Angela Johnson v. American United Life Insurance

PUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

ANGELA JOHNSON, 
Plaintiff-Appellant,
v.
 No. 12-1381
AMERICAN UNITED LIFE INSURANCE
COMPANY,
Defendant-Appellee.

Appeal from the United States District Court
for the Middle District of North Carolina, at Greensboro.
L. Patrick Auld, Magistrate Judge.
(1:09-cv-00037-LPA-LPA)

Argued: December 5, 2012

Decided: May 24, 2013

Before TRAXLER, Chief Judge, and FLOYD and
THACKER, Circuit Judges.

Reversed and remanded by published opinion. Chief Judge
Traxler wrote the opinion, in which Judge Floyd and Judge
Thacker joined.
2 JOHNSON v. AMERICAN UNITED LIFE INSURANCE
COUNSEL

ARGUED: Gavin James Reardon, ROSSABI BLACK
SLAUGHTER, PA, Greensboro, North Carolina, for Appel-
lant. Elizabeth J. Bondurant, SMITH MOORE LEATHER-
WOOD, LLP, Atlanta, Georgia, for Appellee. ON BRIEF: T.
Matthew Creech, SMITH MOORE LEATHERWOOD, LLP,
Greensboro, North Carolina, for Appellee.

OPINION

TRAXLER, Chief Judge:

Richard Johnson ("Richard") participated in an employee
welfare benefit plan ("the Plan") that provided life insurance
and accidental death and dismemberment ("AD & D") bene-
fits through group policies issued by American United Life
Insurance Company ("AUL"). When Richard died in a single-
vehicle crash, his widow Angela Johnson ("Johnson")
received life insurance benefits, but AUL, which also served
as administrator for the Plan, refused to pay AD & D benefits.
Richard was highly intoxicated at the time of his fatal crash,
and AUL concluded that Richard’s drunk-driving death was
not the result of an "accident" under the Plan. Johnson filed
this action under the Employee Retirement Income Security
Act ("ERISA"), see 29 U.S.C. § 1132(a)(1)(B), to recover
these AD & D benefits. Applying a de novo standard of
review, the district court affirmed the denial of benefits on the
grounds that Richard’s death was not accidental because the
fatal crash was an "anticipated and expected" result of driving
while intoxicated.

For the reasons set forth in detail below, we must reverse.
The insurance policies do not define the term "accident"
despite its critical importance for determining eligibility for
AD & D benefits. Because "accident" is susceptible to more
 JOHNSON v. AMERICAN UNITED LIFE INSURANCE 3
than one reasonable interpretation, we construe it against
AUL, the drafting party, and conclude that a reasonable plan
participant under similar circumstances would have under-
stood Richard’s alcohol-related crash to be an "accident"
under the policy language.

The question of whether drunk-driving deaths or injuries
are "accidental" for purposes of accidental death insurance
has perplexed the judiciary for some time.1 Given the "sheer
number of court cases nationwide involving disputes over
claims by drunk drivers," an insurer surely understands that it
will "likely face claims under its AD & D policies based on
injuries sustained in alcohol-related collisions." Kovach v.
Zurich Am. Ins. Co., 587 F.3d 323, 336 (6th Cir. 2009). The
interpretive onus belongs on the insurers who draft these acci-
dent insurance policies; they can eliminate dilemmas like this
one by clearly and plainly stating whether a loss caused by the
participant’s driving drunk is "accidental" so that the insured
"know[s] what he is getting in his insurance policy." Senkier
v. Hartford Life & Accident Ins. Co., 948 F.2d 1050, 1053
(7th Cir. 1991).

Reaching this result gives us no great pleasure. Drunk driv-
ing is reckless, irresponsible conduct that produces tragic con-
1
The Pennsylvania Supreme Court sums up the frustration common to
courts addressing this issue:
What is an accident? Everyone knows what an accident is until
the word comes up in court. Then it becomes a mysterious phe-
nomenon, and, in order to resolve the enigma, witnesses are sum-
moned, experts testify, lawyers argue, treatises are consulted and
even when a conclave of twelve world-knowledgeable individu-
als agree as to whether a certain set of facts made out an accident,
the question may not yet be settled and it must be reheard in an
appellate court.
Brenneman v. St. Paul Fire & Marine Ins. Co., 192 A.2d 745, 747 (Pa.
1963); see Botts v. Hartford Accident & Indem. Co., 585 P.2d 657, 660
(Or. 1978) ("There are probably not many words which have caused
courts as much trouble as ‘accident’ and ‘accidental.’").
4 JOHNSON v. AMERICAN UNITED LIFE INSURANCE
sequences for the thousands it touches annually. But our task
in this case is not to promote personal responsibility or
enforce good driving habits. We must focus on the terms of
the policies issued under the Plan and determine whether
Richard died as a result of an accident without "allowing our
moral judgments about drunk driving to influence our
review." Kovach, 587 F.3d at 330. At bottom, this ERISA
appeal presents a problem of contract law which requires us
to determine the intent of the parties as reflected in the lan-
guage of the policy.

I.

A.

The Plan provided Richard with (1) standard AD & D and
life insurance benefits of $25,000 through a policy paid for by
Richard’s employer, and (2) voluntary AD & D and life insur-
ance benefits of $100,000 through a policy paid for by Rich-
ard. AUL issued both policies. Johnson is the designated
beneficiary under the policies.

Under the AD & D provision in the policies, AUL pays
benefits "[i]f a Person has an accident while insured under the
policy which results in a [covered] loss." J.A. 268. In the case
of an accidental loss of life to the insured, the policies pay the
principal benefit amount which in this case is $100,000 and
$25,000 for the employee- and employer-paid policies,
respectively. The policies define "accidental death" as "death
due to an accident, directly and independently of all other
causes," J.A. 224, but fail to define the predicate term "acci-
dent."

The AD & D provision contains a limitations clause
expressly excluding the payment of benefits in various cir-
cumstances:

Benefits are not payable for loss due directly or indi-
rectly to:
 JOHNSON v. AMERICAN UNITED LIFE INSURANCE 5
1. suicide or attempted suicide, whether sane or
insane;

2. air travel as a crew member;

3. participation in a riot or from war or an act of war,
whether declared or undeclared;

4. commission of an assault or felony;

5. the voluntary taking of:

a. a prescription drug in a manner other than as
prescribed by a physician;

b. any other federally- or state-controlled sub-
stance in an unlawful manner;

c. non-prescription medication, in a manner other
than as indicated in the printed instructions; or

d. poison, except for accidental ptomaine poison-
ing.

6. the voluntary inhaling of gas (unless due to occu-
pational accident); or

7. sickness other than infection occurring as a result
of accidental injury.

J.A. 226.

With two exceptions, the terms of the employer- and
employee-paid policies are virtually identical. First, the
employee-paid policy includes an additional category in the
limitations clause for which AD & D benefits are not pay-
able—"participation in hang-gliding, bungee jumping, auto-
mobile racing, motorcycle racing, skydiving, rock climbing,
6 JOHNSON v. AMERICAN UNITED LIFE INSURANCE
or mountain climbing." J.A. 269. Second, the employee-paid
policy provides an additional AD & D benefit not available
under the employer-paid policy—the "Seat Belt" benefit.
According to the policy, "AUL will pay an additional acci-
dental death benefit, called the Seat Belt Benefit, if a Person
dies as a result of an Automobile accident while properly
wearing a Seat Belt at the time of the accident." J.A. 270.

Significantly, the Seat Belt Benefit alone is expressly sub-
ject to a drunk-driving limitation clause:

This benefit will not be paid if the Person, while
operating the Automobile, was legally intoxicated as
defined by applicable laws, violating traffic laws,
racing, stunt-driving, or engaging in other similar
activity during the accident.

In addition to the above limitation, this benefit is
subject to the further limitations and provisions of
this AD & D section.

J.A. 270 (emphasis added).

B.

On August 2, 2007, at about 1:30 a.m., Richard was driving
a pickup truck owned by his employer near Myrtle Beach,
South Carolina, when he lost control of the vehicle and veered
off the road, struck a highway sign and flipped over multiple
times. Richard was partially ejected from the vehicle and sus-
tained fatal injuries. The law enforcement officer who investi-
gated the incident reported that the primary factor
contributing to Richard’s crash was that he was driving too
fast for conditions. The post-incident traffic report estimated
that Richard had been driving 65 mph in a 50 mph zone. The
report contains no mention of alcohol. The Certificate of
Death issued by the Horry County Coroner stated under
"Cause of Death" that Richard died from internal injuries
 JOHNSON v. AMERICAN UNITED LIFE INSURANCE 7
from a motor vehicle accident occurring when "victim lost
control of [his] vehicle, striking [the highway] pole." J.A.
192. A toxicology report subsequently issued by the South
Carolina Law Enforcement Division ("SLED") indicated that
Richard’s blood alcohol content ("BAC") was 0.289 percent
at the time of his fatal crash, significantly higher than South
Carolina’s legal limit of .08 percent.

Richard’s employer submitted a claim on behalf of Johnson
for benefits under the two group policies. AUL immediately
paid the life insurance benefits but refused to pay AD & D
benefits under the two policies (totaling $125,000). AUL
issued a denial letter, concluding that, based on his state of
intoxication, Richard did not die in an accident and thus did
not qualify for AD & D benefits:

Based upon the police and medical reports pro-
vided to AUL, Richard Johnson had a sufficient
quantity of intoxicants in his system to make him
lose control of his mental and physical faculties at
the time of his fatal collision. Therefore, benefits are
not payable under the accidental death and dismem-
berment provisions of the policy.

Mr. Johnson’s death was not accidental in nature
since it was not caused directly and independently of
all other causes. An accident occurs when an unfore-
seen, sudden and unexpected event, usually of an
afflictive or unfortunate character[,] occur[s] . . . .

The hazards of drinking excessively are widely
known and widely publicized. It is clearly foresee-
able that drinking excessive amounts of alcohol, and
driving may result in death or bodily harm. As the
decedent should have foreseen the consequences of
drinking excessive amounts of alcohol, a determina-
tion of his death not being accidental is reasonable.
8 JOHNSON v. AMERICAN UNITED LIFE INSURANCE
J.A. 359. The denial letter also noted that the limitations
clause specifically applicable to the Seat Belt Benefit
excluded any payment of benefits in light of the fact that
Richard’s BAC exceeded the legal limit.

The employer sent a written request asking AUL to recon-
sider its denial, observing that "being intoxicated by alcohol
is not listed as a limitation under the AD & D benefit. The
only reference to a limitation for legal intoxication appears on
the following page and appears to apply to the seat belt bene-
fit exclusively." J.A. 170. On December 14, 2007, AUL again
denied AD & D benefits on the same grounds as before—that
Richard’s death was reasonably foreseeable at his level of
intoxication and therefore not accidental—and cited general
statistics regarding the effect of alcohol on a driver’s abilities.
But AUL also added a new ground for denial, focusing on
specific limitations in the AD & D policy provision. AUL
suggested that benefits were excluded because Richard died
during the "commission of an assault or felony" under South
Carolina traffic laws but did not elaborate on this assertion.

Johnson subsequently retained counsel, who appealed the
denial administratively, arguing that the general AD & D pro-
vision "does not state that legal intoxication disqualifies one
from being involved in an accident." J.A 134. Counsel chal-
lenged the relevance of AUL’s statistics, suggesting that they
did not show that death was a likely result of driving while
intoxicated and that it is far more likely that a drunk driver
gets arrested. In fact, the "policy does exclude payment of the
seatbelt benefit if there is an accidental death while a person
is legally intoxicated;" however, "the policy does not
expressly contain any such limitation for death claims (sepa-
rate and apart from the seatbelt benefit). J.A. 134. AUL then
issued its final denial on December 9, 2008, largely repeating
its first several letters verbatim.
 JOHNSON v. AMERICAN UNITED LIFE INSURANCE 9
C.

Johnson then filed this action, contending that AUL wrong-
fully denied her AD & D benefits. The parties filed cross-
motions for summary judgment.2 Defining "accident" by ref-
erence to North Carolina law, the district court concluded that
Richard’s death was due to an "accident" only if the crash was
the "unanticipated and unexpected result of an intentional,
voluntary act." J.A. 555 (internal quotation marks omitted). In
light of Richard’s significant level of intoxication while oper-
ating his vehicle 15 mph over the speed limit, the court held
that his crash "constitutes an anticipated and expected result
(and thus not an ‘accident’ within the meaning of § 58-3-30
. . .)." J.A. 555. Thus, the district court granted AUL’s motion
for summary judgment and denied Johnson’s cross-motion.

II.

"In an appeal under ERISA, we review a district court’s
decision de novo, employing the same standards governing
the district court’s review of the plan administrator’s deci-
sion." Williams v. Metropolitan Life Ins. Co., 609 F.3d 622,
629 (4th Cir. 2010). In Firestone Tire & Rubber Co. v. Bruch,
the Supreme Court established that courts must review a
denial of benefits "under a de novo standard unless the benefit
plan gives the administrator or fiduciary discretionary author-
ity to determine eligibility for benefits or to construe the terms
of the plan." 489 U.S. 101, 115 (1989). "If such discretionary
authority is conferred, the courts’ review is for abuse of dis-
cretion"; however, "the default standard of review is de
novo," and "abuse-of-discretion review is appropriate only
when discretion is vested in the plan administrator." Woods v.
Prudential Ins. Co. of Am., 528 F.3d 320, 322 (4th Cir. 2008).
AUL stipulated below that the Plan documents do not grant
2
The parties agreed to have the magistrate judge enter a dispositive rul-
ing. See 28 U.S.C. § 636(c)(1). For simplicity, we refer to the magistrate
judge as "the district court" or "the court."
10 JOHNSON v. AMERICAN UNITED LIFE INSURANCE
it discretionary authority to make a benefits-eligibility deter-
mination under the policies or construe the terms of the poli-
cies. Accordingly, our review of the denial of benefits in this
case is de novo, and our job is to make our own independent
determination of whether Johnson was entitled to the AD &
D benefits. The correctness, not the reasonableness, of AUL’s
denial of AD & D benefits is our only concern in this appeal.
Cf. Eckelberry v. ReliaStar Life Ins. Co., 469 F.3d 340, 343
(4th Cir. 2006) ("Under [the abuse of discretion] standard, we
do not search for the best interpretation of a plan or even for
one we might independently adopt. Rather, when reviewing a
plan administrator’s decision, a court will not disturb any rea-
sonable interpretation." (internal quotation marks omitted)).

III.

A.

The question presented is whether Richard’s fatal crash
qualified as an "accident," which is not a defined term in these
group policies. "ERISA plans are contractual documents
which, while regulated, are governed by established principles
of contract and trust law." Haley v. Paul Revere Life Ins. Co.,
77 F.3d 84, 88 (4th Cir. 1996). Although courts apply federal
common law rules of contract interpretation when construing
a policy governed by ERISA, see United McGill Corp. v.
Stinnett, 154 F.3d 168, 171 (4th Cir. 1998); Denzler v. Quest-
ech, Inc., 80 F.3d 97, 101 (4th Cir. 1996), we look to "princi-
ples of state common law to guide our analysis," Wheeler v.
Dynamic Eng’g, Inc., 62 F.3d 634, 638 (4th Cir. 1995). Thus,
both state law and general contract law principles inform our
attempt to divine the meaning of an undefined term in an
ERISA plan. See Regents of the Univ. of Mich. v. Employees
of Agency Rent–A–Car Hosp. Assoc., 122 F.3d 336, 339 (6th
Cir. 1997).

A paramount principle of contract law requires us to
enforce the terms of an ERISA insurance plan according to
 JOHNSON v. AMERICAN UNITED LIFE INSURANCE 11
"the plan’s plain language in its ordinary sense," Wheeler, 62
F.3d at 638, that is, according to the "literal and natural mean-
ing" of the Plan’s language, Stinnett, 154 F.3d at 172 (internal
quotation marks omitted); see Glocker v. W.R. Grace & Co.,
974 F.2d 540, 544 (4th Cir. 1992) ("The primary effort should
be to ascertain the intent of the parties . . . by giving language
its ordinary meaning . . . ."). Courts should determine "the
common and ordinary meaning as a reasonable person in the
position of the plan participant would have understood the
words." Cardoza v. United of Omaha Life Ins. Co., 708 F.3d
1196, 1203 (10th Cir. 2013) (internal quotation marks omit-
ted). Our inquiry, then, requires us to consider "what a reason-
able person in the position of the participant would have
understood those terms to mean." LaAsmar v. Phelps Dodge
Corp. Life Acc. Death & Dismem. & Dep. Life Ins. Plan, 605
F.3d 789, 801 (10th Cir. 2010).

Moreover, "ERISA plans, like contracts, are to be con-
strued as a whole." Alexander v. Primerica Holdings, Inc.,
967 F.2d 90, 93 (3d Cir. 1992). Courts must look at the
ERISA plan as a whole and determine the provision’s mean-
ing in the context of the entire agreement. See generally
Restatement (Second) of Contracts § 202(2). And, because
contracts are construed as a whole, courts should seek to give
effect to every provision in an ERISA plan, avoiding any
interpretation that renders a particular provision superfluous
or meaningless. See Harris v. Epoch Group, L.C., 357 F.3d
822, 825 (8th Cir. 2004) ("[An ERISA plan] should be inter-
preted as to give meaning to all of its terms-presuming that
every provision was intended to accomplish some purpose,
and that none are deemed superfluous." (internal quotation
marks omitted)); see generally Restatement (Second) of Con-
tracts § 203(a) ("[A]n interpretation which gives a reasonable,
lawful, and effective meaning to all the terms is preferred to
an interpretation which leaves a part unreasonable, unlawful,
or of no effect . . . .").

If application of these primary principles of construction
fails to provide clarity and the plan language remains ambigu-
12 JOHNSON v. AMERICAN UNITED LIFE INSURANCE
ous, then we are "compelled to apply the rule of contra
proferentum and construe the terms strictly in favor of the
insured," Wegner v. Standard Ins. Co., 129 F.3d 814, 818 (5th
Cir. 1997), and "in accordance with the reasonable expecta-
tions of the insured," Gallagher v. Reliance Standard Life Ins.
Co., 305 F.3d 264, 269 (4th Cir. 2002) (internal quotation
marks omitted); see Glocker, 974 F.2d at 544. "An ambiguity
exists where the language of a contract is fairly and reason-
ably susceptible to either of the constructions asserted by the
parties." Glover v. First Union Nat’l Bank, 428 S.E.2d 206,
209 (N.C. Ct. App. 1993). Whether an ambiguity in fact
remains is ultimately a question of law for the court. See
Bicket v. McLean Sec., Inc., 478 S.E.2d 518, 521 (N.C. Ct.
App. 1996).

B.

We begin, therefore, with the plain language of the dis-
puted provision, viewed in the context of the policy as a
whole. As noted, the policies define "accidental death" as
"death due to an accident, directly and independently of all
other causes," without defining the term "accident." Citing
various dictionary definitions, Johnson suggests that the most
natural and common understanding of the term "accident" is
an unintentional, unplanned incident that occurs as a result of
a careless error. See Merriam–Webster Dictionary Online,
http://www.merriam-webster.com (last visited April 25, 2013)
(defining accident as "an unforeseen and unplanned event or
circumstance"); The American Heritage Dictionary,
http://www. ahdictionary.com (last visited April 25, 2013)
("An unexpected and undesirable event, especially one result-
ing in damage or harm: an accident on the assembly line; car
accidents on icy roads."). More or less equating "accident"
with an absence of intent, Johnson reasons that the average
layperson would understand a loss resulting from a vehicular
crash to be accidental where the crash or loss was not planned
or intentionally caused. Johnson argues that a vehicular fatal-
ity, even in the instance of an intoxicated driver, would there-
 JOHNSON v. AMERICAN UNITED LIFE INSURANCE 13
fore qualify as an "accidental death" unless there was some
evidence to show that the driver planned to crash the vehicle
and cause his death.

On the other end of the spectrum, the term "accident" could
also be understood to exclude any incident where the conse-
quences of intentional conduct are expected or reasonably
foreseeable. See American Heritage Dictionary, supra, (giv-
ing alternate definition of accident as "[a]n unforeseen event
that is not the result of intention or has no apparent cause").
Standing alone, then, the word "accident" is reasonably sus-
ceptible to more than one interpretation. See Olympic Airways
v. Husain, 540 U.S. 644, 651 n.6 (2004) ("The term ‘accident’
has at least two plausible yet distinct definitions. On the one
hand, . . . ‘accident’ may be defined as an unintended event.
On the other hand, . . . the term ‘accident’ may be defined as
an event that is ‘unusual’ or ‘unexpected,’ whether the result
of intentional action or not." (internal citation omitted)).

Of course, we must construe the document as a whole.
Indeed, ambiguous language in one portion of an ERISA plan
may well be clarified by reference to unambiguous language
in another portion of the plan. See Temme v. Bemis Co., 622
F.3d 730, 734-35 (7th Cir. 2010). Here, there are a few other
portions of each policy that potentially bear on the meaning
and scope of "accident." First, the policies include a "Limita-
tions Clause" specifically applicable to AD & D benefits. This
provision expressly excludes the payment of AD & D benefits
for losses resulting from a wide spectrum of conduct, from
intentional acts like suicide to conduct that could be consid-
ered highly likely to produce a loss, such as "participation in
a riot or . . . war" and "motorcycle racing." Driving-drunk col-
lisions are not expressly and categorically excluded from AD
& D coverage, meaning at the very least that there are some
circumstances in which AD & D benefits would be paid for
injuries to drunk drivers. See Eckelberry, 469 F.3d at 345
("The simple fact that drunk driving occurred does not mean
there was no accident under the policy. If the insurer did not
14 JOHNSON v. AMERICAN UNITED LIFE INSURANCE
intend to cover any injury to a drunk driver, then drunk driv-
ing would have been a specific exclusion listed in the plan."
(emphasis added)).

Second, the Seat Belt Benefit provided by the employee-
paid policy has an express "limitation" that specifically
excludes payment of this benefit where the insured was
legally intoxicated:

This benefit will not be paid if the Person, while
operating the Automobile, was legally intoxicated as
defined by applicable laws, violating traffic laws,
racing, stunt-driving, or engaging in other similar
activity during the accident.

In addition to the above limitation, this benefit is
subject to the further limitations and provisions of
this AD & D section.

J.A. 270 (emphasis added). This provision makes clear that
payment of the Seat Belt Benefit is not only subject to the
general AD & D limitations but also to a separate and distinct
drunk-driving limitation. There would be no reason to include
an express limitation excluding payment of the Seat Belt Ben-
efit where the insured was driving while intoxicated unless a
drunk-driving collision otherwise qualified as an "accident" in
the first place. Indeed, "[t]he purpose of an exclusion is to
take something out of the coverage that would otherwise have
been included in it." Columbia Cas. Co. v. Georgia & Florida
RailNet, Inc., 542 F.3d 106, 113 (5th Cir. 2008). Any other
reading would relegate this language to mere surplusage.

While the limitations clauses clearly suggest that losses suf-
fered in a drunk-driving crash can qualify as accidental under
the Plan, these clauses do not necessarily clarify the definition
or scope of "accident." Like many other courts to have wres-
tled with the meaning of the undefined term "accident" as
applied to a claim arising from a drunk-driving crash, we find
 JOHNSON v. AMERICAN UNITED LIFE INSURANCE 15
it to be ambiguous. See, e.g., LaAsmar, 605 F.3d at 804 (col-
lecting cases and noting that "[s]urely there can be no ques-
tion in this case that the [undefined] term ‘accident,’ as used
in this Plan and as applied to [an insured’s drunk driving
fatality], is ambiguous."); cf. Wickman v. Northwestern Nat’l
Ins. Co., 908 F.2d 1077, 1087 (1st Cir. 1990) ("Case law is
fairly consistent in defining an accident, using equally ambig-
uous terms such as undesigned, unintentional, and unex-
pected.").

Thus, we "apply the rule of contra proferentum and con-
strue the terms strictly in favor of the insured," Wegner, 129
F.3d at 818, and "in accordance with the reasonable expecta-
tions of the insured," Gallagher, 305 F.3d at 269. We con-
clude that a reasonable plan participant in circumstances
similar to those before us would easily have understood that
this accident was covered. In this case, there is no evidence
of intent. The Traffic Collision Report Form submitted by the
responding law enforcement officer stated simply that Rich-
ard "was traveling too fast for conditions . . . traveled off the
roadway, struck a highway sign, and overturned several
times." J.A. 393. The Certificate of Death issued by the Horry
County Coroner also indicated the "Manner of Death" was an
"accident" and listed the cause of death as "Internal Injuries"
from an "MVA," i.e., a motor vehicle accident. J.A. 392. See
Kovach, 587 F.3d at 333 (concluding that "an ordinary person
would characterize [the insured’s] collision at the intersection
to be an accident" even though the insured had been intoxi-
cated while riding his motorcycle because "he did not ‘expect’
or ‘intend’ to hit another vehicle"). In light of the general
Limitations Clause and the Limitations Clause specifically
applicable to the Seat Belt Benefit, a reasonable plan partici-
pant would have believed that Richard’s loss was the result of
an accident covered by the policies.

"Strictly construing ambiguous terms presents ERISA pro-
viders with a clear alternative: draft plans that reasonable peo-
ple can understand or pay for ambiguity." Rasenack v. AIG
16 JOHNSON v. AMERICAN UNITED LIFE INSURANCE
Life Ins. Co., 585 F.3d 1311, 1320 (10th Cir. 2009) (internal
quotation marks omitted). As the Tenth Circuit aptly stated,

It is not too much to ask of ERISA insurers to set
forth explicitly what is and is not an accident cov-
ered by their AD & D policy, and to state unambigu-
ously whether death and disability caused by the
insured’s drunk driving is an accident and, if not, to
include a workable definition of drunkenness and of
causation attributed to such drunkenness.

LaAsmar, 605 F.3d at 805.

AUL could have defined "accident" or even imposed a lim-
itation on benefits for any loss resulting from the insured’s
driving with a blood alcohol content above the legal limit of
the state in which the vehicle is driven. Instead, the policy
language simply leaves "accident" undefined and susceptible
to more than one interpretation. Reviewing Johnson’s claim
de novo, we are constrained to construe the term in her favor
and conclude that Richard’s loss was "accidental."

C.

AUL contends that when an ERISA plan fails to define "ac-
cident" or "accidental" with sufficient clarity, circuit prece-
dent requires us to apply the two-step framework embraced
by Eckelberry v. ReliaStar Life Insurance Company. See 469
F.3d at 343-46. Eckelberry bears some factual similarities to
the case before us. Eckelberry was insured under an AD & D
policy provided by his employer that afforded him benefits if
he died "due to an accident." Eckelberry died in a single-
vehicle crash, and it was later determined that his BAC was
50 percent higher than West Virginia’s legal limit at the time
of the accident. The plan administrator denied benefits, con-
cluding that Eckelberry’s death was not unexpected in light of
his intoxicated state and, therefore, was not "due to an acci-
dent." Unlike the AUL policy before us, however, the Eckel-
 JOHNSON v. AMERICAN UNITED LIFE INSURANCE 17
berry policy actually supplied a definition of "accident"—"an
unexpected and sudden event which the insured does not fore-
see." 469 F.3d at 342 (internal quotation marks omitted). The
contract interpretation problem in Eckelberry revolved around
the terms "unexpected" and "foresee," which were not
defined. Also, unlike the plan presently before us, the Eckel-
berry plan reserved discretionary interpretive authority to the
insurer/plan administrator, and therefore on appeal the central
question was whether the insurer abused its discretion in con-
cluding Eckelberry’s drunk-driving death was not "unex-
pected" and therefore not accidental. Id. at 343.

In determining whether the drunk-driving collision quali-
fied as "unexpected," Eckelberry noted that numerous courts
have followed the analysis established by the First Circuit in
Wickman v. Northwestern National Insurance Co. to deter-
mine the meaning of "accident" when an insurance policy
fails to provide a definition or provides an ambiguous one:

Because the Plan’s undefined terms and indeed the
term "accident" are not always susceptible to easy
application, many federal courts have adopted the
framework laid out in [Wickman] to clarify the
meaning of "unexpected." Initially, the court asks
whether the insured subjectively expected his actions
to result in injury or death. . . . However, "if the fact-
finder . . . finds the evidence insufficient to accu-
rately determine the insured’s subjective expectation,
the fact-finder should then engage in an objective
analysis of the insured’s expectations." This "objec-
tive analysis" asks "whether a reasonable person,
with background and characteristics similar to the
insured, would have viewed the injury as highly
likely to occur as a result of the insured’s intentional
conduct."

Eckelberry, 469 F.3d at 343 (emphasis added) (internal cita-
tions omitted); see Wickman, 908 F.2d at 1088. Eckelberry
18 JOHNSON v. AMERICAN UNITED LIFE INSURANCE
recognized that in applying Wickman, courts have not always
held strictly to the "highly likely" threshold but have also used
a "reasonable foreseeability" standard. Id. at 344 & nn.1-2.
Ultimately, we concluded that the administrator’s "determina-
tion that Eckelberry’s death was not unexpected because he
put himself in a position in which he should have known seri-
ous injury or death could occur finds considerable support in
the record." Id. at 345 (emphasis added) (internal quotation
marks omitted).

For several reasons, Eckelberry neither controls our analy-
sis here nor dictates the result in this appeal. Eckelberry did
not establish a per se rule that drunk driving injuries or fatali-
ties can never be accidental, as the opinion itself points out.
See id. Cases like this are highly fact-specific, rising and fall-
ing on the particular terms of the policy as applied to the
unique facts of the incident giving rise to the claim. Unlike
the policy presently before us, the policy in Eckelberry actu-
ally defined "accident" in terms of foreseeability—there, an
"accident" was "an unexpected and sudden event which the
insured does not foresee." Id. at 342 (internal quotation marks
omitted). Although the definition failed to define every rele-
vant term, the Eckelberry AD & D policy seemed to import
the tort concept of foreseeability. Hence, we observed that
"[o]rdinarily, a death that occurs as a result of driving while
intoxicated . . . is not an accident because that result is reason-
ably foreseeable." Id. at 345 (internal quotation marks omit-
ted).

The terms of AUL’s policies, by contrast, do not steer us
towards a foreseeability analysis of "accident." We see noth-
ing in the policies to warrant defining "accident" so as to
exclude reasonably foreseeable losses:

"Reasonable foreseeability," besides itself being
ambiguous, injects a different spin to the analysis
and, depending upon how broadly it is interpreted,
could drastically reduce coverage under the AD & D
 JOHNSON v. AMERICAN UNITED LIFE INSURANCE 19
policy since, particularly in hindsight, it could be
said many accidents are foreseeable, even reasonably
foreseeable, as opposed to unforeseeable.

LaAsmar, 605 F.3d at 809. Unlike Eckelberry, our review is
de novo in this appeal, and we construe the meaning of the
Plan terms in the first instance and are not limited to consider-
ing only the reasonableness of the decision and reasoning of
the claims administrator. Accordingly, we are not bound to
define "accident" as we did in Eckelberry simply because
these cases fall into the same general factual category.

IV.

Finally, we must address the lower court’s use of state law
to define "accident." As previously noted, the district court
imported the North Carolina insurance statute’s definition of
"accident" into the terms of the Plan. This statute applies "to
the provisions of all group life, group accident, group health,
and group accident and health insurance policies and group
annuities . . . that are issued on or after October 1, 1989."
N.C. Gen. Stat. § 58-3-30(a). Finding an "absence of any
showing" in the record that the North Carolina statutory defi-
nition of "accident" has been preempted by ERISA, the court
concluded that the North Carolina statute controlled the defi-
nition of accident. J.A. 541.

North Carolina law dictates that for any such group life or
accident policy, "‘[a]ccident’ . . . shall be defined to imply
‘result’ language and shall not include words that establish an
accidental means test." N.C. Gen. Stat. § 58-3-30(b). The dis-
trict court determined that under the "accidental result" test,
the relevant question is whether the crash was an "unantici-
pated and unexpected result of an intentional, voluntary act."
J.A. 555 (internal quotation marks omitted). In light of John-
son’s significant level of intoxication while operating his
vehicle at an excessive rate of speed, the court found that his
crash "constitutes an anticipated and expected result (and thus
20 JOHNSON v. AMERICAN UNITED LIFE INSURANCE
not an ‘accident’ within the meaning of § 58-3-30)." J.A. 555.
Johnson believes that the court properly considered the North
Carolina statute but reached the wrong result in applying it.
AUL replies ERISA preempts the North Carolina statute and
thus it was error for the court below to consider it; however,
AUL takes the position that the court nonetheless reached the
proper result because the statutory definition of "accident" is
very similar to the Wickman standard cited in Eckelberry.

A.

Johnson contends that the "Conformity with State Laws"
clause contained in the policies reflects the parties’ intent to
incorporate and make North Carolina insurance law part of
the policies.3 If this is true, Johnson suggests, we would
merely be enforcing the agreed-upon terms of the policy by
applying North Carolina law and would not actually be pre-
sented with a preemption problem.

We are not convinced that the general Conformity-with-
State-Laws clause, standing alone, moots the question of pre-
emption. "ERISA plans must always conform to state law, but
only state law that is valid and not preempted by ERISA."
Louisiana Health Serv. & Indem. Co. v. Rapides Healthcare
Sys., 461 F.3d 529, 533 (5th Cir. 2006). However, assuming
the North Carolina statute applied here, we would still reach
the same conclusion.

Section 58-3-30 of the North Carolina General Statutes dic-
tates that any group life or accident policy "shall" define "ac-
cident" so as "to imply ‘result’ language and shall not include
words that establish an accidental means test." N.C. Gen. Stat.
§ 58-3-30(b). Like many jurisdictions, North Carolina has rec-
3
This clause states in its entirety as follows: "CONFORMITY WITH
STATE LAWS: Any provision of the policy in conflict with the laws of
the state in which it is delivered is amended to conform to the minimum
requirements of those laws." J.A. 294.
 JOHNSON v. AMERICAN UNITED LIFE INSURANCE 21
ognized a distinction between "accidental means" and "acci-
dental result" as those terms are used in insurance policies.
See Collins v. Life Ins. Co. of Va., 393 S.E.2d 342, 343 (N.C.
Ct. App. 1990).4 Under the stricter "accidental means" termi-
nology, no coverage is provided where the loss "occurs by
reason of an insured’s intentional act" or "is the natural and
probable consequence of a voluntary act or course of con-
duct." Id. By contrast, a policy that pays benefits based on an
"accidental result" standard does not categorically exclude
from the definition of "accident" losses resulting from inten-
tional acts; rather, "accidental" under this standard means a
loss occurred "fortuitously without intent or design" and was
"unexpected, unusual and unforeseen." Henderson v. Hartford
Accident & Indem. Co., 150 S.E.2d 17, 20 (N.C. 1966).

Section 58-3-30(b) purports to eliminate for group life and
accident policies "issued on or after October 1, 1989" the dis-
tinction between "accident" or "accidental result" and "acci-
dental means" and move to a single result-oriented definition.
See N.C. Gen. Stat. § 58-3-30(a). Although we have found no
decisions from the North Carolina Supreme Court or Court of
Appeals specifically addressing this statute, subsequent case
law involving the meaning of "accident" in the context of
individual policies—where the accident/accidental means dis-
tinction apparently still exists—illuminates the meaning of
"‘result’ language" in § 58-3-30(b). In North Carolina Farm
Bureau Mutual Insurance Co. v. Stox, 412 S.E.2d 318, 325
(N.C. 1992), the North Carolina Supreme Court refused to
construe the undefined term "accident" in a homeowner’s pol-
icy as requiring the means of the loss to be accidental. See id.
(rejecting argument that loss was not accidental because the
4
Although the "distinction between loss due to ‘accidental means’ and
loss due to ‘accident’ . . . was, at one time, generally accepted by most
courts," recently "an increasing number of jurisdictions have rejected the
distinction between ‘accidental means’ and ‘accident,’ ‘accidental result,’
‘accidental injury,’ ‘accidental death,’ and the like, in favor of treating the
terms as legally synonymous." 10 Couch on Insurance 3d § 139.22 (Rev.
ed. 2012).
22 JOHNSON v. AMERICAN UNITED LIFE INSURANCE
"injuries resulted from . . . intentional acts"). The court con-
cluded "that where the term ‘accident’ is not specifically
defined in an insurance policy, that term does include injury
resulting from an intentional act, if the injury is not inten-
tional or substantially certain to be the result of the inten-
tional act." Id. (emphasis added). Under this "substantially
certain" standard, which is similar to—and perhaps more gen-
erous to the insured than—the Wickman "highly likely" stan-
dard, the question would be whether a reasonable plan
participant would have understood that driving while intoxi-
cated under similar circumstances was substantially certain to
result in death or severe injury. In this case, we would answer
that question in the negative.

The record contains only general statistical data regarding
the extent to which a driver’s ability to operate a vehicle is
impaired by alcohol. In denying Johnson’s claim, AUL refer-
enced reports from the American Medical Association and the
National Traffic Safety Administration for the widely-
accepted common-sense proposition that "blood alcohol con-
centration is directly correlated with the degree of impairment
an individual displays when driving after drinking." J.A. 173.
AUL points to one additional document in the record pro-
duced by the National Commission Against Drunk Driving
that summarizes various stages of impairment based on BAC.
In this case, Richard had a BAC of .289, which, according to
the NCADD, would put a typical driver either in the "Confu-
sion" stage, which is marked by symptoms such as increasing
muscular incoordination and slurred speech, or in the "Stu-
por" stage, which is marked by significant lack of coordina-
tion or loss of motor functions. J.A. 532. This evidence makes
clear that impairment is highly likely for someone with a
BAC of .289, but there is no data with respect to drunk driv-
ing fatalities in relation to the incidents of drunk driving gen-
erally.

The record supports the conclusion that injury or death is
a reasonably foreseeable consequence of driving at significant
 JOHNSON v. AMERICAN UNITED LIFE INSURANCE 23
levels of intoxication. But we simply fail to see how this gen-
eral data demonstrates that driving with a BAC of .289 under
these circumstances is substantially certain to result in death
or severe injury. There is a significant difference between
these standards:

A result is reasonably foreseeable if there are indica-
tions which would lead a reasonably prudent man to
know that the particular results could follow from his
acts. Substantial probability is more than this. The
indications must be strong enough to alert a reason-
ably prudent man not only to the possibility of the
results occurring but the indications also must be
sufficient to forewarn him that the results are highly
likely to occur.

City of Carter Lake v. Aetna Cas. & Sur. Co., 604 F.2d 1052,
1059 n.4 (8th Cir. 1979) (emphasis added). To the extent such
data exists, a cursory review actually suggests the oppo-
site—that such losses are not actually substantially certain or
highly likely to result from driving under the influence.5
Accordingly, even if we applied North Carolina’s "substan-
tially certain" test—which is almost indistinguishable from
the "highly likely" standard employed by Wickman—we
would conclude that Richard’s death was accidental and that
AUL owes benefits under the AD & D provisions.
5
For example,
The Centers for Disease Control (CDC) studied alcohol-impaired
driving by adults during the period 1993-2002. In 2002, the last
year of the study, subjects reported making 159 million trips in
which they drove while alcohol-impaired. Given that there were
17,419 deaths from alcohol-related motor vehicle crashes in
2002, drunk driving possibly proved fatal only once in every
9,128 trips.
Douglas R. Richmond, Drunk in the Serbonian Bog: Intoxicated Drivers’
Deaths as Insurance Accidents, 32 Seattle U. L. Rev. 83, 117 (2008)
(internal footnotes omitted).
24 JOHNSON v. AMERICAN UNITED LIFE INSURANCE
B.

AUL contends that N.C. Gen. Stat. § 58-3-30 falls within
ERISA’s broad preemptive scope and therefore cannot con-
trol. ERISA preempts "any and all State laws" that "relate to
any employee benefit plan" covered by ERISA. 29 U.S.C.
§ 1144(a). Nonetheless, ERISA specifically "saves" from pre-
emption "any law of any state which regulates insurance." 29
U.S.C. § 1144(b)(2)(A). "[A] state law must be specifically
directed toward the insurance industry in order to fall under
ERISA’s saving clause; laws of general application that have
some bearing on insurers do not qualify." Kentucky Ass’n of
Health Plans, Inc. v. Miller, 538 U.S. 329, 334 (2003) (inter-
nal quotation marks omitted). Moreover, "the state law must
substantially affect the risk pooling arrangement between the
insurer and the insured" to survive preemption. Id. at 342.

Johnson argues that N.C. Gen. Stat. § 58-3-30 comes
within ERISA’s savings clause because, by prescribing the
limits of what constitutes an accident, it "alters the scope of
permissible bargains between insurers and insureds," Benefit
Recovery, Inc. v. Donelon, 521 F.3d 326, 331 (5th Cir. 2008)
(internal quotation marks omitted), and therefore "dictates to
the insurance compan[ies] the conditions under which [they]
must pay for the risk [they have] assumed," Miller, 538 U.S.
at 339 n.3. AUL contends that this statute is nothing more
than a state law regarding the interpretation of insurance poli-
cies, not a state law that "regulates insurance." 29 U.S.C.
§ 1144(b)(2)(A). AUL’s position relies on a well-established
line of decisions from our sister circuits embracing the notion
that "[r]ules of contract interpretation force the insurer to bear
the legal risks associated with unclear policy language," but
that "[s]hifting legal risk is . . . [much different than] transfer-
ring or spreading a policyholder’s risk." Miller v. Monumental
Life Ins. Co., 502 F.3d 1245, 1249 (10th Cir. 2007) (internal
quotation marks omitted); see Hammond v. Fidelity & Guar.
Life Ins. Co., 965 F.2d 428, 430 (7th Cir. 1992) ("We cannot
imagine any rational basis for the proposition that state rules
 JOHNSON v. AMERICAN UNITED LIFE INSURANCE 25
of contract interpretation ‘regulate insurance’ within the
meaning of § 1144(b)(2).").

The preemption question in this case is not easily answered,
and we are especially loathe to wade into this issue in light of
the fact that it was not well-developed by the parties below.
Ultimately, we need not decide this question. If ERISA pre-
empts N.C. Gen. Stat. § 58-3-30(b), as AUL insists, our anal-
ysis set forth supra in section III.B remains unchanged as we
applied federal common law without regard to the North Car-
olina statute. But even if § 58-3-30(b) is not preempted, our
conclusion would remain unchanged for the reasons explained
in section IV.A. See McClure v. Life Ins. Co. of N. Am., 84
F.3d 1129, 1133 (9th Cir. 1996) (declining to decide whether
ERISA preempted state insurance rule advocated by the
insured where the court found in favor of coverage even with-
out applying the state rule).

V.

For the foregoing reasons, we reverse the decision of the
court below and remand for entry of judgment awarding the
benefits in question to Angela Johnson.

REVERSED AND REMANDED