Accidental Death Benefits Not Due For Drunk Driving

Plan administration can be tricky sometimes but it is good to see when a court upholds an administrators determination as "reasonable" when it also makes common sense. Take the case of Redeaux v. Southern National Life Insurance Company, recently decided by the 5th Circuit. In this case Redeaux was covered under a life insurance policy (the plan) issued by Southern National Life Insurance Company. He died in an automobile accident in 2002. His mother, the listed beneficiary, received the life insurance benefits, but the plan denied her claim for accidental death benefits. It turns out that Mr. Redeaux died in a single-car accident and the death certificate showed that his BAC at the time of death was .21 (significantly over the .10 legal limit). Southern denied the claim for accidental death benefits based on a policy exclusion "for a loss which in any way results from . . . injury or death occurring as a result of the commission of a crime or the attempt to commit a crime." After removal of the state court action to federal court, the district court granted summary judgment in favor of Redeaux, and Southern appealed. According to the 5th Circuit, the only issue on appeal is whether Southern erred when it denied the claim on the basis of the policy exclusion. the 5th Circuit reviewed Southern's denial using a deferential standard of review because of language in the plan providing for the right to interpret plan provisions. The question became whether the insured's death occurred as the result of committing a crime. While the deceased was not charged with a crimes, driving a vehicle while intoxicated is a crime under state law. The Court found that an actual criminal charge is not required to conclude that he was driving illegally. As such, the Court concluded that Southern did not err in finding that the accidental death benefit was not payable from the plan because of the exclusion. The 5th Circuit reversed the lower court's decision and rendered judgment in Southern's favor. Aside from being appearing to be an extremely rational decision, this also serves a a reminder to plan administrators that language giving the right to interpret the plan provisions to the administrator is good because of the deferential standard. Plus it reminds us that clearer language may be needed to further protect the plan. Had Southern said excluded benefits for the commission of a crime "whether or not the insured is actually charged with a crime," that might have eliminated the need for the appeal. So read language carefully and don't assume what you meant is what every court will read. For assistance in reviewing your plan language to avoid ambiguities, please contact your attorney at Fox Rothschild.

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