Denial Of Benefits For Intoxicated Operation Of Boat Not Abuse Of Discretion; Exclusion Term “Vehicle” Not Ambiguous: Fifth Circuit

Application of intoxication exclusions in two employer-sponsored accidental death and dismemberment insurance policies to bar coverage was not an abuse of discretion, the Fifth Circuit U.S. Court of Appeals has ruled in Green v. Life Insurance Company of North America (No. 13-60049). The Fifth Circuit also concluded that the term “vehicle” in the exclusions was not ambiguous and included the boat the insured was operating. Thus, the lower court’s ruling in favor of the insurer was affirmed.

Background. Joshua Green was insured under two employer-sponsored accidental death and dismemberment insurance policies. Life Insurance Company of North America served as the policies’ insurer, issuer, claims administrator, and plan administrator. The insured was killed when his boat struck the support legs of a concrete piling, causing a fatal head injury. According to the police report, the insured’s blood alcohol content was .243, empty beer bottles and cans were present in the boat, he sounded intoxicated when he spoke to his wife the evening of the accident, and he had not been using his running lights. He had spoken to his wife near civil twilight, when terrestrial objects become indistinguishable.

The insured’s wife filed claims for accidental death benefits under the policies, but the insurer denied the claims on the ground that the insured’s death was not a “Covered Accident” because he was intoxicated when he was operating the boat and did not use his lights when operating the boat. The insurer also denied the claims on the ground that the policies’ exclusion for operating a vehicle while intoxicated applied.

Policy language. The policies defined a “Covered Accident” as: “[A] sudden, unforeseeable, external event that results, directly and independently of all other causes, in a Covered Injury or Covered Loss and meets all of the following conditions: 1. occurs while the Covered Person is insured under the policy; 2. is not contributed to by disease, Sickness, mental or bodily infirmity; 3. is not otherwise excluded under the terms of this policy.”

The policies included as a “Common Exclusion” from recovery: “[O]perating any type of vehicle while under the influence of alcohol or any drug, narcotic or other intoxicant including any prescribed drug for which the Covered Person has been provided a written warning against operating a vehicle while taking it. Under the influence of alcohol, for purposes of this exclusion, means intoxicated, as defined by the law of the state in which the Covered Accident occurred.”

Firman distinguishable. The Fifth Circuit concluded that the policies’ “Common Exclusion” applied to bar coverage. The Fifth Circuit ruling upon which the insured’s wife and mother based their argument against the insurer, Firman v. Life Ins. Co. of N. Am., was distinguishable. In this case, the policies provided an explicit exclusion for alcohol-related deaths in addition to clearly defining “Covered Accident” to include “unforeseeable” events. Also, distinct from the Fifth Circuit’s ruling was the existence of evidence of the insured’s intoxication beyond his blood alcohol content.

“Vehicle.” The Fifth Circuit also concluded that the term “vehicle” in the policies was not ambiguous and included the boat that the insured was operating. The insured’s wife and mother argued that the Mississippi legal definition of “vehicle,” which was limited to use “upon a highway,” created an ambiguity that should be construed in their favor. They pointed out that Mississippi law also distinguished “vehicle” from “watercraft,” and that federal law recognized that a “vessel” was not a “vehicle.”

The Fifth Circuit explained that Mississippi law did not apply to interpret “vehicle” in the policies. The reference to “as defined by the law of the state in which the Covered Accident occurred” did not extend to include the interpretation of “vehicle”; it applied to interpret “intoxicated.”

Additionally, the plain meaning of “vehicle” in the policies was unambiguous and broad enough to include the boat the insured was operating. The Fifth Circuit acknowledged the common and generally accepted meaning of “vehicle” to be “a means of transporting something,” and that the exclusion explicitly referred to “any type of vehicle” and, thus, the insurer intended the broadest definition of the term to apply. Accordingly, the insurer correctly construed “vehicle” to include a boat. Because the insurer properly denied coverage because the exclusion applied, the lower court’s ruling in favor of the insured was affirmed.

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