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Arruda v. Zurich American Insurance Company

United States District Court, D. Massachusetts

February 6, 2019

DENISE ARRUDA, Plaintiff,
v.
ZURICH AMERICAN INSURANCE COMPANY, Defendant.

          MEMORANDUM AND ORDER

          DOUGLAS P. WOODLOCK UNITED STATES DISTRICT JUDGE.

         Denise Arruda brings this action against Zurich American Insurance Company (“Zurich”) seeking accidental death benefits pursuant to an employee welfare benefits plan stemming from the death of her husband, Joseph Arruda, in a car accident. Zurich has denied benefits. The parties have separately filed motions for judgment on the administrative record. The parties do not contest the language or meaning of the contract terms, but instead contest the sufficiency of the record evidence to support Zurich's decision. Finding that Zurich's decision is not supported by substantial evidence, I will grant Mrs. Arruda's motion and deny that of Zurich.

         I. BACKGROUND

         A. Factual Background

         1. Mr. Arruda's General Health

         Mr. Arruda, age 57, worked as a salesperson for NSTAR in May of 2014. [Administrative Record (“R.”) at 3.] He had been suffering from hypertension, hyperaldosteronism, and hypertrophic cardiomyopathy. Mr. Arruda was obese, did not exercise, and did not follow-up with physicians as instructed. [Id. at 333, 335-36.] He also failed to follow his prescription medication regimen. [Id.]

         In January 2014, Mr. Arruda passed out at home and was admitted to the hospital the following day. [Id. at 151.] As a result of that medical episode, he had a ardioverter/defibrillator pacing device surgically implanted in the left side of his chest in January 2014. [Id. at 334.] Mr. Arruda's last medical examination by his cardiologist, Christopher Abadi, M.D., on February 25, 2014, included notes that Mr. Arruda had “done well from a cardiac standpoint since” having the defibrillator implanted and that his “blood pressure was fine.” [Id. at 195.]

         2. The Policy

         Mr. Arruda was insured under Basic Accident Policy No. GTU 4380194 (the “Policy”) issued by Zurich. [Id. at 473.] The Policy provides, in relevant part that: “If an Insured suffers a loss of life as a result of a Covered Injury, We will pay the applicable Principal Sum.” [Id. at 96.] It defines a covered injury as “an Injury directly caused by accidental means which is independent of all other causes, results from a Covered Accident, occurs while the Covered Person is insured under this Policy, and results in a Covered Loss.” [Id. at 92.] A covered accident is defined as “an Accident that results in a Covered Loss.” [Id.] An accident is “a sudden, unexpected, specific, and abrupt event that occurs by chance at an identifiable time and place during the Policy term.” [Id.] Finally, a covered loss is “a loss which meets the requisites of one or more benefits or additional benefits, results from a Covered Injury, and for which benefits are payable under this Policy.” [Id.] The Policy also contains two relevant exclusions: Exclusion 4, which provides that a “loss will not be a Covered Loss if it is caused by, contributed to, or results from . . . illness or disease, regardless of how contracted . . .” and Exclusion 8, which provides that a loss will not be a covered loss if it is caused by, contributed to, or results from “being under the influence of any prescription drug, narcotic, or hallucinogen.” [Id. at 102.]

         3. The Car Accident

         On the morning of May 22, 2014, Mr. Arruda was driving to the University of Massachusetts-Amherst to attend a work event. [Id. at 1.] At about 9:39 a.m., Mr. Arruda's car crossed the highway median into oncoming traffic and struck another car. [Id. at 147, 471.] The collision caused Mr. Arruda's car to hit a curb, flip over multiple times, and land upright. [Id. at 143.] CPR was performed on Mr. Arruda. [Id. at 147.] He was pronounced dead on the scene by the Hadley Fire Department. [Id.] The autopsy report listed Mr. Arruda's cause of death as hypertensive heart disease. [Id. at 834.] A postmortem toxicology report found that Mr. Arruda had marijuana in his system at the time of the crash. [Id. at 842.]

         4. The Attempt to Collect

         On or about August 19, 2014, Mrs. Arruda filed for accidental death benefits, as beneficiary of the Policy. [Id. at 52.] Zurich then retained the services of an investigator, CS Claims Group, Inc. (“CS Claims”), to investigate the loss. [Id. at 109.] CS Claims investigated over a period of eight months, providing Zurich with 17 reports regarding its progress in collecting medical records, witness statements, and medical examiner reports. [Id. at 125, 128, 132, 135, 189, 269, 331, 399, 400-402, 801, 802, 804, 831-33, 852.]

         In a letter dated December 8, 2015, Zurich issued a denial of benefits based on two grounds. [Id. at 473.] First, Zurich concluded that Mr. Arruda's death was not the result of an accidental bodily injury independent of all other causes. [Id. at 475.] Second, and independently, Zurich concluded that the Policy exclusion for loss caused by, contributed to, or resulting from illness or disease, was applicable. [Id.] Essentially, Zurich concluded that Mr. Arruda's cause of death was hypertensive heart disease such that Mr. Arruda's death was not independent of an underlying medical condition. [Id. at 474.]

         On January 29, 2016, Mrs. Arruda filed an appeal of denial with Zurich. [Id. at 477.] In this appeal, Mrs. Arruda submitted an Arrhythmia Logbook report from Boston Scientific, the manufacturer of Mr. Arruda's implantable cardioverter defibrillator; the hearing transcript from Mr. Arruda's July 1, 2015 workers' compensation hearing; and the workers' compensation lump sum settlement agreement. [Id. at 477.] Mrs. Arruda supplemented her appeal on August 24, 2016 with an expert report from Elizabeth A. Laposta, M.D. [Id. at 1407-1424.]

         The appeals committee included four individuals who reviewed the matter de novo. [Id. at 1786.] In assessing Mrs. Arruda's claim, the appeals committee retained a medical opinion from forensic pathologist Mark Taff, M.D. [Id. at 1526.] Zurich submitted a letter to Mrs. Arruda dated February 7, 2017, documenting Dr. Taff's opinion as to Mr. Arruda's cause of death. [Id. at 1584.] In sum, Dr. Taff concluded that Mr. Arruda died as a result of accidental bodily injuries that were contributed to by multiple pre-existing illnesses or diseases, which caused him to lose control of his car and crash. [Id. at 1599-1600.] Within the February 7 letter, Zurich notified Mrs. Arruda that it might raise Exclusion 8 (contribution of drug use) of the Policy with regard to her claim. [Id. at 1584.] Zurich explained that before it issued its final decision, it would give Mrs. Arruda an additional 30 days to review the material and provide any input regarding the Exclusion 8 language. [Id.] On April 17, 2017, Mrs. Arruda submitted Dr. Laposata's response to Dr. Taff's report for Zurich's review, which included a direct response to Zurich's application of Exclusion 8. [Id. at 1697-1700.]

         By letter dated May 11, 2017, Zurich's appeals panel affirmed the initial denial, concluding that Mr. Arruda did not sustain a covered loss due to a covered accident, and that the claim was also excluded based on Exclusions 4 and 8. [Id. at 1727.] In that letter, Zurich explained that the evidence indicated Mr. Arruda's death was caused by, or resulted from, illness, disease, and use of marijuana. [Id. at 1728.] Zurich's letter also included explanations of the three medical reviews it relied on, noting that William W. Angell, M.D., and Michael D. Bell, M.D., both pointed to heart issues as the primary cause of death, and that Dr. Taff concluded that Mr. Arruda's health conditions were not the immediate cause of his death, but “most likely triggered loss of control/erratic driving . . . which resulted in fatal bodily injuries.” [Id.]

         According to the terms of the Policy, Zurich is the administrator of the Plan, and it has discretion to apply and interpret the terms of the Plan in determining claims for benefits. [Id. at 105.] Specifically, the Plan provides:

ERISA Claims Fiduciary. The Policyholder agrees that the Policy constitutes the plan and plan document under the Employee Retirement Income Security Act of 1974 as amended (ERISA). The Policyholder designates Us as the claims fiduciary of this plan and gives Us the discretionary authority to determine eligibility for benefits and to construe the terms of the plan. The Policyholder agrees to comply with the disclosures and reporting requirements of ERISA regarding the plan and Our designation and authority as the claims fiduciary.

[Id.] “We” as defined in the Policy is Zurich. [Id. at 93.]

         In addition to these proceedings, a dispute regarding the cause of Mr. Arruda's death gave rise to a workers' compensation hearing on July 1, 2015. [R. at 1290-97.] After the hearing, the parties reached a lump sum settlement of Mr. Arruda's workers' compensation claim. [Id. at 1391-92.]

         5. The Record Evidence

         a. Dr. Bell

         Dr. Bell submitted a report to Zurich on November 30, 2015. [Id. at 470.] That report, based on a compilation of medical and non-medical records provided for review, which included progress notes from Mr. Arruda's cardiologist through February 2014, concluded that the crash and Mr. Arruda's death “were caused by his heart disease, whether it be due to hypertension or a variant of HCM.” [Id. at 470-71.] Dr. Bell relied not simply on Mr. Arruda's previous medical records, but also on the autopsy performed by Dr. Sexton, which showed that Mr. Arruda had “a C1 left posterior arch fracture and C3-C4 dislocation with soft tissue hemorrhage at the injury sites.” [Id. at 471.] Dr. Bell found that this fracture was a contributory cause of death. [Id.] Dr. Bell also took into account Trooper David Sanford's collision analysis, Trooper McMillan's report, and Dr. Mindy Hull's cardiac pathology report. [Id.]

         b. ...


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