Eighth Circuit Holds that Maine Ban on Discretionary Authority in Health Plans Does Not Apply to AD&D Insurance Policy

In Williams v. Unum Life Ins. Co. of Am., No. 20-1694, __F.4th__, 2021 WL 3729660 (8th Cir. Aug. 24, 2021), involving a dispute over the denial of accidental death and dismemberment (“AD&D”) insurance policy benefits governed by the Employee Retirement Income Security Act (“ERISA”), the Eighth Circuit considered two questions:

(1) Does an AD&D insurance policy qualify as “a health plan” under Maine law, Me. Rev. Stat. Ann. tit. 24-A, § 4303, such that de novo review should apply to the Court’s review of Unum’s decision to deny benefits?

(2) Did Unum abuse its discretion when it denied benefits under the policy’s intoxication policy, where the insured fell down a flight of stairs in her home with a blood-alcohol content more than four times the legal driving limit in Missouri?

On the first question, the Eighth Circuit considered a Maine statute which forbids health plans from conferring absolute discretion on plan administrators. Me. Rev. Stat. Ann. tit. 24-A, § 4303, 4303(11)(A). If the statute applies to the policy at issue here, then the policy’s discretionary clause would be unenforceable, and de novo review would apply to Unum’s decision. The court found that the statute does not apply because the AD&D policy does not meet the requirements of a health plan under Maine law. Specifically, it does not provide for the financing or delivery of health care services nor is it subject to the federal Affordable Care Act. Because Maine’s ban on discretionary clauses applies only to health plans, the court reviews Unum’s decision for an abuse of discretion.

On the second question, the Eight Circuit found that Unum did not abuse its discretion when it denied benefits under the AD&D’s intoxication exclusion. The court found that there was plenty of evidence that the insured was intoxicated when she fell down the stairs and ultimately died due to an intracranial hemorrhage. All that Unum had to determine was that her intoxication “contributed to” her fall. “Intoxication can ‘contribute to’ a loss without being the only reason it happened.” Even if other factors played a role in the insured’s death, Unum was reasonable in concluding that the insured’s “extreme intoxication” contributed to her fatal injuries.

The court affirmed the judgment of the district court.