If you have a life insurance policy that has a pre-existing condition exclusion and your policy applies the law of the First Circuit, you might need to be perfect to have coverage.

Mr. Joseph Arruda was on his way to work on a four-lane road when he crossed all lanes of traffic, collided with another car, hit the curb, rolled over, and landed on the opposite side of the road. He died at the scene of the accident. His widow was the named beneficiary on his life insurance policy.

When accidents like this happen, the insurance company always investigates. If the decedent had any pre-existing conditions, the insurer will often deny the claim, saying that they contributed to the cause of death. And, that is what happened when Mrs. Arruda made her claim.

Mr. Arruda had hypertensive heart disease. He received treatment some time prior to the accident. The autopsy report said the cause of death was hypertensive heart disease. What actually killed him, or the manner of death, was a motor vehicle collision with a rollover. Zürich hired several doctors to say that he had a hypertensive heart disease event which caused him to lose control of the car. The car rolled over and killed him. Thus, the pre-existing condition caused the accident and thereby caused his death.

Given this, Mrs. Arruda filed suit in federal court and the court ruled in her favor. Zürich appealed. The First Circuit, though noting that other circuits have done so, refused to apply a “substantial contributing factor” test (the pre-existing condition must make a substantial contribution to the death) when the arbitrary and capricious standard of review applied.

In essence, the First Circuit held that regardless how small the contribution of any pre-existing condition, it can be a justifiable reason to deny a claim. Taken to its logical conclusion, this theory doesn't hold up. Is anyone without some pre-existing condition? Does the condition have to be diagnosed? What if you had a cold just before you were in a similar accident. You sneezed, and that caused you to lose control. Pre-existing condition exclusion? Maybe you had arthritis which caused you to drop your cell phone lose control. The possibilities of avoiding payment on a claim on this basis with this standard are virtually endless.

In backing up Zürich's refusal to pay this life insurance benefit to a named beneficiary, the First Circuit criticized Mrs. Arruda's lack of evidence in the claim record finding:

“Arruda offers no support for her contention that (Zurich's doctor) needed to determine the precise mechanism or mechanisms by which Mr. Arruda's pre-existing conditions contributed to Mr. Arruda's car suddenly veering across multiple lanes of traffic and his fatal car accident. It is sufficient that (Zurich's doctor) reached a firm conclusion to a reasonable degree of forensic medical certainty, which was self-evidently reasoned, that some manifestation(s) of Mr. Arruda's pre-existing conditions caused him to have the accident that killed him.”

Life insurance cases are very challenging when ERISA applies. They have a very short appeal time frame, usually only 60 days from the date the claim denial is received. You have to know what to do right away to marshal the evidence needed. Having “been there” many times before greatly helps.

How could this case have turned out differently?

Perhaps the autopsy report could have been challenged. Doctors can disagree and autopsies are no exception. Was the entire claim record obtained before presenting the appeal? Was it thoroughly and painstakingly reviewed? Was a detailed investigation of the accident undertaken? Were medical experts obtained to challenge Zürich's doctors? All this probably had to be done within 60 days. You have to hit the ground running. You have to know what to look for and what to do, realizing that you don't have long to do it. You won't have the chance to gather all of this later. You are stuck with the claim record.

That's ERISA.

Experience matters. If you have an ERISA life insurance case, put our experience to work for you. Our life insurance lawyers can help you evaluate and document your claim. An attorney's review of a life insurance claim can make a big difference. We can also file appeals after a claim is denied. Whatever the facts of your case, contact us to schedule a free initial consultation with a life insurance benefits attorney today at 800-284-9309.