DWI Death an Accident, Insurer’s Claim Rejection Not

Posted November 16, 2011 in Insurance Law by Arthur Buono

Driving while intoxicated may be an "accident" waiting to happen. But there’s nothing accidental about the tactics of one insurance company in denying benefits under accidental death policies when insureds die as a result of driving while intoxicated.

     
  • Accidental death policy said not to cover death while DWI
  • Insurance company’s line rejected in a number of prior cases
  • Denial exposes ugly underside of policy interpretation, benefits law

 

Accidental Death Insurer Refuses to Pay DWI Death Claims

The Life Insurance Company of North America (LINA), a subsidiary of the giant CIGNA insurance company, has an unwritten policy, no pun intended, of refusing to pay such claims. They’ve litigated, and lost, most of these denials, but persist in the face of the results.

Timothy Whinery died in a single-car accident. He was intoxicated and speeding when his car, despite his reactions, as documented by an accident investigation, veered out of control and crashed into a tree, killing him. He was survived by his widow and children.

Nothing prevents an insurer like LINA from excluding certain acts or events from accidental death benefits coverage. For example, many insurers exclude coverage for death occurring in the commission of a felony. In fact, LINA’s policies now expressly exclude coverage for death caused by driving while intoxicated.

Nonsense Definition of "Accident"

At the time he died, Timothy Whinery was covered by a LINA policy which did not exclude DWI deaths. Nevertheless LINA refused to pay the $418,000 death benefit to his innocent survivors. In his case, as in others before, LINA says that Whinery’s death was not an "accident" covered by the policy.

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Los Angeles insurance attorney Glenn Kantor represents Mrs. Whinery in her claim for benefits against LINA. Her case should go to trial in federal court this December.

The denial took Mrs. Whinery by surprise, as it would most ordinary people. For as much as we don’t like it, thousands of people drive under the influence every day without incident. Of those involved in crashes, we say they had an "accident."

This is where things get weird, and we descend into the bizzaro world of insurance-speak, claims handling procedures, and insurance law. As Kantor points out, "the LINA policy covering Timothy Whinery promised to pay benefits for loss from bodily injuries ’caused by an accident.’ Incredibly, although it was an accidental death policy, it did not define the term ‘accident.’"

Insurance policies, like all contracts, have rules for interpreting terms the parties have left undefined. These rules, and their exceptions and corollaries, take up a fair amount of space in law school texts and court opinions. Lawsuits often turn on finding and applying the correct rule.

Usually, the rules are known in advance by everyone. LINA, though, has concocted its very own rules for defining "accident," which it’s disclosed to no one.

Kantor explains, "In rejecting the claim, LINA said, ‘an accident is a sudden, unforeseeable, external event.’" From there, LINA reasons that because it’s foreseeable that a person who drinks and drives might lose control of his car, crash and be injured or die, this is not an accident.

LINA also belatedly claimed that Whinery died as a result of an intentional, self-inflicted injury. Given how slight the chance of even being in a crash when driving DWI is, it’s illogical to say the injury could be expected, let alone intended. Statistically it would be a lucky person indeed who set out to kill himself by DWI and succeeded.

Kantor points out several problems with LINA’s positions. The first, and not the least, is that LINA’s definition of accident appears nowhere in the insurance policy. It’s not like insureds are on notice. Secondly, he says this definition (and this policy of denying claims) is against LINA’s own in-house claims manual, and was developed quietly, by word-of-mouth, somewhere in LINA’s claims department, though insureds were never told of it.

One can abhor drinking and driving and admit that it increases the risk of an accident and still agree that a crash happening as a result is an accident. Just because a car crash is foreseeable doesn’t mean it’s not an accident, anymore than a broken leg is not an accident because it’s a known risk of a fall while skiing.

Ignoring Judicial Standard of "Accident"

Significantly, the judges of the federal Ninth Circuit Court of Appeals (and most other judges nationwide), also do not agree with LINA’s rule. So under federal law, in an insurance case like this one, whether an accident has occurred is determined by asking, simply:

  1. Did the insured not expect injury or death to occur, and was that thinking reasonable from his perspective?
  2. If that can’t be determined, would a reasonable person, similar to the insured, have thought the resulting injury or death substantially certain to result from the insured’s conduct?

Though drunk and speeding, Timothy Whinery tried to regain control of his car before it crashed, according to the accident report. So it would appear he was not expecting to die that evening. As statistics show, the odds of dying while DWI are so remote, no reasonable person would think death was substantially certain to result from it.

This is where it gets even weirder.

LINA has "discretion" to interpret its policies when considering claims. This gives the insurer leeway in defining terms and coverage. Discretion doesn’t mean "carte blanche." It doesn’t mean coming up with a completely unexpected – I’m tempted to say accidental, but it’s nothing of the sort – meaning for a word.

LINA says this "discretion" allows it to ignore the law as set by the Ninth Circuit and indeed any court. But one of the checks on this discretion, besides outright abusive behavior, comes because of LINA’s clear conflict of interest. The more claims it denies, the more money it makes.

Defeating Innocent Beneficiaries’ Reasonable Expectations

While this may strike you as bad faith, most of these cases have involved employer-sponsored group insurance. As such they’re governed by federal employment benefit and pension law known as ERISA. This law does not allow bad faith claims – no matter how despicable an insurer’s actions.

As we’ve seen, bad faith laws help keep insurers honest. As we’ve seen, since it’s subject to no penalty for refusing to pay Whinery’s claim, and others before his, LINA will take every measure, no matter how cockeyed, to resist. And despite its conflict of interest, LINA gets to hold those death benefits until the last, while Mrs. Whinery and her children, and others like them, must wait.

The trend in insurance law is to require plain English in policies. It’s to fulfill the reasonable expectations of the insured. It’s not to make insurance a shell game, where insureds are left to guess which shell the pea is under, and to find, sometimes, there’s no pea at all.

Art Buono co-authors the Lawyers.com blog.

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