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Disability insurer cannot avoid obligation to drunk driver by characterizing his injuries as "intentional"

The Sixth Circuit recently handed down an important decision interpreting ERISA insurance policies.  Under these policies, insurers have traditionally excluded payment of benefits where an insured intentionally suffered injury.  The Reagan-Bush appointees to the Court has, over the past decade, begun recognizing a broader range of negligent conduct as "intentional" at the request of insurers seeking to avoid a duty to pay health or accident benefits.  The result has been the "activist" development of a line of cases suggesting that insurers could avoid paying benefits where an insured did something "stupid," in cases where no one would categorize the actual injuries as "intentionally" suffered.  In Kovach, et al. v. Zurich American Insurance Company, the Sixth Circuit finally handed down a ruling placing a limit on this development under ERISA.

Kovach suffered an amputated leg after a collision caused by his own negligence.  He was operating his motorcycle while intoxicated when he ran a stop sign and hit another car.  He was covered under an employer-funded accidental death and dismemberment policy, however, Zurich declined to pay benefits as it claimed the accident was an "accidental" occurrence because Kovach was drunk.

Zurich argued that Kovach's  blood alcohol level of .148 % rendered his injuries a "purposeful, self-inflicted wound" under the policy and refused to pay the scheduled loss for an amputation. [Zurich also cited the presence of Vicodin in Kovach's blood at the hospital, however, it apparently conceded on appeal that this was a result of his post-injury treatment.] Zurich relied primarily on the Lennon v. Metropolitan Life Insurance case where the Sixth Circuit had offered three separate opinions, but upheld denial of benefits to a semi-conscious driver with a .321 blood alcohol content who had lost control of his car while driving at extreme high speed in the wrong direction on a one-way street.

In the instant case, however, the Sixth Circuit concluded that Zurich was arguing for too-tortured a construction of "purposeful, self-inflicted wound" and unduly manipulating the common understanding of an "accidental" injury.  The Court held that it was "arbitrary and capricious" to interpret the "accidental" policy language in such a manner as to conclude that Kovach's injuries were intentionally-inflicted and not accidental. 

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