In Martin v. Hartford Life and Accident Life Insurance Company, No. 11-1310-cv (2nd Cir. 2012) (Summary Order), the plaintiff, Amanda Martin (“Martin”), was appealing a ruling from the district court granting summary judgment to the defendant, Hartford Life and Accident Life Insurance Company (“Hartford”), on her claim for death benefits. The death benefits were payable with respect to Martin’s decedent husband, under an employee welfare benefits plan subject to ERISA (the Plan”). Hartford was the plan administrator and insurer of the Plan. It denied the claim in that capacity, after an administrative review, relying on the Plan’s exclusion for intentionally self-inflicted injury.
In analyzing the case, the Second Circuit Court of Appeals (the “Court”) noted that the Plan grants Hartford full discretion and authority to determine eligibility for benefits and to construe and interpret all terms and provisions. Therefore, the Court’s review of Hartford’s claim denial is limited to abuse of discretion. But since Hartford both evaluates claims for benefits and pays benefits claims, Hartford has a conflict of interest which must be weighed as a factor in determining whether there is an abuse of discretion.
In this case, Martin’s husband had negligently electrocuted himself to death, during some autoerotic activity. The Court said that Hartford’s interpretation of the Plan, which would deny Martin’s claim due to an intentionally self-inflicted injury, would exclude injuries resulting from merely negligent acts, even if the insured did not intend to inflict injury upon himself. Interpreting an exclusion for intentionally self-inflicted injury to exclude negligently self-inflicted injury is an abuse of discretion. To the extent that Hartford now attempts to offer a different rationale for its denial of Martin’s claim after the completion of the claim’s administrative review, Hartford failed to provide Martin with the adequate notice setting forth the specific reasons for such denial and the full and fair review to which she is entitled under ERISA. As such, the Court vacated the district court’s decision, and remanded the case back to the district court, with instructions to return the case to Hartford for reconsideration in light of this decision.