After her partner’s dying as a consequence of a heroin overdose, a participant introduced profit claims beneath her employer’s ERISA life insurance coverage and unintended dying and incapacity (AD&D) insurance policies (which coated the partner). The insurer paid the life insurance coverage profit however denied the AD&D declare, asserting that the coverage’s “deliberately self-inflicted harm” exclusion utilized. The participant sued, and the insurer argued that the lawsuit ought to be dismissed as a result of the participant had did not first exhaust administrative treatments. The trial court docket disagreed, holding that exhaustion of the plan’s inside claims procedures was not required the place no language about procedures existed within the underlying plan doc and concluding that the plan’s deliberately self-inflicted harm exclusion didn’t apply to this example (see our Checkpoint article). The insurer appealed, conceding that the written plan paperwork didn’t embrace inside evaluate or enchantment procedures however arguing that the go well with was nonetheless barred as a result of the participant did not exhaust the executive treatments set forth within the insurer’s denial letter.

The appellate court docket rejected the insurer’s argument, emphasizing that the requirement to exhaust administrative treatments earlier than submitting go well with is constantly premised on these treatments being expressly prescribed within the participant’s written plan paperwork. The court docket defined that requiring the participant to exhaust inside evaluate procedures that weren’t within the plan paperwork would render her reliance on these paperwork “largely meaningless” and famous that its choice aligns with rules that require ERISA plans to set forth written claims procedures in plan paperwork and abstract plan descriptions. Turning to the deserves of the case, the appellate court docket rejected the insurer’s argument that it correctly denied the participant’s declare beneath the AD&D coverage’s deliberately self-inflicted harm exclusion. The court docket concluded that, though the partner’s heroin use was a purposeful act that contributed to a deadly overdose, this didn’t imply that the harm ensuing from that act, i.e., a deadly overdose, was essentially intentional. The court docket reasoned that whether or not the exclusion applies is dependent upon whether or not the harm in query was certainly intentional (not simply foreseeable or possible), even when the injury-causing conduct was dangerous or reckless. Concluding that the plain language of the exclusion didn’t apply to unintended accidents just like the partner’s heroin overdose, the court docket affirmed the trial court docket’s award of advantages to the participant.

EBIA Remark: This choice highlights the significance of offering claims procedures which might be in line with ERISA’s necessities. Because the appellate and trial courts famous, the plan doc is on the heart of ERISA. Whereas it’s typically acceptable and handy to set forth a plan’s claims procedures in a doc that’s separate from the formal plan doc, it’s essential to expressly incorporate these procedures by reference—in any other case they don’t seem to be really a part of the plan. For extra data, see EBIA’s ERISA Compliance guide at Sections VIII.E (“ERISA-Required Plan Provisions”), VIII.G (“Different Necessary Plan Provisions”), and XXXVI.B (“Exhaustion of Plan Administrative Claims Procedures”).

Contributing Editors: EBIA Employees.