Patricia W. BUCE, Plaintiff-Appellee, v. ALLIANZ LIFE INSURANCE COMPANY, f.k.a. North American Life and Casualty Company, Defendant-Appellant.
No. 99-15405.
United States Court of Appeals, Eleventh Circuit.
April 10, 2001.
247 F.3d 1133
IV. CONCLUSION
For the reasons stated above, this court AFFIRMS the district court‘s opinion in part and REMANDS for further proceedings consistent with this opinion.
Douglas N. Campbell, Edward H. Nicholson, Jr., McGuire, Woods, Battle & Boothe, LLP, Atlanta, GA, for Defendant-Appellant.
Before CARNES and BARKETT, Circuit Judges, and POLLAK*, District Judge.
POLLAK, District Judge:
This appeal presents questions arising from the denial—initially by the plan administrator and then by the insurance carrier—of death benefits claimed under an employer-sponsored personal injury insurance policy governed by the Employee Retirement Income Security Act (“ERISA“),
In Part I of this opinion we outline the principal facts giving rise to the plaintiff‘s claim and the manner in which the claim was addressed by, first, the plan administrator and, second, the insurance carrier. In Part II, we summarize the history of the case after it came to court—first, a Georgia state court and then, on removal, the District Court. In Part III we consider the contentions made by the insurance carrier on appeal.
I
Walter H. Buce, Jr., a Georgia resident, was employed by National Services Industries, Inc. (“NSI“), a company located in Atlanta. In 1985 Mr. Buce elected to become insured under a group Personal Accident Insurance Plan provided by NSI as an optional employee benefit. The accident insurance plan—originally underwritten by Fireman‘s Fund, Inc., but taken over, in 1993, by Allianz Life Insurance Company of North America (“Allianz“)—provided that: “The Plan is to be interpreted in accordance with the laws of the State of Georgia.” On December 13, 1995, at about 2:00 a.m., Mr. Buce, was killed in a single-vehicle crash on Interstate 75 near Cleveland, Tennessee. There were no passengers or other witnesses. A posthumously drawn blood sample measured Mr. Buce‘s alcohol level as .22 percent.
Mr. Buce‘s widow, Patricia W. Buce, the beneficiary of her husband‘s accident policy, filed a claim. NSI, Mr. Buce‘s employer, referred the claim to Allianz, the insurance carrier. Allianz in turn referred the claim to American Special Risk Management (“ASRM“), the company retained by Allianz to act as administrator of the insurance plan; as of that time, Allianz was ASRM‘s sole client.
This Policy provides a “Loss of Life Accident Indemnity. When injury results in the loss of life of the Insured Person“. The Policy also states the following:
20. The Company shall not be liable for any loss sustained in consequence of the person whose injury is the basis of a claim being intoxicated or under the influence of any narcotic unless administered on the advise [sic] of a physician.
We have obtained the Cleveland Police Department report that indicated this single car accident happened when the car “left the roadway on the right hand shoulder of the road striking the guard rail“. The Tennessee Bureau of Investigation‘s Forensic Services Crime Laboratory report on Alcohol, indicated the insured‘s level was twice the legal limit permitted to operate a vehicle. We therefore, must deny any Accidental Death Benefits for this accident, under the terms of this policy.
Mrs. Buce‘s attorney, John E. Robinson, took issue with Mr. Carroll‘s decision in a letter dated May 9, 1997. Mr. Robinson‘s letter was referred to Douglas Campbell, Allianz‘s attorney. On July 11, 1997 Mr. Campbell wrote to Mr. Robinson reaffirming the denial of Mrs. Buce‘s claim:
This Firm represents Allianz Life Insurance Company of North America [the “Company“] and your letter of May 9, 1997, regarding the above referenced claim has been referred to us for response ....
[T]he Company has, at your request, re-evaluated this claim and the materials you have submitted in support thereof. This is an accident policy which, as applicable to this particular claim, provides payment of benefits where loss of life is due to bodily injury caused by an accident and resulting directly and independently of all other causes in death. As such, it is an “accidental means” policy which requires that, in the act which preceded the injury, there must have occurred something sudden, unexpected and unforeseen. In the first instance, the materials you have submitted do not show any positive identification of the individual found in the wrecked automobile as in fact being Mr. Buce, even though the death certificate states that it was. Moreover, even if the body was that of Mr. Buce, tests revealed that, several hours after the wreck, there was present a blood alcohol level of .22%, which would mean that Mr. Buce was intoxicated at the time of the wreck. Given the weather and road conditions as reported by the authorities, and the lack of any evidence of vehicular malfunction, it appears that Mr. Buce‘s injuries were occasioned by his voluntary ingestion of alcohol and were therefore not “bodily injuries cause[d] by an accident” as required by the coverage provisions of the Policy.
Furthermore, the Policy contains the following exclusion:
20. The Company shall not be liable for any loss sustained in consequence of the person whose injury is the basis of claim being intoxicated ...
As the Policy contains no definition of intoxication, the common law definition would apply—namely, that the person was materially impaired from guarding himself against casualty or injury. A person with a .22% (or higher at the time of the wreck) blood alcohol level is
undoubtedly materially impaired within the meaning of that definition. As discussed in the preceding paragraph, it was this impairment which caused the wreck that resulted in Mr. Buce‘s death. For the foregoing reasons, and based entirely on the information available to us at this time, including the information you submitted in support of the claim, the Company, upon reconsideration, again denies the claim.
On December 5, 1997, in response to a further letter from Mr. Robinson, Debra Libby, NSI‘s Assistant Counsel, stated that “we regret that this unfortunate event occurred, but the claim does not appear to be covered by the Plan.”
II
Six days later—on December 11, 1997—Mrs. Buce filed this law suit, naming as defendants NSI, ASRM and Allianz (the latter was originally sued under its former name, North American Life and Casualty Company). Suit was brought in the Superior Court of Fulton County, Georgia. Invoking ERISA, the defendants removed the case to the United States District Court for the Northern District of Georgia.
After granting in part and denying in part motions for summary judgment filed by the defendants, the District Court conducted a two-day bench trial. Shortly thereafter, the District Court filed its opinion awarding judgment in Mrs. Buce‘s favor, against Allianz, for the policy proceeds of $150,000, plus prejudgment and post-judgment interest. “The denial of benefits was arbitrary and capricious,” the District Court ruled, “and the Plaintiff is entitled to the death benefit due under the Plan.” Buce v. National Service Industries, Inc., et al., 74 F.Supp.2d 1272, 1280 (N.D.Ga. 1999). Finding no “breach of fiduciary duty,” id., on the part of ASRM and NSI, the District Court directed the entry of judgment in favor of those defendants.
In ruling against Allianz, the District Court came to a series of conclusions:
(A) The first issue addressed by the District Court was the standard of review under which it was to judge the correctness of Allianz‘s denial of benefits. The District Court noted that the Supreme Court, in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989), had held that “a denial of benefits challenged under [
(B) Mr. Buce‘s policy provided coverage for “bodily injury caused by an accident ... and resulting directly and independently of all other causes in loss covered by the policy.” In the July 11, 1997 letter of Allianz‘s attorney, reaffirming the denial of Mrs. Buce‘s claim, the carrier‘s position was that “[t]his is an accident policy which, as applicable to this particular claim, provides payment of benefits where loss of life is due to bodily injury caused by an accident and resulting directly and independently of all other causes in death. As such, it is an ‘accidental means’ policy which requires that, in the act which preceded the injury, there must have occurred something sudden, unexpected and unforeseen .... [I]t appears that Mr. Buce‘s injuries were occasioned by his voluntary ingestion of alcohol and were therefore not ‘bodily injuries cause[d] by an accident’ as required by the coverage provisions of the Policy.” The District Court discussed the legal sufficiency of the carrier‘s position as follows:
The first question to be addressed is whether the insurance company properly interpreted the Plan by reading into the policy an exclusion for injury or death that is foreseeable based upon such risk increasing behavior as driving while intoxicated. In Laney v. Continental Ins. Co., 757 F.2d 1190 (11th Cir.1985), the Eleventh Circuit addressed this issue in the context of a diversity case applying Georgia law. The decedent in that case died of acute alcohol poisoning; the autopsy showed a blood alcohol content of .47 grams percent. The court recognized that Georgia law distinguishes between the terms “accidental injury” and “injuries resulting from accidental means.” Id. at 1191. Applying Georgia law, the court concluded that “caused by accident” is synonymous with “accidental means.” Id. at 1192. “The focus is on the occurrence or happening which produces the result, not the result itself.” Id. The court then concluded:
Given this construction of the policy term, it is evident that the defendant was entitled to judgment as a matter of law. Mrs. Laney does not dispute that her husband intentionally and voluntarily drank the alcohol that caused his death. Nor does she contend that some mischance, slip or mishap occurred during his consumption of the whiskey and beer to cause him to consume more than he intended. Although the result of his drinking
was unexpected, the act of drinking was intentional. Georgia law makes it clear that such conduct is not covered by an “accidental means” policy.
Id. See also Continental Assurance Company v. Rothell, 227 Ga. 258, 181 S.E.2d 283 (1971). A reasonable person would have foreseen that driving with a blood alcohol level of .22 grams percent was highly likely to result in injury or death. If Laney or Georgia law applies to this case, the court should enter judgment in favor of the Defendants and against the Plaintiff. Nevertheless, it is also unquestionably true that the ordinary purchaser of an accidental death insurance policy would think that the unintentional and unexpected burning to death as a result of a car wreck constitutes death by accident.
The Eleventh Circuit has clearly held that ERISA preempts state law and authorizes federal courts to create federal common law to implement Congress’ statutory scheme. Branch v. G. Bernd Co., 955 F.2d 1574, 1580 (11th Cir.1992). In this case, the Court is faced with the question of whether to frustrate the statutory scheme of ERISA by adhering to the metaphysical distinction between “accidental means” and “accidental results” that has bedeviled the courts for more than 60 years ....
... The Eleventh Circuit has clearly stated the process for determining ERISA common law.
To decide whether a particular rule should become part of ERISA‘s common law, courts must examine whether the rule, if adopted, would further ERISA‘s scheme and goals. ERISA has two central goals: (1) protection of the interests of employees and their beneficiaries in employee benefit plans; and (2) uniformity in the administration of employee benefit plans.
Horton v. Reliance Standard Life Ins. Co., 141 F.3d 1038, 1041 (11th Cir.1998) (citations omitted). Reading a foreseeability exclusion into the policy would frustrate the Congressional purpose of protecting ERISA plan beneficiaries. It would not contribute to uniformity in the administration of employee benefit plans. A foreseeability exclusion contributes to uncertainty and difficulty of administration. “[A]n insured should not have to consult a long line of case law or law review articles and treatises to determine the coverage he or she is purchasing under an insurance policy.” 74 F.Supp.2d at 1276, 1279.
Accordingly, the District Court concluded “that Allianz applied an incorrect legal standard to the determination of whether Mr. Buce died as a result of an accident.” Id. at 1279.
(C) Finally, the District Court rejected Allianz‘s alternative contention that Mrs. Buce‘s claim was, in any event, barred by the policy‘s intoxication exclusion provision, which read: “The Company shall not be liable for any loss sustained in consequence of the person whose injury is the basis of claim being intoxicated or under the influence of any narcotic unless administered on the advice of a physician.” The District Court found that the 1985 Summary Plan Description, a portion of a plan booklet furnished to Mr. Buce, “contained a list of policy exclusions that did not include an exclusion for injuries due to intoxication.” Id. The 1993 plan booklet contained a Summary Plan Description which did include an intoxication exclusion provision, but the District Court found, on the basis of NSI‘s answers to interrogatories, that “the 1985 Summary Plan Description was the only one ever issued to either Mr. or Mrs. Buce,” id. at 1274, with
III
On appeal, Allianz challenges each of the District Court‘s rulings.
The first ruling—that “heightened arbitrary and capricious” review is the proper standard for federal court review of the benefits denial in this case—is, as a matter of law, unassailable, for the reasons cogently stated by the District Court. ASRM—the plan administrator, and author of the initial denial of Mrs. Buce‘s claim—was dependent on the patronage of Allianz. And on review of ASRM‘s decision, Allianz, in stating through its attorney in the July 11, 1997 letter, that it “ha[d]...reevaluated this claim,” was exercising its ultimate authority to determine for itself whether payments should be made out of its own assets—an authority which then led it, “upon reconsideration,” to conclude that it “again denies the claim.” This is precisely the conflict-of-interest setting which—under this court‘s case law, carefully analyzed by the District Court—calls for “heightened arbitrary and capricious” review.
In its opening brief on appeal, Allianz undertakes to deflect the District Court‘s exercise of “heightened arbitrary and capricious” review by arguing that “notwithstanding a conflict of interest, the heightened arbitrary and capricious test does not apply if the administrator‘s interpretation of the plan language is correct.” We think, however, that it is not the correctness of the administrator‘s interpretation—namely, that the intoxication exclusion barred Mrs. Buce‘s claim—which is chiefly at issue. We think, rather, that what is chiefly at issue is the correctness of the insurance carrier‘s interpretation, for that was the final and controlling rationale for the denial of benefits. To be sure, the insurance carrier did invoke the intoxication exclusion provision, but that ground was alternative, and ancillary, to its principal basis for denying Mrs. Buce‘s claim—namely, that Mr. Buce‘s policy was “an ‘accidental means’ policy which requires that, in the act which preceded the injury, there must have occurred something sudden, unexpected and unforeseen,” and that “Mr. Buce‘s injuries were occasioned by his voluntary ingestion of alcohol and were therefore not ‘bodily injuries cause[d] by an accident’ as required by the coverage provisions of the Policy.” The District Court, in the second of its three rulings, rejected that interpretation, holding that “accidental means” doctrine, while good law in Georgia, was not a permissible ingredient of a benefits plan governed by ERISA. To the correctness of that ruling, which is subject to plenary review by this court, we now turn.
The District Court, in the portion of its analysis quoted above (in Part II(B) of this opinion), noted that Georgia is an “accidental means” jurisdiction, as recognized by this court in Laney v. Continental Ins. Co., 757 F.2d 1190 (11th Cir.1985), and went on to observe that “[i]f Laney or Georgia law applies to this case, the Court should enter judgment in favor of the Defendants and against the Plaintiff.” 74 F.Supp.2d at 1276. However, the District Court, finding limited value in “accidental means” doctrine, concluded that, since the case at bar is not, like Laney, a diversity case, but an ERISA case, the Georgia law of “accidental means” was not controlling.
In the portion of the District Court‘s opinion quoted at some length in Part II(B) of this opinion, supra, the District Court referred to “the metaphysical distinction between ‘accidental means’ and ‘accidental results’ that has bedeviled the courts for more than 60 years.” The “more than 60 years” was a reference back to the Supreme Court‘s decision in Landress v. Phoenix Ins. Co., 291 U.S. 491, 54 S.Ct. 461, 78 L.Ed. 934 (1934). Landress was a pre-Erie1 diversity case. The decedent died of sunstroke while playing golf. The decedent‘s widow sought to recover on two accident insurance policies. One policy provided coverage for death resulting “directly and independently of all other causes from bodily injuries effected through external, violent and accidental means, and not directly or indirectly, wholly or partly from disease or physical or mental infirmity.” The other policy provided coverage for death resulting “from bodily injuries effected directly and independently of all other causes through external, violent and accidental means.” On certiorari, the Court reviewed a judgment of the Sixth Circuit, 65 F.2d 232, affirming the district court‘s dismissal of the complaint. The Court affirmed. Speaking through Justice Stone, the Court explained:
Petitioner argues that the death, resulting from voluntary exposure to the sun‘s rays under normal conditions, was accidental in the common or popular sense of the term and should therefore be held to be within the liability clauses of the policies. But it is not enough, to establish liability under these clauses, that the death or injury was accidental in the understanding of the average man—that the result of the exposure “was something unforeseen, unsuspected, extraordinary, an unlooked for mishap, and so an accident,” see Lewis v. Ocean Accident & G. Corp., 224 N.Y. 18, 21, 120 N.E. 56; see also Aetna Life Ins. Co. v. Portland Gas & Coke Co., 229 Fed. 552—for here the carefully chosen words defining liability distinguish between the result and the external means which produces it. The insurance is not against an accidental result. The stipulated payments are to be made only if the bodily injury, though unforeseen, is effected by means which are external and accidental. The external means is stated to be the rays of the sun, to which the insured voluntarily exposed himself. Petitioner‘s pleadings do not suggest that there was anything in the sun‘s rays, the weather or other circumstances, external to the insured‘s own body and operating to produce the unanticipated injury, which was unknown or unforeseen by the insured ....
This distinction between accidental external means and accidental result has been generally recognized and applied
where the stipulated liability is for injury resulting from an accidental external means ... And injury from sunstroke, when resulting from voluntary exposure by an insured to the sun‘s rays, even though an accident, see Ismay, Imrie & Co., v. Williamson [1908] A.C. 437, has been generally held not to have been caused by external accidental means.
291 U.S. at 495-96, 54 S.Ct. 461.
Justice Cardozo dissented. “A cause,” he wrote, “does not cease to be violent and external because the insured has an idiosyncratic condition of mind or body predisposing him to injury .... Here the complaint alleges that the idiosyncrasy was not a physical or mental disease, and that it appeared from autopsy that there was no bodily infirmity or disease which could have been a contributing cause of death. Since the case is here on demurrer, those allegations must be taken as true.” Id. at 498, 54 S.Ct. 461. Cardozo then turned to the contending legal principles as they applied to the case before the Court:
2. Sunstroke, though it may be a disease according to the classification of physicians, is none the less an accident in the ordinary speech of men .... The suddenness of its approach and its catastrophic nature ... have made that quality stand out when thought is uninstructed in the mysteries of science .... Violent it is for the same reason, and external because the train of consequences is set in motion by the rays of the sun beating down upon the body, a cause operating from without.
“In my view this man died from an accident. What killed him was a heatstroke coming suddenly and unexpectedly upon him while at work. Such a stroke is an unusual effect of a known cause, often, no doubt, threatened, but generally averted by precautions which experience, in this instance, had not taught. It was an unlooked for mishap in the course of his employment. In common language, it was a case of accidental death.” Per Loreburn, L. C., in Ismay, Imrie & Co., v. Williamson, supra.
3. The attempted distinction between accidental results and accidental means will plunge this branch of the law into a Serbonian Bog2. “Probably it is true to say that in the strictest sense and dealing with the region of physical nature there is no such thing as an accident.” Halsbury, L. C., in Brinton‘s v. Turvey, L.R. [1905] A.C. 230, 233 .... On the other hand, the average man is convinced that there is, and so certainly is the man who takes out a policy of accident insurance.
In Landress Cardozo stood alone. His elegant, ominous and obscure warning of the menace that lurked in a Serbonian Bog—a type of bog not locatable in Black‘s Law Dictionary or in Words and Phrases
As of today, the jurisdictions, of which Georgia is one, that continue to adhere to “accidental means” as a category of accident insurance liability distinct from, and more restrictive than, other categories of accident insurance liability are in the minority. Id. at § 139:21. But it does not seem to be a small minority. In 1994, the California Supreme Court, in a lengthy opinion by Justice George announcing (over vigorous dissent) continued allegiance to “accidental means,” noted that, “as of 1992, 22 jurisdictions, including California, expressly recognized the distinction between ‘accidental means’ and ‘accidental death’ (3 Harnett & Lesnick, [The Law of Life and Health Insurance], § 7.03[1], pp. 7-24—7-29; id., (1992 supp.) p. 5), whereas 25 jurisdictions expressly have rejected or repudiated this distinction. (3 Harnett & Lesnick, supra, § 7.06[1], pp.7-112—7-116).” Weil v. Federal Kemper Life Assurance Co., 7 Cal.4th 125, 27 Cal.Rptr.2d 316, 866 P.2d 774, 781 (1994)3. Justice George also noted that the First Circuit, in an ERISA case—Wickman v. Northwestern Nat. Ins. Co., 908 F.2d 1077 (1st Cir.), cert. denied, 498 U.S. 1013, 111 S.Ct. 581, 112 L.Ed.2d 586 (1990)—had rejected “accidental means.”
In Wickman, the decedent, Paul Wickman, fell to his death from a highway bridge to railroad tracks forty or fifty feet below. When last seen, the decedent was “standing on the outside of the bridge‘s guardrail, holding on to it with only his right hand.” Id. at 1080. Whether Paul Wickman slipped or jumped could not be determined. After the claim filed by Mary Jane Wickman (the decedent‘s widow, and the beneficiary of his group accidental death and dismemberment policy) was denied by the insurance carrier, she brought a diversity action against the carrier in the United States District Court for Massachusetts. Because the group policy was
Wickman‘s rejection of “accidental means” does not, however, rule the case of Walter Buce. In the case at bar, the vague terms of the policy—“bodily injury caused by an accident ... and resulting directly and independently of all other causes in loss covered by the policy“—are given cognizable doctrinal context by another provision of the policy, the directive that “[t]he Plan is to be interpreted in accordance with the laws of the State of Georgia.” Georgia—as this court held in Laney, supra—is an “accidental means” jurisdiction. Laney was decided in 1985, the year that Walter Buce elected to become a participant in NSI‘s Personal Accident Insurance Plan. In Laney the decedent‘s widow brought suit, based on her husband‘s death from over-consumption of alcohol (“acute ethanol intoxication (poisoning)‘“), under a policy providing coverage for “loss ... resulting directly and independently of all other causes from bodily injuries caused by accident.” In affirming the district court‘s grant of summary judgment in favor of the carrier, we addressed the meaning of “caused by accident” (the phrase which links Pat Laney and Walter Buce) under Georgia law. We reviewed “accidental means” case law in Georgia and neighboring jurisdictions. We noted that “[l]eading commentators on insurance law ... equate ‘caused by accident’ and ‘accidental means.‘” 757 F.2d at 1192. And we then said: “Finally, grammatical construction suggests that the two terms, ‘caused by accident’ and ‘accidental means,’ are synonymous and not the same as ‘accidental injury.’ In the phrase ‘accidental means,’ the word accidental is an adjective describing the quality of the events precipitating the ultimate result. The focus is on the occurrence or happening which produces the result, not the result itself. Similarly, in the phrase ‘bodily injuries caused by accident,’ the qualifier limits the cause of the harm to those circumstances where the result, i.e., the injury, is due to an unexpected, unforeseen or unintentional event.” Id. In the case at bar, the July 11, 1997 letter of Allianz‘s attorney to Patricia Buce‘s attorney, John Robinson, giving the reasons for the carrier‘s denial of Mrs. Buce‘s claim, is in harmony with this court‘s explication in Laney of Georgia law. Wrote Allianz attorney Douglas Campbell: “This is an accident policy which, as applicable to this particular claim, provides payment of benefits where loss of life is due to bodily injury caused by an accident and resulting directly and independently of all other causes in death. As such, it is an ‘accidental means’ policy which requires that, in the act which preceded the injury, there must have occurred something sudden, unexpected and unforeseen.” Thus, in the light of the express directive of the policy that it “is to be interpreted in accordance with the laws of the State of Georgia,” we conclude that Allianz‘s decision to deny the claim made by Patricia Buce survives “enhanced arbitrary and capricious” review5.
In the case at bar, we have been pointed to no ERISA statutory language, and no cases formulating the common law of ERISA, which suggest that the agreement of the parties to utilize Georgia doctrine would be subversive of ERISA policy6. From Cardozo onward, “accidental
The doctrine of “accidental means” may no longer be fashionable, but its use in this Georgia benefits plan can hardly be characterized as “unreasonable“, let alone “fundamentally unfair“. Accordingly, the District Court was without authority to determine that it should be disregarded. “The parties to accident insurance contracts have the right and power to contract as to the accidents and risks for which the company shall and shall not be liable, subject to the restraints of public policy, and the courts may not make new or different contracts for them.” 10 Couch on Insurance 3d § 139:8 (1998 ed.) (footnotes omitted).
Conclusion7
For the reasons given above, the judgment of the District Court is REVERSED and the cause REMANDED with directions to enter judgment dismissing the suit of plaintiff-appellee Patricia Buce against defendant-appellant Allianz.
REVERSED and REMANDED.
BARKETT, Circuit Judge, concurring, in which POLLAK, District Judge, joins:
I concur in the majority opinion and write only to expand on the question of whether an ERISA plan provider and its
I start with the principle that the parties to a contract have the right to define the terms of that contract. Thus, in the insurance context, parties are free to agree upon the extent of coverage, to agree to limit insurance liability through exclusions or other contingencies, and to agree to the manner in which the disputed meaning of contractual terms should be decided1. The question before this Court is whether ERISA precludes the parties to an agreement from using state law to define an ERISA contract‘s terms. In the absence of any compelling rationale to the contrary, I am not persuaded that ERISA sweeps so broadly.
To determine the extent of Congress’ preemptive intent, courts first look to the language of the statute‘s preemption clause. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 95-100, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). In this case, ERISA‘s preemption clause,
[e]xcept as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this title.
The Supreme Court has recognized that ERISA‘s preemption clause is “not a model of legislative drafting,” Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 740, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 46, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987), and has provided guidance to resolve the question before us. In De Buono v. NYSA-ILA Medical and Clinical Services Fund, 520 U.S. 806,
In De Buono, the Supreme Court noted that in the early ERISA preemption clause cases, the state laws at issue had a clear “connection with or reference to ERISA benefit plans.” 520 U.S. at 813, 117 S.Ct. 1747 (internal citations omitted). Thus, in those cases it was “not ... necessary to rely on the expansive character of ERISA‘s literal language in order to find preemption.” Id. Ultimately, when confronted with the question of whether Congress intended ERISA‘s “relates to” language to modify “the starting presumption that Congress does not intend to supplant state law,” the Supreme Court explained that it “unequivocally concluded that it did not ....” Id.
In De Buono, the Supreme Court also acknowledged that its “prior attempt[s] to construe the phrase ‘relate[s] to’ d[id] not give ... much help [in] drawing the line” between the issues preempted by
[i]n order to evaluate whether the normal presumption against preemption has been overcome in a particular case, we [have] concluded that we “must go beyond the unhelpful text [in
§ 1144(a) ] and the frustrating difficulty of defining its key term[s], and look instead to the objectives of the ERISA statute as a guide to the scope of the state law that Congress understood would survive.”
De Buono, 520 U.S. at 813-14, 117 S.Ct. 1747 (citing Travelers, 514 U.S. at 656, 115 S.Ct. 1671). The Supreme Court reiterated this view in Dillingham, noting that the statute at issue there, a wage law, was no different from myriad state laws in areas traditionally subject to local regulation, and when Congress enacted the ERISA preemption clause, it could not possibly have intended to eliminate all of these laws.3Dillingham, 519 U.S. at 334, 117 S.Ct. 832.
In my view, nothing in ERISA suggests that Congress intended to preempt the agreement of the parties here. Rather, when Congress enacted ERISA, it was concerned about the enormous number of benefit plans which were receiving preferential tax treatment, but were not protecting long term employees from losing anticipated retirement benefits because the plans lacked vesting provisions. See
When one looks at ERISA‘s preemption clause in light of Congress’ goals for the entire statute, it seems clear that Congress was simply ensuring that no state regulation would supersede the protections provided by the statute‘s provisions. Therefore, consistent with these goals, the phrase “State laws” in
Indeed, no Supreme Court case has addressed ERISA preemption in light of private agreements concerning state law. Rather, all of the Supreme Court‘s ERISA preemption cases address the question of whether state legislative enactments affect the regulation, operation, structure and policy concerns of ERISA, or whether state law causes of action conflict with the statute‘s enforcement mechanisms. See Egelhoff v. Egelhoff, 532 U.S. 141, 121 S.Ct. 1322, 149 L.Ed.2d 264 (2001) (holding that a Washington state law which automatically revoked designation of spouse as plan beneficiary upon divorce was preempted as applied to ERISA plans because it conflicted with ERISA‘s requirement that a plan be administered according to the plan‘s terms); UNUM, 526 U.S. 358, 119 S.Ct. 1380, 143 L.Ed.2d 462 (1999) (holding, inter alia, that California agency law establishing that an employer was an agent of the insurer providing its insurance policies was preempted by ERISA); Boggs v. Boggs, 520 U.S. 833, 117 S.Ct. 1754, 138 L.Ed.2d 45 (1997) (holding that ERISA preempted a Louisiana state law regulating community property when the insured sought to use a testamentary transfer to convey his interest in an ERISA plan); De Buono, 520 U.S. 806, 117 S.Ct. 1747, 138 L.Ed.2d 21 (1997) (holding that ERISA did not preempt a New York state tax on the gross receipts of health care facilities operated by an ERISA fund); Travelers, 514 U.S. 645, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995) (holding that ERISA did not preempt a New York statute requiring hospitals to collect surcharges from patients covered by a commercial insurer but not from a patient insured by a Blue Cross Blue Shield plan); John Hancock Mut. Life Ins. Co. v. Harris Trust and Sav. Bank, 510 U.S. 86, 114 S.Ct. 517, 126 L.Ed.2d 524 (1993) (recognizing that ERISA‘s fiduciary duties provisions do not always preempt state law obligations for fiduciaries managing benefit plans); Dist. of Columbia v. Greater Washington Bd. of Trade, 506 U.S. 125, 113 S.Ct. 580, 121 L.Ed.2d 513 (1992) (holding that the District of Columbia Worker‘s Compensation Equity Amendment Act explicitly referred to ERISA and was therefore preempted); Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990) (holding
The only circuit court which has addressed a case similar to this one is the Eighth Circuit in Prudential Insurance Company of America v. Doe, 140 F.3d 785, 790-91 (8th Cir.1998), which relied on the earlier case of Brewer v. Lincoln National Life Insurance Company, 921 F.2d 150, 153-54 (8th Cir.1990). In Prudential, the
Neither Prudential nor Brewer offer any compelling rationale for why ERISA‘s preemption clause should be construed to wholly bar the general practice of agreements between insurers and insureds as to how their insurance policy‘s terms will be construed. Thus, I concur with Judge Pollak‘s assessment that ERISA‘s preemption clause does not bar the enforcement of a choice of law agreement, as long as the law applied does not conflict with ERISA‘s statutory language or policy goals.
CARNES, Circuit Judge, concurring in the result:
I concur in the reversal of the district court‘s judgment because I reach the same bottom line conclusion as the majority about Allianz‘s decision to deny Patricia Buce‘s claim for death benefits—the denial was not arbitrary and capricious under the heightened standard of review. But I arrive at that conclusion by a different route than the majority. The route the majority follows involves a holding that ERISA does not preempt state law definitions of plan terms when those definitions are incorporated into the plan by a choice-of-law provision. That holding on an important issue of first impression in this circuit may be correct. Or it may not be.
Some other courts appear to have decided the issue differently. Those other courts have held that ERISA‘s preemption provision, among the broadest ever drafted by Congress, does preempt state law specified in plan choice-of-law provisions. See Prudential Ins. Co. of Am. v. Doe, 140 F.3d 785, 790-91 (8th Cir.1998) (holding, in light of the “broad preemptive scope of ERISA,” that “[t]he choice of law provision in the [benefits plan] does not alter the outcome here, for parties may not contract to choose state law as the governing law of an ERISA-governed benefit plan“); Morton v. Smith, 91 F.3d 867, 871 (7th Cir. 1996) (dictum) (choice-of-law provision does not control because the “federal common law of ERISA preempts most state
I find it unnecessary to decide the ERISA preemption issue the majority addresses, or any other issue relating to how the Plan term “caused by an accident” is defined, because in my view Mrs. Buce‘s claim is precluded by the Plan‘s intoxication exclusion. That exclusion provides that “[Allianz] shall not be liable for any loss sustained in consequence of the person whose injury is the basis of claim being intoxicated.”
Mr. Buce was exceedingly intoxicated when he died—a posthumously drawn blood sample measured his blood alcohol content at .22 percent, more than twice the legal limit. See
The district court concluded that denying benefits on the basis of the intoxication exclusion was arbitrary and capricious for one reason: the 1985 summary plan description, the only one the Buces ever received, did not mention the Plan‘s intoxication exclusion. Buce v. National Serv. Inds., Inc., 74 F.Supp.2d 1272, 1279-80 (N.D.Ga.1999). The district court reasoned that where a plan and a summary plan description are inconsistent, the terms of the summary description control. Id. at 1279. Here, the district court determined that the two were inconsistent because the Plan contained an intoxication exclusion which the summary plan description did not mention. Id. Accordingly, the court concluded that Allianz‘s denial of death benefits on the basis of that exclusion was arbitrary and capricious under our heightened standard of review. Id. at 1280.
ERISA contemplates that the summary plan description will be the employee‘s primary source of information regarding benefits, and employees are entitled to rely on the description contained in it. See
I disagree. Mrs. Buce‘s testimony showed reliance, but it did not show detrimental reliance. In my view, Mrs. Buce was required to go beyond a simple showing that she acted or failed to act in some respect because of the Summary Plan Description‘s omission of the intoxication exclusion. In this context, a requirement of reliance includes a showing of detriment. While we have never squarely held that an employee or beneficiary must show that her reliance on a statement or omission in the summary plan description was detrimental, we have indicated that she must. In Branch v. G. Bernd Co., 955 F.2d 1574 (11th Cir.1992), the terms of the plan specified an election period for obtaining continued coverage that differed from the election period given in the summary plan description. We held that the plan‘s terms, and not those of the summary plan description, governed the plaintiff‘s eligibility for benefits, because the plaintiff had provided “no evidence ... [that he had] ever read or relied on the summary.” Id. at 1579-80. To be sure, the holding of Branch is simply that a plan trumps a summary plan description where there is no reliance at all, and there was no occasion to decide in that case whether the reliance required is detrimental reliance. See also Collins v. American Cast Iron Pipe Co., 105 F.3d 1368, 1371 (11th Cir. 1997) (plaintiff did not rely on faulty summary plan description because he did not read it until after he had filed his lawsuit).
But our discussion in Branch did provide an example of the kind of evidence that would satisfy the reliance requirement, and that example suggests that a showing that the reliance was detrimental is necessary in order to prevail on the basis of an omission in the summary plan description. We said:
a beneficiary who receives a summary that omits the plan‘s limit on the election period could prove reliance with evidence that the beneficiary received and read the summary and failed to make a timely election based on the belief that there was no time limit.
Branch, 955 F.2d at 1579 n. 2. I believe the negative implication of that dicta is correct. An employee or beneficiary is not harmed by non-detrimental reliance, and we ought not disregard a plan‘s otherwise controlling terms because of an omission from a summary plan description in the absence of harm. See Maxa v. John Alden Life Ins. Co., 972 F.2d 980, 984 (8th Cir.1992) (“[I]n order to recover for a faulty plan summary, appellant must ... show that [he] took action, resulting in some detriment, that [he] would not have taken had [he] known [that the terms of the plan were otherwise].“) (internal quotes and citation omitted).1
Detrimental reliance or actual harm from a summary plan description‘s inconsistency with the plan can also be shown by evidence that, but for the inconsistency, the employee or beneficiary would have obtained other insurance which would have paid benefits. But there is absolutely no evidence that if the summary description had referred to the intoxication exclusion either Mr. or Mrs. Buce would have purchased some other insurance policy that did not have such an exclusion.
I join the majority‘s reversal of the district court‘s judgment which set aside Allianz‘s denial of Mrs. Buce‘s death benefits claim. I would, however, base that reversal
Notes
Beyond this flood a frozen Continent
Lies dark and wilde, beat with perpetual storms
Of Whirlwind and dire Hail, which on firm land
Thaws not, but gathers heap, and ruin seems
Of ancient pile; all else deep snow and ice,
A gulf profound as that Serbonian Bog
Betwixt Damiata and mount Casius old,
Where Armies whole have sunk: the parching Air
Burns frore, and cold performs th’ effect of Fire. Indeed, there is nothing in ERISA generally that addresses how contractual terms such as “accident” should be defined or interpreted. Mrs. Buce was given an opportunity in the district court to identify any detriment that she suffered from failing to take any steps she might have taken had she known of the intoxication exclusion. For example, the following exchange took place at trial:
Q: So you‘re not contending now that there is any specific thing or things that you think an autopsy would or might have revealed that might bear one way or another on this particular case; is that what you‘re saying?
R: I don‘t know what an autopsy would reveal.