Life insurance plans, accidental death and dismemberment plans, and disability plans often exclude coverage for losses that occur while the participant is intoxicated, or where the loss is intentionally self-inflicted. Though these exclusions are often very clear, they are often the subject of contentious disputes over what, exactly, they mean, or were intended to mean, or should be interpreted as meaning.
A example of this can be found in Rau v. Hartford Life & Acc. Ins. Co., 2013 WL 1985305 (D. Conn. May 13, 2013). In Rau, Katie Rau went out one night and got monumentally intoxicated (0.3% blood alcohol level). While being driven home by a friend, she pulled herself from the passenger seat into the open window of the pickup truck, with only her legs inside. After exclaiming “look what I can do,” she fell backwards out of the pickup, hit her head on the pavement, and died.
After her mother made a claim for benefits under Katie’s AD&D plan, Hartford Life denied the claim, citing an exclusion providing that the plan “does not cover any loss caused or contributed to by: … Injury sustained while intoxicated.” There was no dispute that Katie was “intoxicated” under the terms of the plan. According to the court, Hartford determined that, because Katie was intoxicated when she sustained her fatal injury, her claim was excluded from coverage under the plan.
Katie’s mother challenged the denial, arguing that it was arbitrary and capricious, and a breach of fiduciary duty, for Hartford to deny the claim without considering whether Katie’s intoxication caused the injury that resulted in her death. She argued that Hartford’s interpretation would allow it to deny a claim if an intoxicated person was standing on the sidewalk and hit by a car that drove onto the sidewalk.
The court confirmed the claim determination, holding that the language of the exclusion was clear and unambiguous. Had the drafters of the plan intended to limit the exclusion to situations in which the intoxication caused the injury, they easily could have “written the exclusion to apply to injury sustained as a result of intoxication, rather than to ‘injury sustained while intoxicated.’” Hammering the point home, the court ruled: “The court reads the plan language of the exclusion to apply to all injury sustained while a decedent is intoxicated.
In so ruling, the court avoided what is often the conceptual quicksand that claimants can try to mire the argument in. The plaintiff here attempted to frame the argument in terms of a socially pertinent result that the plan sponsor might have been attempting to achieve: we do not want to encourage our employees to engage in risky or socially harmful behavior, so we will not cover losses that result from such behavior. Viewed on that level, one might logically argue that it would make no sense to exclude coverage for the harmless drunk minding her own business on the sidewalk before being hit by a car, because she is not putting anyone at risk. But arguing at that level of abstraction merely allows the claimant to avoid the actual language of the plan. The plan exclusion is not a statement of principal; it is a specific term that should be understood based on the language used.