Court of Appeals Clarifies Policy Causation Language In Favor Of The Insured

When language in one part of your ERISA policy says your claim is covered, can the company rely on language elsewhere in the policy to deny your claim?  The Ninth Circuit Court of Appeals recently answered “no.”  In Dowdy v. Metropolitan Life Ins. Co., the court ruled the conflicting language about what caused the insured’s loss did not  preclude coverage.

Mr. Dowdy’s leg was amputated following a car crash.  He made a claim under his ERISA-governed Accidental Death & Dismemberment insurance policy with MetLife, purchased through Mrs. Dowdy’s employer.

MetLife denied coverage, claiming the amputation was excluded because it was complicated by Mr. Dowdy’s diabetes.  MetLife relied on language in the policy requiring the loss to be the “direct result of the accidental injury, independent of other causes,” and excluding injuries for losses related to “illness or infirmity” or “infection occurring in an external accidental wound.”  Under this language, MetLife claimed the right to deny coverage for any amputation “contributed to” or “complicated by” diabetes.

The court ruled the language could be read two ways, but that the Dowdys prevailed under either interpretation.  Under one interpretation, coverage existed if the injury was the “predominate or proximate cause,” while under the more stringent interpretation, coverage was barred as long as the excluded condition (diabetes) “substantially contributed” to the loss.

While agreeing diabetes was “a factor” in the injury leading to the amputation, the court determined there was no evidence diabetes “substantially” contributed to the injury.  The court relied on definitions of “substantial” requiring “a significant magnitude of causation” demonstrating the diabetes was “more than merely related to the injury.”

Since Mr. Dowdy’s medical records established only that diabetes “complicated” Mr. Dowdy’s wound, the court determined diabetes did not “substantially” contribute to the injury. The car crash caused a severe injury that nearly severed Mr. Dowdy’s leg.  The subsequent infection and wound issues were complicated by diabetes, but did not cause Mr. Dowdy’s amputation.

Because this type of language frequently appears in Accidental Death & Dismemberment policies as well as health and disability policies, the Dowdy ruling is helpful for many ERISA participants seeking coverage.