Judy Hagen v. Aetna Insurance Company, 808 F.3d 1022

Background

David Hagen, a Hewlett-Packard employee, had AD&PL (accidental death) coverage through an Aetna-administered plan and named his wife Judy Hagen beneficiary.
On August 6, 2010, David fell at home and fractured his right hip, underwent surgery, initially seemed to recover, but died weeks later; autopsy listed cause of death as complications of blunt force trauma of the lower extremity (manner: accident) with COPD, chronic alcoholism, and hypertensive cardiovascular disease as contributory.
The Policy required death to be the direct result of a bodily injury suffered in an ‘‘accident’’ and excluded losses ‘‘due to, or contributed by, an illness or disease of any kind.’u2019
Aetna denied Mrs. Hagen’s AD&PL claim twice: initially citing exclusions (medical/surgical treatment, alcohol), then on re-review concluding the fall was caused or contributed to by Mr. Hagen’s illnesses and his death was more consistent with pulmonary compromise.
Mrs. Hagen sued under ERISA § 502(a)(1)(B). The district court granted summary judgment for Aetna; on appeal the Fifth Circuit reviewed for abuse of discretion (administrator had discretionary authority) but considered Aetna’s conflict of interest as a factor.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Aetna’s conflict of interest required reduced deference	Hagen: Aetna both paid and administered benefits; process was procedurally unreasonable, shows bias, and Aetna took no steps to reduce bias	Aetna: conflict exists but did not materially affect decision; claims process was reasonable and record supports denial	Court: Conflict considered but not entitled to greater weight; no procedural unreasonableness or proven history of bias shown; no abuse of discretion
Whether Mr. Hagen’s fall was a covered "accident" under the Policy	Hagen: Evidence shows no prodromal symptoms; fall was a sudden, external, unforeseen event (slip/trip/loss of balance) and not caused by illness	Aetna: Medical records show fatigue, weakness, COPD, edema, prior falls and limited functioning that could have caused or contributed to the fall, which the Policy excludes	Court: Substantial evidence supports Aetna’s conclusion that illness contributed to the fall; therefore not a covered "accident"
Whether Aetna’s change in denial rationale rendered its decision unreasonable	Hagen: Aetna changed denial reasons between initial and second letters, suggesting procedural problems	Aetna: Second review (including nurse consultant review) represented a meaningful reconsideration and refinement, not improper conduct	Court: Change in stated rationale did not show procedural unreasonableness; it indicated further review
Whether Policy’s exclusions were misapplied or internally inconsistent	Hagen: Aetna interpreted exclusions inconsistently with Policy language	Aetna: Interpretation consistent with Policy exclusions barring losses contributed to by illness	Court: Because fall not a covered accident under Policy, court did not reach or need to resolve remaining exclusion-interpretation arguments

Key Cases Cited

Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008) (conflict of interest by a plan administrator is a factor in abuse-of-discretion review)
Cooper v. Hewlett-Packard Co., 592 F.3d 645 (5th Cir. 2010) (abuse-of-discretion review where plan grants discretionary authority)
Trinity Universal Ins. Co. v. Employers Mut. Cas. Co., 592 F.3d 687 (5th Cir. 2010) (summary judgment standard and appellate review principles)
Ellis v. Liberty Life Assurance Co., 394 F.3d 262 (5th Cir. 2004) (substantial evidence standard under abuse-of-discretion review)
Robinson v. Aetna Life Ins. Co., 443 F.3d 389 (5th Cir. 2006) (administrative-record support required to uphold denial)
Truitt v. Unum Life Ins. Co. of Am., 729 F.3d 497 (5th Cir.) (consideration of conflict factors and procedural unreasonableness)
Holland v. Int'l Paper Co. Ret. Plan, 576 F.3d 240 (5th Cir. 2009) (review of administrative record and procedural concerns)
Corry v. Liberty Life Assurance Co. of Bos., 499 F.3d 389 (5th Cir. 2007) (reasonableness continuum for administrator decisions)
Sekel v. Aetna Life Ins. Co., 704 F.2d 1335 (5th Cir. 1983) (context on causation standards in exclusion clauses)