Cir. 2009) (federal choice-of-law principles apply to ERISA issues with choice clauses)
- Haynsworth v. The Corporation, 121 F.3d 956 (5th Cir. 1997) (federal common-law choice-of-law principles; enforce choice clauses unless unreasonable)
- Kimber v. Thiokol Corp., 196 F.3d 1092 (10th Cir. 1999) ('due to' ambiguous; deference to plan administrator's interpretation)
- James v. La. Laborers Health and Welfare Fund, 29 F.3d 1029 (5th Cir. 1994) (proper denial under substantial evidence when supported by record)
- Gahn v. Allstate Life Ins. Co., 926 F.2d 1449 (5th Cir. 1991) (ERISA preemption and savings clause principles)