Appeal from the United States District Court for the District of Colorado (D.C. No. 06-cv-00013-MSK-MJW).
The opinion of the court was delivered by: Ebel, Circuit Judge.
Before BRISCOE, Chief Judge, EBEL and MURPHY, Circuit Judges.
"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. 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." Landress v. Phoenix Mut. Life Ins. Co., 291 U.S. 491, 499 (1934) (Cardozo, J., dissenting) (quotations, citations omitted).
Plaintiffs Ronald and Sandra LaAsmar's adult son Mark had accidental death insurance as part of an employee benefit plan governed by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461. In this case, we must decide whether Mark LaAsmar's death, in a one-vehicle crash, was the result of an "accident" covered under the plan. Defendant Metropolitan Life Insurance Company ("MetLife"), the plan's administrator, denied the LaAsmars' claim for accidental death benefits because, at the time of the crash, Mark LaAsmar's blood alcohol level was almost three times the limit permitted under Colorado law. The district court overturned that decision. Having jurisdiction under 28 U.S.C. § 1291 and reviewing MetLife's denial of benefits de novo, we AFFIRM.
Mark LaAsmar began working for Phelps Dodge Corporation in January 2004. Through Defendant Phelps Dodge Corporation Life, Accidental Death and Dismemberment and Dependent Life Insurance Plan ("Plan"), LaAsmar obtained both life insurance and accidental death and dismemberment ("AD&D") coverage. The Plan contracted with Defendant Metropolitan Life Insurance Company ("MetLife") to provide these benefits; MetLife was also the Plan's claims administrator.
According to the terms of that Plan, Mark LaAsmar's AD&D insurance provided "additional security by paying [his] beneficiary a benefit in addition to life insurance if [he] die[d] as a result of an accident." (Aplt. App. at 81.) The accident had to be "the sole cause of the injury," "the sole cause of the covered loss," and "[t]he covered loss [had to] occur not more than one year after the date of the accident." (Id. at 82.)
In the early morning hours of July 25, 2004, LaAsmar died in a single-vehicle crash in Grand County, Colorado. His death certificate identified him as the "apparent driver" of the vehicle, a pickup truck owned by LaAsmar. (Id. at 179.) The vehicle's other occupant, Patrick O'hotto, also died in the crash. The Colorado State Patrol report on the incident indicated that, at the time of the crash, LaAsmar's truck was traveling sixty miles per hour on a straight two-lane rural road where the posted speed limit was forty miles per hour. The truck traveled off the right side of the road and rolled four and one-quarter times. Neither occupant was wearing a seat belt; they were both ejected from the vehicle and were pronounced dead at the scene. LaAsmar's death certificate indicated that the "immediate cause" of his death was "[h]ead and internal injuries" which were due to "[b]lunt force trauma" as a consequence of an "MVA," or motor vehicle accident. (Id. at 179.) It was the opinion of the Colorado state trooper investigating the crash that alcohol was involved. And the toxicology report indicated that LaAsmar had a blood alcohol content ("BAC") of 0.227g/100 ml, which is almost three times Colorado's legal limit of .08, see Colo. Rev. Stat. §42-4-1301(2)(a).
Mark LaAsmar's parents, Plaintiffs Ronald and Sandra LaAsmar, were his beneficiaries. They filed a claim with MetLife for life and AD&D benefits. MetLife paid the LaAsmars life insurance benefits, but denied AD&D benefits for several reasons: 1) because Mark LaAsmar's extreme intoxication contributed to the crash, the motor vehicle "accident" was not the "sole cause" of his death; 2) because the crash was the reasonably foreseeable result of driving while intoxicated, it was not an "accident" covered under the Plan; and 3) these circumstances fell within the Plan's exclusion from AD&D coverage for a "loss caused by or contributed to by . . . [i]njuring oneself on purpose" (Aplt. App. at 83).
The LaAsmars then filed suit for breach of contract in Colorado state court, naming both the Plan and MetLife as defendants. Defendants removed the action to federal court, asserting ERISA preemption; the parties now agree that ERISA governs the lawsuit, and we therefore construe the LaAsmars' suit as a private civil enforcement action to recover benefits under a plan, pursuant to 29 U.S.C. § 1132(a)(1)(B).*fn1 Both sides moved for summary judgment, stipulating that "no trial [was] necessary and that the Court should determine the Plaintiffs' claim based solely upon the administrative record before the Court." (Aplt. App. at 39).*fn2 Reviewing de novo MetLife's decision to deny AD&D benefits, the district court reversed that determination after concluding, among other things, that Mark LaAsmar's crash did constitute an "accident" under the Plan. (Id. at 47-48.)
In appeal No. 07-1267, MetLife and the Plan timely appeal the district court's order requiring that accidental death benefits be paid to the LaAsmars. The LaAsmars cross-appeal, No. 07-1286, from the district court's failure to rule on their requests for an award of attorney's fees and prejudgment interest.
We review summary judgment orders de novo, using the same standards applied by the district court. See Kellogg v. Metro. Life Ins. Co., 549 F.3d 818, 825 (10th Cir. 2008). Where, as here, the parties in an ERISA case both moved for summary judgment and stipulated that no trial is necessary, "summary judgment is merely a vehicle for deciding the case; the factual determination of eligibility for benefits is decided solely on the administrative record, and the non-moving party is not entitled to the usual inferences in its favor." Bard v. Boston Shipping Ass'n, 471 F.3d 229, 235 (1st Cir. 2006) (internal quotation omitted). Further, we accord no deference to the district court's decision. See Sandoval v. Aetna Life & Cas. Ins. Co., 967 F.2d 377, 380 (10th Cir. 1992).
"Like the district court, we must first determine the appropriate standard to be applied to [MetLife's] decision to deny benefits." Weber v. GE Group Life Assurance Co., 541 F.3d 1002, 1010 (10th Cir. 2008). We determine de novo what that standard should be. See Rasenack ex rel. Tribolet v. AIG Life Ins. Co., 585 F.3d 1311, 1315 (10th Cir. 2009).
"[A] denial of benefits" covered by ERISA "is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). Where the plan gives the administrator discretionary authority, however, "we employ a deferential standard of review, asking only whether the denial of benefits was arbitrary and capricious." Weber, 541 F.3d at 1010 (internal citation, quotation omitted). Under this arbitrary-and-capricious standard, our "review is limited to determining whether the interpretation of the plan was reasonable and made in good faith." Kellogg, 549 F.3d at 825-26 (internal alterations, quotations omitted). As the party arguing for the more deferential standard of review, it is MetLife's burden to establish that this court should review its benefits decision at issue here under an arbitrary-and-capricious standard. See Gibbs ex rel. Estate of Gibbs v. CIGNA Corp., 440 F.3d 571, 575 (2d Cir. 2006).
1. Whether Procedural Irregularities Warrant de Novo Review
The district court held that the terms of the Plan did not delegate discretion to MetLife to make benefits decisions.*fn3 This presents a difficult question, but one we need not decide. Assuming, without deciding, that the Plan vested MetLife with such discretion, there were "procedural irregularities" here-MetLife's failure to comply with ERISA-mandated time limits in deciding the LaAsmars' administrative appeal-that require us to apply the same de novo review that would be required if discretion was not vested in MetLife.
The LaAsmars filed their claims with MetLife on September 8, 2004, seeking life and AD&D benefits. MetLife initially denied the claim for AD&D benefits in a letter dated October 19, 2004.
The Plan explicitly provided that the LaAsmars could administratively appeal that decision to MetLife, giving them sixty days from the receipt of the initial denial to do so. The LaAsmars timely sought an administrative appeal with MetLife in a letter dated December 7, 2004.
The Plan further provided that, having received a request for an administrative appeal, MetLife "will review [the] claim and write to [the claimant] with its final and binding decision within 60 days of receiving [the] review request letter," or in this case, by approximately February 4, 2005.*fn4 (Aplt. App. at 89.)
The Plan's sixty-day deadline for MetLife to decide the LaAsmars' administrative appeal stems from ERISA's requirement that, "[i]n accordance with regulations of the Secretary [of Labor], every employee benefit plan shall . . . afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim." 29 U.S.C. § 1133(2); see Aetna Health Inc. v. Davila, 542 U.S. 200, 220 (2004). The Secretary's regulations implementing that "reasonable opportunity" for review obligation require, among other things, that "the plan administrator . . . notify a claimant . . . of the plan's benefit determination on review within a reasonable period of time, but not later than 60 days after receipt of the claimant's request for review by the plan." 29 C.F.R. § 2560.503-1(i)(1)(i) (2002).
In this case, however, MetLife did not decide the LaAsmars' administrative appeal until May 26, 2005, 170 days after they had sought review, or more than three times as long as permitted under the terms of the Plan and the ERISA regulations.*fn5
This court has on several occasions reviewed a benefits denial de novo, notwithstanding the fact that the Plan afforded the administrator discretion to make benefits determinations, where there were procedural irregularities in the administrator's consideration of the benefits claim. Applying an earlier version of 29 C.F.R. § 2560.503-1(h)(4) (1998), this court first applied de novo review based upon the insurer's breach of its duty to deliver a timely administrative decision in Gilbertson v. Allied Signal, Inc., 328 F.3d 625, 631 (10th Cir. 2003).
In Gilbertson, the insurer never decided the claimant's administrative appeal. See id. at 628-29. Notwithstanding that fact and well after the expiration of the sixty-day time limit, the claimant filed suit under ERISA challenging the denial of her claim. See id. at 629-30. The claimant did so relying on the version of 29 C.F.R. § 2560.503-1(h)(4) in effect at that time, which provided that when an administrator's appeal decision was not timely furnished, the claim would be "deemed denied." Gilbertson, 328 F.3d at 629-30. In that case, despite the fact that the terms of the plan at issue vested the insurer with discretion to determine benefits, we reviewed the Plan's denial of benefits de novo because "the administrator's 'deemed denied' decision [occurred] by operation of law rather than [by the administrator's] exercise of discretion." Id. at 631. Gilbertson, thus, held that "deferential review," where it was otherwise warranted, only applies "in those instances where an administrator's decision is an [actual] exercise of 'a discretion vested in [it] by the instrument under which [it] act[s].'" Id. (quoting Firestone, 489 U.S. at 111 (internal quotations and emphasis omitted)). Gilbertson's holding was based on the sensible notion that an ERISA "plan administrator is not entitled to the deference of arbitrary and capricious review when [the administrative] appeal [was] 'deemed denied' because the administrator made no decision to which a court may defer." Finley v. Hewlett-Packard Co. Employee Benefits Org. Income Prot. Plan, 379 F.3d 1168, 1173 (10th Cir. 2004).
The Secretary of Labor revised 29 C.F.R. § 2560.503-1, effective in 2002, and that revised version of this regulation applies here. The revision eliminated the "deemed denied" language and now the regulation instead provides that, [i]n the case of the failure of a plan to establish or follow claims procedures consistent with the requirements of this section, a claimant shall be deemed to have exhausted the administrative remedies available under the plan and shall be entitled to pursue any available remedies under section 502(a) of the Act [29 U.S.C. § 1132(a)] on the basis that the plan has failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim.
29 C.F.R. § 2560.503-1(l) (2002) (emphasis added). This regulation, like its predecessor, protects a claimant by insuring that the administrative appeals process does not go on indefinitely. See Gilbertson, 328 F.3d at 635-36.
Recently, this court, applying the revised 29 C.F.R. § 2560.503-1(l) but relying on the reasoning first expressed earlier in Gilbertson, employed a de novo standard of review in another case where the administrator never issued any decision on the claimant's administrative appeal. See Kellogg, 549 F.3d at 827-28. In Kellogg, this court applied a de novo standard of review under those circumstances, notwithstanding that the plan at issue vested "sole discretion" in the plan administrator to determine benefits eligibility. Id. at 826-28.
Unlike in Gilbertson and Kellogg, however, in this case MetLife did issue a decision denying the LaAsmars' administrative appeal, a decision to which this court potentially could defer; however, MetLife issued that decision in a belated manner. Under these circumstances, we still decline to apply a deferential standard of review; instead, we will review MetLife's benefits denial de novo.
The facts of our case are similar to those presented in Rasenack. In that case, we applied a de novo standard of review under the new version of 29 C.F.R. § 2560.503-1(l) (2002), even though the administrator eventually but belatedly issued a decision denying a claimant's administrative appeal, albeit after the claimant had already filed suit under ERISA. See Rasenack, 585 F.3d at 1314-18. Importantly, we noted that "[t]he relevant fact is that the administrator failed to 'render a final decision within the temporal limits' prescribed by the Plan and ERISA." Id. at 1318 (quoting Gilbertson, 328 F.3d at 631; alteration omitted). In Rasenack, we further noted that permitting plan administrators to avoid de novo review by belatedly denying an appeal after the deadline has passed and the claimant has filed suit would conflict with the ERISA's stated purposes, namely "protect[ing] . . . the interests of participants in employee benefit plans and their beneficiaries, . . . by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions, and ready access to the Federal courts."
Id. at 1318 (quoting 29 U.S.C. § 1001(b)).
That same reasoning applies here. Although MetLife eventually denied the LaAsmars' claim on administrative review, it did so substantially outside the time period within which the Plan vested it with discretion to interpret and apply the Plan. Thus, it was not acting within the discretion provided by the Plan. See Gilbertson, 328 F.3d at 631.
Our conclusion is bolstered by the Department of Labor's indication, in revising § 2560.503-1(l), that it intended "to clarify that the procedural minimums of the regulation are essential to procedural fairness and that a decision made in the absence of the mandated procedural protections should not be entitled to any judicial deference." Pension and Welfare Benefits Administration, 65 Fed. Reg. 70246-01, 70255 (Nov. 21, 2000) (emphasis added).*fn6
2. Whether MetLife's Substantial Compliance with these Procedural Requirements Permits it to Avoid de Novo Review
MetLife argues that, despite these procedural irregularities, it substantially complied with the requirements for a timely administrative appeal. Under our earlier precedent applying the pre-2002 version of 29 C.F.R. § 2560.503-1, this court declined to apply "a hair-trigger rule" requiring de novo review whenever the plan administrator, vested with discretion, failed in any respect to comply with the procedures mandated by this regulation. See Finley, 379 F.3d at 1173. Instead, if this court concluded that the administrator's decision was in "substantial compliance" with ERISA deadlines, then, if otherwise warranted, we would still afford deference to the benefits decision. See id. at 1173-75 (applying deferential arbitrary-and-capricious standard of review notwithstanding that administrative appeal was "deemed denied" and thus administrator did not exercise discretion in ruling on claimant's appeal); see also Gilbertson, 328 F.3d at 634-35. We need not decide whether that "substantial compliance" doctrine still applies to the revised regulation at issue here, 29 C.F.R. § 2560.503-1, because even assuming it does apply, MetLife did not substantially comply here with ERISA's requirement of a timely resolution of an administrative appeal.*fn7 In our cases addressing the prior regulation, we stated that an administrator substantially complied if the procedural irregularity was "(1) 'inconsequential'; and (2) in the context of an on-going, good-faith exchange of information between the administrator and the claimant." Finley, 379 F.3d at 1174 (quoting Gilbertson, 328 F.3d at 635); see also Rasenack, 585 F.3d at 1317. Assuming, without deciding, that that test would apply under the revised regulation, MetLife has failed to meet it because the 170-day delay in this case did not occur within "the context of an on-going, good-faith exchange of information between the administrator and the claimant." Finley, 379 F.3d at 1174 (quoting Gilbertson, 328 F.3d at 635). MetLife never requested an extension of time, as 29 C.F.R. § 2560.503-1(i)(1)(i) permits. And there is no suggestion in the record that Metlife was, during this delay, engaged in "an on-going productive evidence-gathering process in which the claimant is kept reasonably well-informed as to the status of the claim and the kinds of information that will satisfy the administrator." Gilbertson. 328 F.3d at 636. Instead, in response to the LaAsmars' attorney's letter asking about their administrative appeal, MetLife indicated only that it was still evaluating the case. It does not appear that MetLife ever attempted to gather any additional evidence before eventually denying the LaAsmars' administrative appeal.
For these reasons, we will review MetLife's decision to deny the LaAsmars' claim for AD&D benefits de novo because MetLife failed to comply substantially with 29 C.F.R. § 2560.503-1(i)(1)(i)'s deadline for deciding a claimant's administrative appeal.
B. Whether MetLife Erred in Denying the LaAsmars' claim for AD&D Benefits
We, thus, review de novo both the interpretation of the terms of the Plan and MetLife's decision to deny the LaAsmars accidental death benefits. See Miller v. Monumental Life Ins. Co., 502 F.3d 1245, 1250 (10th Cir. 2007). It was the LaAsmars' burden to establish a covered loss. See Rasenack, 585 F.3d at 1319.
The AD&D Plan at issue here, like any insurance policy, is a contract, an agreement between the Plan and its participant. See Salisbury v. Hartford Life & Accident Co., 583 F.3d 1245, 1247 (10th Cir. 2009). In interpreting that agreement, we must ...