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Fifth Circuit Upholds ERISA Administrator’s Discretionary Decision Based On Circumstantial Evidence
Insurance Law Update
Fifth Circuit Court of Appeals
In Dutka ex rel. the Estate of T.M., a minor v. AIG Life Ins. Co., ___ F.3d ___, 2009 WL 1800139 (5th Cir. (Tex.) June 24, 2009), the Fifth Circuit Court of Appeals held that a claim administrator of an ERISA-governed plan did not abuse its discretion when it determined, based on circumstantial evidence, that a claim for accidental death benefits was excluded under the policy.
The insured, Istvan Macsai, was piloting a private plane when he crashed, resulting in his death and the deaths of his two passengers. The National Transportation Safety Board (NTSB) concluded that the cause of the crash was a failure to maintain adequate air speed.
Macsai’s beneficiaries made a claim under an accidental death policy issued by AIG Life Insurance Company to Macsai’s employer, Continental Airlines. AIG denied the claim because it found that Macsai’s death was “caused in whole or in part by, or resulting in whole or in part from … the Insured Person being under the influence of drugs or intoxicants,” and thus was excluded under the policy.
The district court for the Southern District of Texas held that AIG did not abuse its discretion, and the Fifth Circuit affirmed. The Fifth Circuit identified weaknesses in the evidence such as the toxicology report. For example, although cocaine and other substances were detected in Macsai’s blood, the blood was not tested until 50 days after the crash and AIG’s expert could not definitively determine whether there was cocaine present in Macsai’s blood at the time of the crash. Nevertheless, the Fifth Circuit noted that the toxicology report was consistent with Macsai’s use of multiple drugs, and AIG’s expert’s report conclusively showed that Macsai had a therapeutic level of the narcotic Propoxyphene in his system at the time of his death. Thus, it was reasonable to conclude that Macsai was under the influence of drugs.
The Fifth Circuit held that, although there was no direct proof that the drugs in Macsai’s system caused the crash, it was not unreasonable to find that the crash was caused in part by Macsai’s intoxication. The Court observed that at the time of the crash the weather was good, there was no evidence of mechanical failure, and the NTSB concluded that the failure to maintain the correct air speed was fundamental pilot error. Thus, based on the circumstantial evidence, the Court affirmed the district court’s grant of summary judgment in favor of AIG.
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