Eleventh Circuit Hands Win to Reliance Standard in Dispute over Accidental Death Insurance Benefits Where Body Was Never Found

In Goldfarb v. Reliance Standard Life Ins. Co., No. 23-10309, 2024 WL 3271012 (11th Cir. July 2, 2024), the Eleventh Circuit Court of Appeals reversed a district court’s decision ordering Reliance Standard Life Insurance Company to pay $500,000 in accidental death & dismemberment (“AD&D”) benefits to an insured’s beneficiaries, where the insured died while mountain climbing but his body was never recovered. The court found that Reliance Standard’s decision to deny AD&D benefits was not arbitrary and capricious and directed the district court to enter judgment in Reliance’s favor.

The plaintiffs in this case are brothers and the children of Dr. Goldfarb, who was insured under an ERISA-governed AD&D policy. At the age of 57, after attempting to summit a 6,206-meter high mountain in Pakistan, he never returned. According to his climbing partner on the expedition, the terrain was dangerous, and he advised Dr. Goldfarb not to attempt the climb. Dr. Goldfarb apparently decided to climb anyway. A couple of days after anyone last heard from him, a search party was underway. Rescuers in a helicopter spotted what they believed to be a lifeless body face down in the snow below an ice wall and took aerial photographs of the scene. From the gear visible in the photos, the climbing partner identified the body as Dr. Goldfarb’s. However, the rescuers were not able to recover his body. The governments of Pakistan and the U.S. issued presumptive death certificates and Dr. Goldfarb was declared dead.

At the time of his death, Dr. Goldfarb was enrolled in his employer’s employee benefits plan, which included basic life and AD&D benefits insured by Reliance Standard. Dr. Goldfarb had the max benefit of $500,000 under each policy. Reliance Standard paid the basic life benefit. To qualify for AD&D benefits for loss of life resulting from an “injury,” the loss must be “caused solely by an accident.” The policy did not define accident but defined “injury” as “accidental bodily injury to an Insured that is caused directly and independently of all other causes by accidental means,” without defining accidental or accidental means. Reliance Standard denied the beneficiaries’ claim for AD&D benefits because it was not certain that Dr. Goldfarb suffered loss of life caused solely by an accident given that his true cause of death was unknown.

The district court granted Plaintiffs’ motion for summary judgment, finding that Reliance Standard’s denial of benefits was arbitrary and capricious. Since suicide was ruled out, and in the absence of a specific policy exclusion for death while mountain climbing, Dr. Goldfarb’s death was an accident under the policy. Reliance Standard appealed.

On appeal, the Eleventh Circuit reviewed the district court’s decision de novo. The court found that Reliance Standard was vested with discretion in reviewing claims so the court must assess whether its decision was supported by reasonable grounds. The court explained that Reliance Standard had reasonable grounds applying the federal common law definition of accident established in Wickman v. Northwestern National Insurance Co., 908 F.2d 1077 (1st Cir. 1990). Wickman instructs that if a reasonable person with similar characteristics to the insured would have viewed injury or death as highly likely to occur, then the death was not an accident, and the loss is not covered. Because “accident” and “accidental” were not defined in the policy, the court applied the Wickman standard. The court concluded that a reasonable mountain climber would have recognized a high likelihood of injury or death. The court did note however that applying Wickman de novo, rather than under abuse of discretion review, a decision maker could come to a determination that a reasonable mountain climber would not have judged injury or death as “highly” likely to occur. The court explained that it was Plaintiffs’ burden of proving Dr. Goldfarb’s death was an accident. Not every death whose cause is inconclusive, but not a suicide, is automatically accidental. Lastly, the court found that Reliance Standard’s conflict of interest did not render the denial arbitrary and capricious where Plaintiffs offered no evidence suggesting that the conflict influenced Reliance Standard’s decision.