FIFTH CIRCUIT HOLDS ALCOHOL-RELATED CAR CRASH “ACCIDENT” UNDER ERISA POLICY ABSENT SPECIFIC LANGUAGE TO THE CONTRARY

June 18, 2012

In a second case of first impression issued on Friday, the Fifth Circuit held that an insured’s death in an alcohol-related car crash was an “accident” under an ERISA life insurance plan.  Firman v. Life Ins. Co. of North America, --- F.3d ----, 2012 WL 2161135 (5th Cir. June 15, 2012.)  The court found the self-administered ERISA plan abused its discretion and failed to follow the law.  The insured had died in a car crash with a blood alcohol level well above the legal limit.  But, the death certificate and accompanying medical records indicated the death was an “accident” involving “blunt force trauma.”  The court noted the policy at issue defined an accident and that the car crash met the definition.  The court then noted the policy did not exclude alcohol-related car crashes.  Of particular concern to the court was that the ERISA plan had twice told the beneficiary in denial letters that the plan did not provide coverage.  The court noted that this was directly contrary to the law: “No circuit court considering drunk driving crashes has approved a claims administrator's use of a per se rule in the context of ERISA accidental death policies.” The court went on to render judgment for the beneficiary against the ERISA plan.