Benefits under AD&D policy due where diabetes not a substantial factor in leg amputation

An insured whose left leg was amputated several months after it was injured in an automobile accident was entitled to accidental death and dismemberment benefits under his wife’s employee welfare benefit plan, the U.S. Court of Appeals for the Ninth Circuit ruled. The record showed that although the insured’s preexisting diabetes was a complicating factor, it had not substantially contributed to his ultimate loss. Thus, the AD&D insurer could not rely on the plan’s “illness or infirmity” exclusion to deny benefits.

In September 2014, the insured lost control of the car he was driving and crashed. The police officer who arrived at the scene noted that the insured had suffered serious injuries, including a “semi-amputated ankle.” His ankle injury failed to improve and, in February 2015, his left leg was amputated below the knee. The AD&D insurer denied coverage on the ground that his loss was complicated by his preexisting diabetes.

“Direct and sole cause.” The AD&D policy provided coverage if an accidental injury was the “direct and sole cause” of a covered loss. The term “direct and sole cause” meant that the loss occurred “within 12 months of the date of the accidental injury and was a direct result of the accidental injury, independent of other causes.”

According to the appellate panel, even under the more demanding “substantial contribution” standard (as opposed to the “proximate cause” standard), the insured was entitled to recovery. In order to be considered a substantial contributing factor for purposes of a “direct and sole cause” provision such as the one at issue here, a preexisting condition must be more than merely a contributing factor. A mere relationship of undetermined degree is not enough. This conclusion was supported by the Restatement (Second) of Torts (section 421, comment a), which distinguishes between a responsible cause and a “philosophic,” insignificant one. For a court to make that distinction, there must be some evidence of a significant magnitude of causation. Such evidence must demonstrate that a causal or contributing factor was more than just related to the injury; it must be a substantial catalyst.
Here, the record did not establish that diabetes was a substantial contributing factor. Although the insured’s surgeon opined that the “wound issues” post-surgery were “complicated by his diabetes,” the physician did not elaborate on how much of a role this complicating factor played in the insured’s failure to recover. In summarizing the grounds for surgery, the physician faulted both “comorbidities” and the “type of injury.” Thus, the insurer should not have denied coverage on the basis of the “direct and sole cause” provision.

“Illness or infirmity” exclusion. The insurer also could not deny coverage based on the policy’s exclusion for “any loss caused or contributed to by … illness or infirmity.” Again, the court applied the substantial contribution standard in interpreting the concepts of cause and contribution in the exclusion, which served the same purpose as the threshold limitation on coverage in the “direct and sole cause” provision.

As noted previously, the record was sparse with respect to the role of the insured’s diabetes. The automobile accident resulted in a severe injury that nearly amputated his lower leg. The surgeon opined that when attempts were made to correct the leg, subsequent wound issues were complicated by diabetes, and the fracture itself was slow to heal. Ultimately, however, the insured suffered a deep infection that the surgeon considered “related to the original injury.” Thus, the insurer could not meet its burden of showing that diabetes substantially caused or contributed to the loss. As such, the exclusion did not apply, and the insured was entitled to benefits.

SOURCE: Dowdy v. Metropolitan Life Insurance Co., (CA-9), No. 16-15824, May 16, 2018.
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