Fifth Circuit Affirms Denial of Business Travel Accident Insurance Benefits Where Death Occurred During Unauthorized Business Trip

In Krishna v. National Union Fire Insurance Company of Pittsburgh, Pennsylvania, No. 23-20289, 2024 WL 1049474 (5th Cir. Mar. 11, 2024), the Fifth Circuit affirmed the district court’s grant of summary judgment in favor of Defendant National Union Fire Insurance Company of Pittsburgh, Pennsylvania, in this action seeking payment of Business Travel Accident (“BTA”) insurance under the Honeywell International, Inc. Benefit Plan (“Plan”). The court held that (1) the district court did not err in applying the abuse of discretion standard of review to the administrator’s decision; (2) the terms of the Plan’s Policy was unambiguous, and in any event, the Plan Administrator has discretionary authority to interpret the Plan and resolve ambiguities therein; and (3) the district court did not err in concluding that Plaintiff received a full and fair review under ERISA.

Plaintiff is the widow of Karthik Balakrishnan (“Decedent”), who was a participant in the Plan with BTA insurance coverage in the total amount of $990,000. After the COVID-19 pandemic shutdown in March 2020, Honeywell closed its buildings in New Jersey and Decedent started working remotely “long term” out of Texas. The company also stopped all non-essential business travel. In October 2020, Decedent was flying as a passenger in a small private airplane flying between airports within Texas when the airplane crashed, and he was killed. Plaintiff filed a claim for BTA insurance benefits with AIG Claims, National Union’s authorized claims administrator, on the basis that Decedent passed away during a business trip in Texas. However, Honeywell informed National Union that Defendant was not on a business trip at the time of his death and no business travel was approved for Decedent in 2020. National Union, through AIG Claims, denied Plaintiff’s claim, which she appealed a year later. AIG Claims designated Wagner Law Group to serve as the ERISA Appeals Committee. Two hundred days after Plaintiff filed her appeal, National Union, through AIG Claims, issued a denial letter explaining that Honeywell advised it that no business travel was approved for Decedent and because Decedent was not on an authorized business trip for Honeywell, there is no BTA coverage.

Plaintiff filed suit against National Union alleging that it violated ERISA procedures by issuing a late decision on her appeal. National Union moved for summary judgment and Plaintiff moved for judgment on the administrative record. The district court granted summary judgment in favor of National Union.

The Fifth Circuit addressed three issues on appeal. First, the court found that the district court properly applied abuse of discretion review, rejecting Plaintiff’s claim that de novo review should apply. Regarding Plaintiff’s argument that neither AIG Claims nor Wagner Law Group were authorized to decide the claim, the court explained that the Plan gives the Plan Administrator authority to delegate certain of its powers and duties to a third party. Fifth Circuit case law permits National Union to use third parties to conduct “ministerial tasks.” National Union utilized Wagner as part of its appeal review and used AIG Claims to issue the denial letters. The decision letters were sent on National Union’s behalf. The “ministerial task exception” allowed for this arrangement and did not run afoul of ERISA.

Second, the court found that the Plan’s terms were unambiguous and the doctrine of contra proferentem did not apply. The Policy read, in part: “While on the Business of the Participating Organization means while on assignment by or at the direction of the Participating Organization for the purpose of furthering the business of the Participating Organization, but does not include any period of time: (1) while the Insured Person is working at his or her regular place of employment; (2) during the course of everyday travel to and from work; or (3) during an authorized leave of absence or vacation. If an Insured’s assignment to a location exceeds 365 days, such assignment will be deemed to change the Insured’s residence and regular place of employment to the new location.” Plaintiff argued that the interpretation of “on assignment by” to mean requiring “pre-authorization” or specific instruction from Honeywell to Decedent to travel to Texas was an unfair interpretation when Decedent’s work assignment included travel to Texas as needed and his role and authority included making decisions about how to accomplish his objectives there. The court disagreed. Interpreting “on assignment by” to mean requiring Honeywell’s knowledge and approval was reasonable, not ambiguous, and in any event, a reasonable exercise of National Union’s interpretive discretion.

Lastly, the court found that National Union conducted a full and fair review under ERISA where it substantially complied with ERISA’s procedures. National Union’s lateness in deciding the appeal did not harm Plaintiff. The appeal letter stated that the decision was made after a careful review of the claim and supporting documents. Even if the appeal denial was untimely, Plaintiff filed the lawsuit before National Union issued its decision and availed herself of the option to address the late decision. For these reasons, Plaintiff failed to raise a genuine dispute of material fact that National Union abused its discretion in denying her claim.