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MADD MEN: DRAMATIC CONTRASTS IN ACCIDENT INSURANCE CASES INVOLVING DRUNK DRIVING

by Elizabeth G. Doolin, Chittenden, Murday & Novotny LLC, Chicago, Illinois

Don Draper finished his sixth Canadian Club and then got behind the wheel of his Cadillac for the long drive home.  After traveling about 23 miles, witnesses reported seeing his car swerve left, then sharply right, before rolling over multiple times.  Don died at the scene of the crash.  The Medical Examiner determined his BAC (Blood Alcohol Content) was 0.174g/100 ml, over twice the legal limit.  Don’s partner, Roger Sterling, fared no better.  Driving through a well-marked construction zone at a high rate of speed, he entered the left lane and, without any effort to avoid a collision, crashed head-on into a parked dump truck.  Rogers’ BAC at the time of his death was between .26 and .27, also well over the legal limit. 

Don and Roger were both insured under a group accident policy sponsored by their employer (Sterling Cooper Draper Pryce) which provided accidental death benefits for a “Covered Accident,” defined in the policy as “a sudden, unforeseeable, external event that results, directly and independently of all other causes, in a Covered Injury or Covered Loss…”  In both cases, their insurer denied the resulting claims, noting that, “the hazards of driving while intoxicated are widely known and publicized” and pointing out the illegality of drunk driving made the insured’s knowledge of the risk even more certain.  In the subsequent lawsuits, however, two different courts, both applying a deferential standard of review, came to sharply different conclusions:  Don’s beneficiary walked away with nothing from a federal district court in San Antonio, Texas, while Roger’s wife, who sued in Connecticut, got the decision overturned and remanded.  These two late 2009 decisions reflect a long-standing interpretive divide on whether a drunk driving death is an “accident” in a policy without an intoxication exclusion.  See Sanchez v. Life Ins. Co. of North America, 704 F. Supp. 2d 587 (W.D. Tex. 2009), aff’d. No. 09-51010, 2010 WL 3447723 (5th Cir. September 1, 2010) and Danouvong v. Life Ins. Co. of North America, 659 F. Supp. 2d 318 (D. Conn. 2009). 

With some outliers and subtle variations, courts have resolved this issue in two very different ways, depending on the jurisdiction.  The traditional approach finds that if death can be a reasonably expected or foreseeable result of an action, then it will not be considered the result of an accident and therefore will not be covered under an accident insurance policy.  See, e.g. Cozzie v. Metro. Life Ins. Co., 140 F.3d 1104, 1109-10 (7th Cir. 1998); Arnold v. Hartford Life Ins. Co., 542 F. Supp. 2d 471, 476-81 (W.D. Va. 2008).  Additional courts, applying the federal common law of ERISA, have come to a similar conclusion.  See, e.g. Stamp v. Metro. Life Ins. Co., 531 F.3d 84, 88-94 (1st Cir. 2008); Lennon v. Metro. Life Ins. Co., 504 F.3d 617, 620-24 (6th Cir. 2007).  Other courts, however, reject what they see as an overbroad, blanket interpretation of “accident” which effectively reads a non-existent exclusion into the policy by tying accidents to unforeseeable events.  See, e.g. King v. Hartford Life & Accident Ins. Co., 357 F.3d 840, 842 (8th Cir. 2004); Carter v. Sun Life Assur. Co., No. 05-2214, 2006 WL 1328821, at *8 (E.D. La. May 11, 2006). 

Because of their factual similarities, the Sanchez and Danouvong decisions reveal the stark differences in how courts handle these types of cases.  The insureds in both died in single vehicle crashes with blood alcohol levels well in excess of the legal limit and no evidence of any contributing factor other than intoxication.  (In fact, plaintiff’s counsel in Danouvong conceded that “the collision would not have occurred had the decedent not been drunk.”  659 F. Supp. 2d at 320.)  In both cases, the policies contained identical definitions of “Covered Accident.”  Sanchez, 704 F. Supp. 2d at 594; Danouvong, 659 F. Supp. 2d at 321.  LINA denied each claim because it determined the insured’s death was foreseeable in nature, and thus not the result of an accident, expressly stating:  “[A] Covered Accident must be an unforeseen event.  The hazards of driving while intoxicated are widely known and publicized.  It is also well known in the general public that driving while intoxicated could result in bodily harm or death.”  Sanchez, 704 F. Supp. 2d at 590, n.5; Danouvong, 659 F. Supp. 2d at 321.  Both cases were brought under ERISA and evaluated under the arbitrary and capricious standard of review.  

In Sanchez, the court concluded that LINA’s interpretation of the policy and conclusion that the insured’s death was not the result of a Covered Accident was “legally correct.”  The court pointed to the opinion from the independent toxicologist retained by LINA, who noted that a BAC of .174% “will cause an individual to be impaired to the extent that they would not be able to drive safely…[and] will be manifested by poor judgment, increased reaction time, muscle and coordination, loss of visual acuity, and increased risk taking.”  Sanchez, 704 F. Supp. 2d at 598.  Given the evidence presented, including the known hazards of drunk driving, the court upheld both LINA’s interpretation of “unforeseeable” as “not capable of being reasonably anticipated or expected” and LINA’s application of that interpretation to the facts to deny the claim.  Id. at 599.

In contrast, the court in Danouvong rejected what it called LINA’s “ipse dixit pronouncements, without citation either to the record or the authority,” about the hazards of driving while intoxicated.  Danouvong, 659 F. Supp. 2d at 326.  The court criticized LINA’s application of a “categorical rule” that “if uniformly applied, requires LINA, in all cases and without regard to the individual facts on the record, to deny benefits to any insured driver who, having consumed alcohol in excess of the legal limit, is injured or killed in a car collision.”  Id. at 325.  The court went on to conclude such a rule is inconsistent with “the ordinary and popular interpretation” of the term foreseeable, noting that “statistically speaking, legally intoxicated motorists arrive safely at their destination without incident more often than not.”  Id. at 327, citing Lennon, 504 F.3d at 629 (Clay, J. dissenting).  Accordingly, the Danouvong court remanded the case back to LINA with specific instructions to interpret the policy without relying on its “tautologically repeating” interpretation of the plain but undefined term “unforeseeable” as “not foreseeable.”  Id. at 330.

These two decisions do more, however, than illustrate opposing viewpoints when a claim for accident benefits involves a drunk driving death (with no intoxication exclusion in the policy).  Recent decisions following Sanchez and Danouvong suggest courts may be shifting away from the more traditional “reasonable forseeability” approach.  See, e.g. LaAsmar v. Phelps Dodge Corp. Life, Accidental Death & Indep. Life Ins. Plan, 605 F.3d 789 (10th Cir. 2010); Brettelle v. Life Ins. Co. of North America, 691 F. Supp. 2d 1239 (S.D. Cal. 2010).  While these decisions apply a de novo standard of review, they use reasoning similar to that in Danouvong to reject the insurers’ reasonable forseeability analyses and find in favor of coverage.  Moreover, footnotes and dicta in the Sanchez decision show even that court’s discomfort with the “reasonably anticipated” restriction on the definition of “Covered Accident.”  The court noted it “…is particularly disturbed by the potential arbitrary and capricious focus on the terms ‘unforseeable’ and ‘foreseeable’…relying only on foreseeability presents the opportunity for defendant to deny coverage for risky but legal activities (e.g. standing on a ladder, driving automobile, playing basketball).”  704 F. Supp. 2d at 596, n.18.  The court went on to observe, “if anything, LINA’s interpretation would seem to add terms and exclusions to the policy that (1) the policy does not contain and (2) that defendant could have easily included explicitly.”  Id. at 598.  Even though the Sanchez court ultimately found in LINA’s favor, there is plenty in the opinion to suggest it would have ruled otherwise under a less deferential standard of review or in a case that was not governed by ERISA at all. 

In the future, courts may be less likely to accept the “reasonable forseeability” test for determining whether drunk driving deaths are covered accidents.  As one commentator has recommended, accident insurers will best protect themselves from liability by including specific and uniform intoxication exclusions in their policies.  See Gary Schuman, Dying Under the Influence: Drunk Driving and Accidental Death Insurance, 44 Tort Trial & Ins. Prac. L. J. 1, 24 (Fall 2008).  In the meantime, this dramatic divide continues.  Even worse, Pete Campbell is now running Sterling Cooper Draper Pryce.

Elizabeth G. Doolin
Chittenden, Murday & Novotny LLC
Chicago, Illinois
edoolin@cmn-law.com

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