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Donaldson v. National Union Fire Insurance Company Of Pittsburgh

United States Court of Appeals, Eighth Circuit

July 24, 2017

Michele Donaldson, Individually and as Special Administratrix of the Estate of Phillip Donaldson, Deceased
National Union Fire Insurance Company of Pittsburgh, PA Plaintiff- Appellant Defendant-Appellee

          Submitted: January 13, 2017

         Appeal from United States District Court for the Eastern District of Arkansas - Batesville

          Before COLLOTON, GRUENDER, and KELLY, Circuit Judges.

          KELLY, Circuit Judge.

         While on his delivery route, Phillip Donaldson's truck was struck by an oncoming vehicle that crossed the center divider. Mr. Donaldson died on impact. His wife, Michele Donaldson, filed a claim for accidental death and spousal benefits under a Blanket Accident Insurance Policy (the Policy) issued to Mr. Donaldson's employer, Schwan's Shared Services, LLC (Schwan's), by National Union Fire Insurance Company of Pittsburgh, Pennsylvania (National Union). National Union denied the claim, concluding coverage was excluded under the Policy. On a stipulated record, the district court[1] upheld National Union's denial of benefits and dismissed the complaint. Ms. Donaldson appeals that decision, and we affirm.

         I. Background

         Mr. Donaldson's accident occurred on December 11, 2013. At the time of the accident, he was driving a Schwan's truck on his delivery route and was undisputedly within the scope of his employment with Schwan's. Mr. Donaldson's truck was struck by an oncoming vehicle that was operated by a woman who was not employed by Schwan's. She was also killed in the accident.

         The Donaldsons were insured under the Policy at the time of the accident. The Policy is an employee-benefit plan governed by the Employee Retirement Income Security Act (ERISA) that provides insureds with "needed financial security in the event of an accidental death or accidental injury" "when traveling on business." As relevant, the Policy provides coverage for injuries sustained as a result of an accident that "occurs under the circumstances described in a Hazard applicable to that person."

         After Mr. Donaldson's death, Ms. Donaldson filed a claim under Hazard H-12, entitled "24-Hour Accident Protection While On A Trip (Business Only)." National Union denied the claim on the ground that coverage was excluded under Hazard H-12 because at the time of his death, Mr. Donaldson "was operating a conveyance he had been hired to operate." Following the denial, Ms. Donaldson exhausted her administrative remedies and then filed suit in state court. The complaint seeks an accidental death benefit on behalf of Mr. Donaldson's estate equal to ten times his annual base earnings, or $286, 000, and a spousal benefit of $50, 000. National Union removed the action to federal court. The parties filed a stipulated record and briefing regarding the denial of coverage. The district court found National Union reasonably interpreted the Policy language and did not abuse its discretion in denying coverage. The court dismissed the compliant with prejudice, and Ms. Donaldson appealed.

         II. Discussion

         The parties agree that the abuse of discretion standard applies to National Union's denial of benefits because the Policy "grants the plan administrator . . . discretion to interpret the plan and to determine eligibility for benefits." Hampton v. Reliance Standard Life Ins. Co., 769 F.3d 597, 600 (8th Cir. 2014). "Under this standard of review, we must uphold [National Union]'s decision so long as it is based on a reasonable interpretation of the [Policy] and is supported by substantial evidence." Id. Where, as here, "a plan administrator holds the dual role of evaluating and paying benefits claims, " this conflict of interest should be considered "as a factor in determining whether the plan administrator has abused its discretion." Manning v. Am. Republic Ins. Co., 604 F.3d 1030, 1038 (8th Cir. 2010). Because the record in this case contains no evidence about National Union's "claims administration history or its efforts to ensure that claims assessment is not affected by the conflict, " we only "give[] the conflict some weight." Darvell v. Life Ins. Co. of N. Am., 597 F.3d 929, 934 (8th Cir. 2010).

         The central issue on appeal is National Union's interpretation of the language in Hazard H-12. To determine if a plan administrator's interpretation of policy terms is reasonable, the court examines:

[1] whether their interpretation is consistent with the goals of the Plan, [2] whether their interpretation renders anylanguage of the Plan meaningless or internally inconsistent, [3] whether their interpretation conflicts with the substantive or procedural requirements of the ERISA statute, [4] whether they have interpreted the words at issue consistently, and [5] whether their interpretation is contrary to the clear language of the Plan.

King v. Hartford Life & Accident Ins. Co., 414 F.3d 994, 999 (8th Cir. 2005) (en banc) (quoting Finley v. Special Agents Mut. Benefit Assoc., Inc., 957 F.2d 617, 621 (8th Cir. 1992)). Though these factors "inform our analysis, " id., "[t]he dispositive principle remains . . . that where plan fiduciaries have offered a reasonable interpretation of disputed provisions, courts may not replace [it] with an interpretation of their own-and therefore cannot disturb as an abuse of discretion the ...

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