Second Circuit Finds Aetna Had Discretion to Decide Life Insurance Claim and Did Not Abuse Discretion Denying Accidental Death Benefits

In Tyll v. Stanley Black & Decker Life Ins. Program, Aetna Life Ins. Co., No. 20-1060, __F.App’x__, 2021 WL 1748474 (2d Cir. May 4, 2021), a dispute under the Employee Retirement Income Security Act (“ERISA”) over the payment of AD&D benefits, the Second Circuit affirmed the judgment of the district court in favor of Defendants Stanley Black & Decker Life Insurance Program and Aetna Life Insurance Company. The issues on appeal involve the appropriate standard of review given the plan language, whether Aetna correctly denied accidental death benefits where the decedent died from pulmonary thromboemboli and phlebothrombosis caused by cabin pressure, and whether Aetna correctly determined the plan’s maximum benefit payable.

On the standard of review, the plan states that Aetna has authority to “determine[ ] eligibility for and the amount of any benefits” and to “evaluat[e] all benefit claims and appeals under the Plan.” The court found that the plan delegated discretionary authority to Aetna. First, Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989) held that the arbitrary and capricious standard of review applies if the benefit plan gives the administrator discretionary authority to determine eligibility for benefits. Second, the plan establishes a subjective standard by which Aetna can make claim eligibility decisions. Aetna “will decide claims and appeals in accordance with its reasonable claims procedures.” What is reasonable involves subjective judgment. Third, Aetna created the processes used to determine eligibility and this shows that it exercises discretionary authority. Other courts have found this sufficient to apply a deferential standard of review. Lastly, the court has held similar language sufficient to indicate a delegation of discretionary authority in other cases. The court found that the district court did not err by refusing to consider Tyll’s argument that Aetna’s withholding of certain claims procedure documents, which violates 29 C.F.R. § 2560.503-1, entitles her to de novo review because Tyll did not timely raise the argument. Also, Tyll did not show that a “tempered” abuse of discretion review should apply because she did not identify case-specific conduct showing that a conflict of interest affected Aetna’s decision.

On the merits of the claim, the court found that the insured’s death was not an “accident.” The Policy defines “accident” as:

a sudden external trauma that is; unexpected; and unforeseen; and is an identifiable occurrence or event producing, at the time, objective symptoms of a[n] external bodily injury. … The occurrence or event must be definite as to time and place. It must not be due to, or contributed by, an illness or disease of any kind including a reaction to a condition that manifests within the human body or a reaction to a drug or medication regardless of the reason you have consumed the drug or medication.

The insured died from pulmonary thromboemboli and phlebothrombosis caused by cabin pressure. The court explained that cabin pressure does “not qualify as a sudden external trauma that is unexpected and unforeseen during an airline flight, but this type of reaction falls within the excluded clause as ‘a reaction to a condition that manifests within the human body.’” Regarding the benefit amount, the court found that the following language provides a maximum of $1 million in coverage: “As an eligible employee, you automatically receive Basic Life Insurance and [Basic Accidental Death and Dismemberment] Insurance coverage equal to one and one-half times your annual base pay rounded up to the nearest $1,000, up to $1 million.” It rejected Tyll’s argument that “up to $1 million” modifies “annual base pay” rather than “coverage.” The text is ambiguous but another provision in the policy clarifies its meaning. In describing business travel accident insurance, the numbers clearly refer to the benefit, not to the salary, because it does not make sense otherwise. The court would reach the same result as the district court even under a de novo standard of review.

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