United States District Court, N.D. Illinois, Eastern Division
DANIELLE ORR, as administrator of the estate of Daniel Orr, deceased, and HAILEY ORR and DANIELLE ORR, individually and as beneficiaries of certain insurance policies, Plaintiffs,
ASSURANT EMPLOYEE BENEFITS, agent for UNION SECURITY INSURANCE COMPANY, Defendant.
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge.
Danielle and Hailey Orr are the daughters of Daniel Orr, who died in a motorcycle accident on August 7, 2012. As Mr. Orr's beneficiaries under a group life insurance policy issued by Union Security Insurance Company (USIC), they have sued USIC under the Employee Retirement Income Security Act (ERISA) to recover accidental death and dismemberment benefits under the policy. The Orrs allege that USIC's denial of benefits lacked a basis in the record. USIC has moved for summary judgment, arguing that the Orrs failed to exhaust internal plan remedies and that the denial of benefits was appropriate. The Orrs have cross-moved for summary judgment, arguing that they exhausted internal plan remedies and that USIC's denial of benefits is unsupported by the record. For the reasons stated below, the Court concludes that the Orrs did not exhaust internal plan remedies and therefore grants USIC's motion for summary judgment and denies the Orrs's cross-motion for summary judgment.
On August 7, 2012, Daniel Orr died in a motorcycle accident in which his motorcycle drove off a road. He suffered severe injuries, including a skull fracture, and was found dead several hours after the accident occurred.
On or about August 27, 2012, the Orrs began filing what both they and USIC regarded as a claim for benefits under Daniel Orr's life insurance policy with USIC. USIC paid each of the Orrs $40, 026.88 in life insurance proceeds and interest. But it withheld a total of $80, 000 in accidental death benefits. To determine whether the Orrs were entitled to those benefits, USIC first needed to know the circumstances of Mr. Orr's death.
USIC investigated and, on December 10, 2012, notified the Orrs in writing that it had denied their claim for accidental death benefits. USIC's letter stated that the claim was denied on the ground that Mr. Orr's death resulted from his intoxication, which made accidental death benefits unavailable under the insurance policy. USIC stated that its medical consultant had reviewed autopsy and toxicology reports that determined that Mr. Orr's blood alcohol level at the time of the accident exceeded the legal limit and that Mr. Orr "would have been impaired in attention, coordination and balance" at the time of the accident. Def.'s Ex. A at US000162.
USIC's letter advised the Orrs that they could request review of the decision within sixty days. Enclosed with the letter were instructions regarding USIC's internal review process. The process included a "First Review" by a person not previously involved in the claim decision and, if the claim was denied after the first review, a "Second Review" handled by a manager in the Life Claims area of USIC or the "Life Claims Appeals Committee." Id. at US000163. USIC's description of the process also advised that if the claim was denied as part of the Second Review, the claimant could file a lawsuit in court under ERISA. Id.
The next relevant communication found in the record took place on February 5, 2013, a little under sixty days after USIC denied the Orrs's claim for accidental death benefits. On that date, the Orrs, via their attorney, sent USIC a letter bearing the title "NOTICE OF INTENTION TO OPPOSE DENIAL OF POLICY PROCEEDS." Id. at US000172. The letter stated that "[t]his letter is intended to qualify as a First Review of the denial of benefits as set out [sic] instructions" and that "[t]his letter is claimant's effort to be in compliance with the policy term requirement of Notice within 60 days of a Rejection of a Claim for Benefits to Request Review Proceedings. " Id. The attorney's letter did not identify any particular basis for further review but instead requested certain documents from USIC and advised that the Orrs intended to submit additional written materials. On February 13, 2013, USIC sent the Orrs a letter acknowledging receipt of their notice of intent and providing them a thirty-day extension to appeal the denial of claim benefits.
The next document found in the record is another letter from the Orrs's attorney to USIC, dated March 11, 2013. The letter-rather incongruously, as the Court will discuss-was entitled "NOTICE OF FILING APPEAL (2nd Level) OF DENIAL OF POLICY PROCEEDS." Id. at US000228. This letter, unlike the attorney's February 5 letter, described in detail grounds for the Orrs's request for further review of their claim for accidental death benefits. In summary, the Orrs contended that Mr. Orr's blood alcohol level determined at autopsy was an insufficient basis to deny the claim, because it did not demonstrate his blood alcohol level at the time of the accident, and more importantly, the absence of evidence concerning the accident itself made it speculative that Mr. Orr was actually impaired at the time or that any impairment caused the accident. Id. at US000228-32.
USIC denied the Orrs's appeal on May 14, 2013 via a letter from an "Appeals Specialist" that described the basis for the denial. Id. at US000283-85. The letter advised that in reviewing the claim on appeal, USIC had consulted a forensic pathologist. The pathologist had reviewed the evidence and had concluded, for reasons explained in the letter, that the blood alcohol level determined at the time of the autopsy was in fact an accurate measure of Mr. Orr's blood alcohol level at the time of the accident. The pathologist also concluded that intoxication was the most probable cause of the accident and thus of Mr. Orr's death. Id. at US000284-85.
Included with USIC's letter was another copy of the insurer's procedures for review. The letter stated, "[i[f you disagree with the decision and wish to request a review, please submit a written statement indicating why you believe the decision is incorrect. Any such statement must be submitted within 60 days after your receipt of this letter." Id. at US000285.
On July 15, 2013, the Orrs's attorney sent USIC a letter presenting further challenges to the denial of the claim. Id. at US000291. The July 15 letter described counsel's February 5 letter as "a first level of appeal" and his March 11 letter as "the second level of appeal." Id. Counsel said he was "re-assert[ing] the legal positions taken in that correspondence as supplementary to this letter" and stated that the Orrs had already complied in full with USIC's internal review procedures. Id. Despite this assertion, counsel went on to describe in detail grounds for disputing the denial of benefits, including a challenge to the reasoning set forth in USIC's May 14 letter. Among other things, counsel noted that the route that Mr. Orr had taken required him to negotiate six curves up a steep hill before the final curve where he had gone off the road, and he argued that Mr. Orr's ability to negotiate the earlier curves refuted the contention that he was intoxicated and unable to control his motorcycle properly. Id. Counsel closed by stating:
I am in the process of investigating further the facts of the case, and have retained a forensic pathologist to support the position of the Estate that payment should be made of the benefits of the policy. I expect to have more probative information available if I am successful in the efforts to ...