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    Pre-Existing Diabetes Not “Substantial Contributing Factor” For Purposes of Accidental Dismemberment Claim – 9th Cir.

    Attached is a plaintiff friendly published Ninth Circuit decision, Dowdy v. Metropolitan Life Insurance Company. In this case, plaintiff seeks accidental dismemberment benefits under an ERISA governed plan. Plaintiff was involved in an automobile accident that partially amputated his ankle. The injury was slow to heal and became infected. Plaintiff’s physician opined that the difficulty healing was contributed to my plaintiff’s diabetes. Eventually, Plaintiff has his leg amputated below the knee. He filed a claim for accidental dismemberment benefits. MetLife denied the claim asserting that coverage was excluded because the amputation was not the sole and direct cause of the automobile accident and was not independent of all other causes. The district court agreed with MetLife, and plaintiff appealed. The Ninth Circuit reversed and remanded the case back to the district court, finding that the underlying diabetes did not substantially contribute to the loss.

    A. The “Direct and Sole Cause” of the Injury

    In this case, the Dowdys are entitled to coverage if Mr. Dowdy’s car accident was the “direct and sole cause” of the loss, and if amputation “was a direct result of the accidental injury, independent of other causes.” These are common terms in ERISA policies. We have previously addressed similar language in the context of pre-existing conditions in disability insurance.

    In McClure v. Life Ins. Co. of N. Am., 84 F.3d 1129 (9th Cir. 1996), we determined that where the applicable plan language is less than obvious (“inconspicuous”), the “policy holder reasonably would expect coverage if the accident were the predominant or proximate cause of the disability.” Id. at 1135–36. If, however, the applicable language is conspicuous, recovery could be barred if a preexisting condition substantially contributed to the loss, “even though the claimed injury was the predominant or proximate cause of the disability.” Id. at 1136.

    Here, we need not determine whether the applicable policy language is conspicuous or inconspicuous, because even under the more demanding substantial contribution standard, the Dowdys are entitled to recovery. In affirming the plan administrator’s denial of coverage, the district court concluded that diabetes “caused or contributed to the need for amputation.” We agree that the record establishes that diabetes was a factor in the injury. Nonetheless, the factual record does not support a finding that diabetes substantially contributed to Mr. Dowdy’s loss.

    In order to be considered a substantial contributing factor for the purpose of a provision restricting coverage to “direct and sole causes” of injury, a pre-existing condition must be more than merely a contributing factor. For example, in Adkins v. Reliance Standard Life Ins. Co., 917 F.2d 794 (4th Cir. 1990), the Fourth Circuit cited with approval the reasoning that “a ‘pre-disposition’ or ‘susceptibility’ to injury, whether it results from congenital weakness or fromprevious illness or injury, does not necessarily amount to a substantial contributing cause. A mere ‘relationship’ of undetermined degree is not enough.” 917 F.2d at 797 (quoting Colonial Life & Accident Ins. Co. v. Weartz, 636 S.W.2d 891, 894 (Ky. Ct. App. 1982), overruled on other grounds by Mifflin v. Mifflin, 170 S.W.3d 387 (Ky. 2005)); see also Quesinberry, 987 F.2d at 1028 (holding that “a mererelationship of undetermined degree” was not sufficient to defeat coverage).

    This conclusion is echoed in the Restatement, to which this Court has previously turned for assistance in formulating federal common law in the ERISA context. See, e.g., Salyers v. Metro. Life Ins. Co., 871 F.3d 934, 939–40 (9th Cir. 2017)(adopting a definition from the Restatement of Agency as federal common law in an ERISA action); Native Vill. Of Kivalina v. ExxonMobil Corp., 696 F.3d 849, 855 (9th Cir. 2012) (defining a public nuisance under federal common law in accordance with the Restatement (Second) of Torts). In defining “substantial” in the context of “substantial cause,” the Restatement (Second) of Torts notes:

    The word “substantial” is used to denote the fact that the defendant’s conduct has such an effect in producing the harm as to lead reasonable men to regard it as a cause, using that word in the popular sense, in which there always lurks the idea of responsibility, rather than in the so-called “philosophic sense,” which includes every one of the great number of events without which any happening would not have occurred. Each of these events is a cause in the so-called “philosophic sense,” yet the effect of many of them is so insignificant that no ordinary mind would think of them as causes.

    Restatement (Second) of Torts § 431 cmt. a (Am. Law Inst. 1965).

    For a court to distinguish between a responsible cause and a “philosophic,” insignificant cause, there must be some evidence of a significant magnitude of causation. Such evidence need not be presented with mathematical precision, but must nonetheless demonstrate that a causal or
    contributing factor was more than merely related to the injury, and was instead a substantial catalyst. See, e.g., Coleman v. Metro. Life Ins. Co., 262 F. Supp. 3d 295, 312 (E.D.N.C. 2017) (finding against a defendant in an ERISA case where “the record contains no indication that [the plaintiff’s] cancer contributed to his death in any quantifiable or substantial way”); Towers ex rel. Verderosa v. Life Ins. Co. of N. Am., No. 6:09-CV-1318-ORL-28, 2011 WL 3752734, at *6 (M.D. Fla. Aug. 25, 2011) (ruling against defendant under ERISA plan where “the level of contribution of [plaintiff’s] preexisting conditions to his death has not been quantified . . . [Thus,] the Court cannot discern from the record evidence any means of determining the degree of the causal relationship.”).

    The record here falls short of showing that diabetes was a substantial contributing factor. Dr. Coufal opined that Mr. Dowdy’s “wound issues” post-surgery were “complicated by his diabetes.” He did not elaborate, even generally, on how much of a role that complicating factor played in Mr. Dowdy’s failure to recover. Dr. Coufal identified a host of contributors, including the original, “significant . . . pilon facture,” “potential bony sequestrum indicating osteomyelitis” related to the initial injury, and a resulting “deep infection.” In summarizing the grounds for surgery, Dr. Coufal faulted both “comorbidities” and the “type of injury.”

    The district court concluded that coverage is barred because, as the Plan “dictates,” no physical or mental illness can “‘cause or contribute’” to the loss, and “Mr. Dowdy’s diabetes clearly contributed to his loss.” The court also found “that the complications of Mr. Dowdy’s diabetes substantially contributed to the need for amputation.” Although the district court cited the substantial contribution standard, its application of that standard was clear error, as it was overly strict and not consistent with the requirement that the contributing factor be, in fact, substantial.

    In sum, Congress intended for ERISA to protect the interests of plan participants and their beneficiaries. See 29 U.S.C. §§ 1001(b), 1001b(c)(3). Consistent with that policy choice, federal courts have developed a body of common law that construes coverage provisions in a manner that does not “unreasonably limit[] coverage.” Dixon, 389 F.3d at 1184. Here, even assuming the policy language was conspicuous, we construe the Plan as providing coverage unless Mr. Dowdy’s pre-existing disease “substantially contributed” to his injury. McClure, 84 F.3d at 1136. Based upon the evidence presented in the administrative record, Mr. Dowdy’s diabetes was a complicating factor, but it was not identified as a substantial contributor to the ultimate loss. We therefore hold that coverage should not have been denied on the basis of the Coverage Provision.

    B. The Illness or Infirmity Exclusion

    Because Mr. Dowdy’s injury is a covered loss, we must go on to determine whether the Illness or Infirmity Exclusion bars coverage. That Exclusion states that MetLife will not pay benefits for “any loss caused or contributed to by . . .illness or infirmity.” The plan administrator and the district court both found that this Exclusion applies because Mr. Dowdy’s diabetes “caused or contributed to” the loss. We disagree.

    Under general principles of insurance law, exclusions are construed narrowly. See Critchlow v. First Unum Life Ins. Co. of Am., 378 F.3d 246, 256 (2d Cir. 2004) (explaining that, under ERISA, exclusionary clauses “are given strict construction” and “should be read narrowly rather than expansively”). And MetLife has conceded, as it must, that it has the burden of showing an exclusion applies. See Mario v. P & C Food Mkts., Inc., 313 F.3d 758, 765 (2d Cir. 2002) (“[A]s a matter of general insurance law, the insured has the burden of proving that a benefit is covered, while the insurer has the burden of proving that an exclusion applies.”).

    We hold, for the same reasons discussed above, that the substantial contribution standard applies in interpreting the concepts of cause and contribution in this exclusion. The Illness or Infirmity Exclusion serves the same purpose as the threshold limitation on coverage to accidental injury that is the “direct and sole cause” of a covered loss.2 Accordingly, to satisfy the Exclusion, any cause or contribution by an illness or infirmity must be substantial. See, e.g., Coleman,262 F. Supp. 3d at 308 (“The Adkins standard governs even where, as here, the causation-based exclusion simply says ‘caused or contributed to,’ and it requires that anycontribution be substantial.”).

    Again, the record with respect to the role of diabetes in Mr. Dowdy’s recovery is notably thin. The car accident resulted in a severe injury that came close to amputating his lower leg. Dr. Coufal opined that when attempts were made properly to correct the lower leg, subsequent wound issues were complicated by diabetes, and the fracture itself was slow to heal. Ultimately, however, Mr. Dowdy suffered a deep infection that Dr. Coufal considered “related to the original injury.” In light of this evidence, and giving the Exclusion the required strict reading, MetLife cannot meet its burden of showing that diabetes substantially caused or contributed to the loss.
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