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An insurance policy exclusion that bars coverage for accidents caused by the insured’s use of alcohol is enforceable in an ERISA plan even if the plan was only in draft form at the time of the accident, a federal judge in Philadelphia has ruled. The ruling by U.S. District Judge Ronald L. Buckwalter in Jones v. Aetna Life Insurance Co. means that Daniel C. Jones is not entitled to any coverage under his employer-funded accidental death or dismemberment policy for the one-car accident that rendered him a paraplegic. “There is no support for the proposition plaintiff puts forth that exclusions contained in ERISA plan documents in draft form are not part of the policy,” Buckwalter wrote. Instead, Buckwalter found that “under ERISA, in order for coverage to exist, there is no requirement of a writing.” Buckwalter found that in every draft version of the policy Aetna provided to employees of Janney Montgomery Scott, the alcohol exclusion was clearly set out. “While it is true that [Aetna and Janney] were unable to finalize plan documents until almost two years after the policy’s effective date, a reasonable person could easily conclude from the draft documents that accidents resulting from alcohol consumption would be excluded from coverage,” he wrote. According to court papers, Jones was involved in a one-car accident in May 1999 that resulted in serious spinal injury and left him a paraplegic. Police said they detected an odor of alcohol on Jones’ breath at the scene of the accident and that toxicology tests at a hospital showed that Jones had a blood alcohol level of 0.157. Jones applied for coverage under an accidental death and dismemberment policy that was part of a basic life insurance policy issued to Janney employees by Aetna. Under the policy, Aetna maintained sole authority to determine whether Janney employees were entitled to benefits. It denied Jones’ claim on the basis of an exclusion that bars coverage for accidents resulting from the use of alcohol. Court records show that the policy went into effect in September 1998 — six months before Jones had his accident — but that a final plan was not distributed to Janney employees until October 2000. In his suit, Jones’ lawyer, Richard C. Senker, argued that Aetna’s decision should be subjected to “heightened scrutiny” because of an inherent conflict of interest that resulted from the fact that Aetna both funds the plan and makes benefits determinations. Buckwalter agreed that Aetna should be held to a somewhat higher standard but said the evidence called only for a moderate heightening of the test. “I find myself in the middle of the arbitrary and capricious range, and I examine the facts before Aetna with a moderate degree of skepticism,” Buckwalter wrote. Under such a heightened arbitrary-and-capricious review, Buckwalter said, “my review is deferential but not absolutely deferential.” Buckwalter found it was necessary to look “not only at the result — whether it is supported by reason — but at the process by which the result was achieved.” Buckwalter said Jones had identified only one “problem” with Aetna’s procedures. At the time of his accident, Jones said, there was no official or final written document that described the parameters of the policy. Buckwalter agreed that “neither Aetna nor Janney explain why the plan documents took so long to finalize and distribute.” But the lack of a final plan was not enough to show that Aetna’s decision was biased or faulty, Buckwalter said. “At first glance, this scenario presents a significant potential for abuse in analyzing benefit claims. As long as Aetna stated that the plan documents were not in final form and that a final determination of benefits would be based upon the final approved version of the policy, Aetna was free to change the terms of the policy to suit a position that the claimant was not entitled to benefits,” Buckwalter wrote. “However, upon closer examination, the delay in finalizing the plan documents appears to be an administrative snafu and there is little evidence of any suspicious events which would raise the likelihood of self-dealing on Aetna’s part.” Instead, Buckwalter said, the evidence of bias was lacking because Aetna had never wavered from its position that accidents caused or contributed to by the use of alcohol would not be covered. The exclusion appeared in the very first draft of the plan and in every subsequent draft, Buckwalter noted. “Although plaintiff complains that draft versions of the plan documents existed because [Aetna and Janney] were still negotiating substantive issues with respect to coverage, he has presented no evidence that the alcohol exclusion was one of the provisions under negotiation or that the alcohol exclusion was something that Janney or Aetna had considered eliminating from the plan,” Buckwalter wrote. Buckwalter noted that Janney’s prior insurer, Trans-General Life Insurance Co. of New York, had similarly provided coverage that explicitly excluded accidental bodily injuries caused or contributed to by the voluntary use or consumption of any intoxicant or narcotic, unless used or consumed in accordance with the directions of a physician. “While Trans-General’s policy does not evidence that Aetna intended to exclude accidents resulting from consumption of alcohol, it does show that plaintiff was on notice that Janney did not provide its employees with this type of coverage,” Buckwalter wrote. And the Trans-General policy was also proof that such exclusions are “standard” in such policies, Buckwalter found. The “ultimate question” in the case, Buckwalter said, was “whether a fact finder could conclude that Aetna’s decision to deny plaintiff benefits based upon an alcohol exclusion that existed only in draft form was the result of self-dealing instead of the result of a trustee carefully exercising its fiduciary duties.” Buckwalter concluded that no reasonable fact finder could fault Aetna’s decision because the alcohol exclusion was always part of the plan and that the accident was undisputedly the result of Jones’ own intoxication.

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