Fourth Circuit Upholds an Administrator's Determination that Drunk Driving is Not an Accident

David Rossmiller - who normally runs, as I have noted previously, from ERISA cases as from a basket of snakes - and Day on Torts both have posts today on the Fourth Circuit’s decision upholding an administrator’s denial of accidental death benefits under an ERISA governed plan where the deceased died in an automobile accident while driving drunk. The administrator deemed that the loss was not unexpected and not an accident for purposes of the plan, and thus not covered under the plan’s terms. The case is Eckelberry v. ReliaStar Life Insurance Company.

In the end, the Fourth Circuit’s decision is really, at heart, simply a case of the court recognizing the administrator’s right to apply a reasonable interpretation to the plan’s terms and to deny benefits if they should be denied based on that interpretation. Interestingly, the court engages in a long and detailed analysis of case law on accidents and unexpected injuries in evaluating the administrator’s decision and interpretation of the plan, but that mostly seems superfluous to me. While the court’s finding that the case law supported the administrator’s interpretation certainly lends support to the conclusion that the administrator’s determination and interpretation of the plan’s applicable terms were reasonable, the finding - and in fact the entire discussion - was probably unnecessary. This is because, at the end of the day - and the court in its opinion makes some gestures in this direction - the administrator’s application of the plan’s applicable terms to a drunk driving accident had to be upheld so long as it was in and of itself a reasonable interpretation of the plain language of the plan. Given the facts of the loss, and the plan’s terms governing what constitutes an accident, interpreting the plan’s terms as not encompassing this loss was well within the range of discretion granted to the administrator, and it really wasn’t relevant how federal courts have, in other contexts or cases, interpreted the term accident.

And in that observation probably lies the answer to the question David posed in his post as to how this case might have been different if it were an insurance declaratory judgment action and not an ERISA action. I doubt, in the end, if the court's approach to the case would have varied much at all. As an ERISA action, as noted above, there really was no need for the court to analyze the judicial precedents bearing on the interpretation and application of the applicable plan terms, and instead the court should have - although it did not - focus simply on the objective reasonableness of the interpretation of the applicable plan terms adopted by the administrator. Rather than considering in depth whether the administrator’s interpretation was consistent with the case law, the more appropriate test would have been to consider whether the administrator’s interpretation was within the range of reasonable interpretations given the facts and the plan language; so long as it was, the determination had to be upheld.

In contrast, as an insurance declaratory judgment action, the appropriate approach would have been to proceed exactly as the court actually did, applying case law to the plan language and deciding based on that case law what interpretation should be given to the plan language. This is, at root, the road followed by the court here.