We recently wrote about a case where, through exceptional determination, an ERISA claimant was able to challenge a denial of benefits and win a chance at another appeal after the insurance company attempted to amend their denial of benefits in court with previously unseen evidence. Such after-the-fact introduction of evidence has been ruled unlawful through ERISA statutes and copious precedents.
Yet another recent case has emphasized this precedent and should, ideally, finally put a stop to this tactic. In Rushing v. Sun Life Assurance Co. of Canada, the benefit plan administrators attempted to justify their ERISA claim denial of a life insurance claim in the U.S. District Court for the Western District of Louisiana by highlighting a post-mortem toxicology report.
Traces of an over-the-counter cough suppressant and an antihistamine were found in the bloodstream of the deceased policyholder, whose car had drifted over the center line of a road before a fatal head-on crash. Both drugs are known to have side effects that include drowsiness, disorientation and, in rare cases, hallucinations. Per the manufacturer, driving while taking these drugs is not recommended.
Sun Life attempted to use this evidence to assert a disqualifying criminal act exclusion in the policy in addition to its claim that the crash circumstances did not satisfy the policy’s definition of “accidental” death since the policyholder knowingly got behind the wheel after taking the medication.
However, Sun Life did not mention toxicology results in its original denial of benefits letter or the prelitigation appeal, even though they already had this information in their possession. According to ERISA statute 29 U.S.C. § 1133, insurers must “provide adequate notice in writing to any participant or beneficiary whose claim has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant.”
As such, most courts have barred the introduction of previously unseen evidence during litigation, as it unfairly benefits the insurer and puts claimants at a clear disadvantage by forcing them to respond to new, surprise evidence on the fly. In short, as far as the court is concerned, if it was not mentioned in the denial of benefits letter or during the administrative appeal, it didn’t happen.
Sun Life’s argument for denial was further eroded when Louisiana State Police reported that the policyholder would not have been charged with anything more than a traffic code violation had he survived the crash, nullifying their criminal act exclusion argument.
As the courts have definitively established, taking second, third and more shots in an attempt to successfully hit an ERISA claim denial target is not a winning, or even legal, strategy. Any policyholders who experience this form of fake-it-till-you-make-it claim denial should seek legal assistance.