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5th Cir. – LINA Withheld Evidence

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  • 5th Cir. – LINA Withheld Evidence

    Here’s a new case from the Fifth Circuit, Esther Hill White v. Life Insurance Company of North America. The court finds that LINA abused its discretion in denying life insurance benefits by alleging that the decedent’s death was caused by intoxication or drug abuse. The decedent died in a car accident in which he collided head-on with a tractor trailer. The accident was in the middle of the day with no bad weather and no apparent cause. The decedent tested negative for alcohol, but did test positive for a variety of controlled substances including amphetamines, cocaine, opiates, benzodiazepine, and cannabinoids. While these tests were positive, nothing was ever done to check the quantity of those positive tests. LINA submitted the claim to an expert toxicologist, Dr. Fochtman. He determined that because no quantitative test was done, no estimation of impairment could be made. LINA then failed to ever provide that report to the plaintiff throughout the appeal process and did not mention it in their denial letters. The District Court ruled in favor of LINA. The Fifth Circuit reverses.

    The court first rules that LINA should have, at least, addressed Dr. Fochtman’s report.

    Here, as in Schexnayder, it is undisputed that LINA did not address Dr. Fochtman’s report. LINA argues that Schexnayder is distinguishable because the SSA determination in that case was in direct conflict with the administrator’s findings, whereas in this case Dr. Fochtman’s report was favorable toward LINA’s finding that Mr. White’s death was caused by his intoxication or drug abuse. We must disagree.

    Dr. Fochtman’s report effectively stated that the level of the drugs in Mr. White’s system could not be determined, and thus whether the cause of Mr. White’s death was due to intoxication or drug abuse could only be speculative. The inability to determine the level of drugs in Mr. White’s system was critical to the application of the “intoxication” exclusion because Arkansas defines “intoxicated” as being influenced by alcohol or drugs “to such a degree” that the driver is “a clear and substantial danger” to himself and those around him. See Ark. Code § 5-65-102(4) (emphasis added). The inability to determine whether David was under the influence of alcohol or drugs at the time of the accident does not afford a reasonable conclusion that his death was caused by intoxication or drug abuse.

    Thus, LINA should have at least addressed the report in its denials, especially because Dr. Fochtman’s report was the only expert opinion in the record. As in Schexnayder, “[i]t is the lack of any acknowledgement which leads us to conclude that [LINA’s] decision was procedurally unreasonable and suggests that it failed to consider all relevant evidence.” See Schexnayder, 600 F.3d at 471 n.3. Accordingly, even if “substantial evidence supported [LINA’s] decision, the method by which it made the decision was unreasonable.” See id. at 471. That said, we proceed further in evaluating the appropriate action to take in this case.
    The court then finds that withholding the evidence from the plaintiff violates ERISA’s procedural regulations.

    Here, Dr. Fochtman’s report was clearly “relevant” to White’s claim, and White made a request for such documents. Thus, by not providing the report to White, LINA violated § 1133. Indeed, LINA does not contest that, technically, it violated ERISA’s procedural regulations.

    LINA reasons that it “substantially complied” with ERISA’s procedural requirements. “Challenges to ERISA procedures are evaluated under the substantial compliance standard. This means that technical compliance with ERISA procedures will be excused so long as the purposes of section 1133 have been fulfilled.” Robinson v. Aetna Life Ins. Co., 443 F.3d 389, 392–93 (5th Cir. 2006) (quotations and citations omitted). LINA contends that the purpose of § 1133 is to “afford the beneficiary an explanation of the denial of benefits that is adequate to ensure meaningful review of that denial.” See Wade v. Hewlett-Packard Dev. Co. LP Short Term Disability Plan, 493 F.3d 533, 539 (5th Cir. 2007) (quoting Schneider v. Sentry Grp. Long Term Disability Plan, 422 F.3d 621, 627–28 (7th Cir. 2005)), abrogated on other grounds by Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010). Specifically, LINA argues that it did not have to turn over Dr. Fochtman’s report when requested because the report would not have helped explain why LINA denied benefits. After all, LINA argues, White was already in possession of the documents addressed in Dr. Fochtman’s report, including the non-quantitative toxicology results, the death certificate, and the collision reports. Moreover, according to LINA, the purpose of § 1133 has been fulfilled because Dr. Fochtman’s report was favorable to LINA’s position, not White’s.

    LINA’s explanation is unsatisfactory. It is true that White was in possession of the toxicology results and other documents addressed in Dr. Fochtman’s report. But that report also expressed the opinion that, without a quantitative drug test, “an estimation of Mr. White’s level of impairment cannot be done.” Thus, contrary to LINA’s assertions, Dr. Fochtman’s report undermines LINA’s position that intoxication or drug abuse was the cause of David’s death. Further, this opinion comes from the report of LINA’s very own expert. As such, without Dr. Fochtman’s report, during the administrative process White was unable to meaningfully challenge LINA’s finding that David’s death was caused by intoxication or drug abuse. We therefore conclude that LINA did not substantially comply with ERISA’s procedural requirements and, consequently, denied White a “full and fair review.”
    Finally, the court concludes that the evidence presents a close call and due to LINA’s conflict of interest, the court must not uphold its decision.

    This evidence presents a close call. In the light of Dr. Fochtman’s report, the only clear evidence supporting LINA’s application of the exclusion is that David went straight while the road curved right. Unlike the fundamental piloting error of failing to maintain adequate air speed while flying at a low altitude in Dutka, the mere failure to negotiate a right-hand turn on a highway is not, on its own, sufficient to support a rational conclusion that the driver was intoxicated while driving. See id. at 214. Indeed, unlike Dutka, the record here contains some non-drug-related reasons that the unusual accident occurred. See id. at 212. That said, there is still the unexplained evidence of controlled substances in David’s system. This evidence, however, is only equivocally connected to the accident’s cause.

    In short, although the administrator’s decision is supported by relevant evidence, we cannot deny that the evidence is close. Thus, in accordance with the Supreme Court’s instruction in Glenn, and taking into account all facets of this case, we conclude that LINA’s conflict of interest “affected the benefits decision,” and, accordingly, we may not uphold its decision. See Glenn, 554 U.S. at 117; see also Schexnayder, 600 F.3d at 471 (holding that even if “substantial evidence” supported the administrator’s denial of coverage, the conflicted administrator’s failure to address evidence in the record contrary to its denial was an abuse of discretion).
    The opinion is attached below.
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