ERISA-Fourth Circuit Holds That A Car Crash Occurring When A Plan Participant Drives While Intoxicated Is An Accident For Purposes Of The Plan’s AD & D Coverage

In Johnson v. American United Life Insurance Company, No. 12-1381 (4th Cir. 2013), a question arose as to whether accidental death and dismemberment (“AD & D”) benefits were payable under a welfare benefit plan (the “plan”) to a participant’s widow.

In this case, Richard Johnson (“Richard”) had participated in the Plan, which provided life insurance and accidental death and dismemberment (“AD & D”) benefits through group policies issued by American United Life Insurance Company (“AUL”). When Richard died in a single vehicle crash, his widow Angela Johnson (“Johnson”) received life insurance benefits. However, AUL, which also served as administrator for the Plan, refused to pay AD & D benefits. Richard was highly intoxicated at the time of his fatal crash, and AUL concluded that Richard’s drunk-driving death was not the result of an “accident” under the Plan. Johnson filed this suit under ERISA, claiming that she was entitled to the AD & D benefits. The district court held for AUL, and Johnson appeals.

The Fourth Circuit Court of Appeals (the “Court”) reversed the district court and awarded the AD & D benefits to Johnson. The Court said that the insurance policies underlying the Plan did not define the term “accident”, despite its critical importance for determining eligibility for AD & D benefits. Because “accident” is susceptible to more than one reasonable interpretation, the Court construed it against AUL, the drafting party. The Court concluded that a reasonable plan participant under similar circumstances would have understood Richard’s alcohol-related crash to be an “accident” under the policy language. Therefore, the AD & D benefits were payable by the Plan.

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