Legal Memorandum: Determination of AD&D Benefits

Issue: How does a court determine what benefits are available under an accidental death and dismemberment policy?

An accidental death and dismemberment (AD&D) insurance policy is considered an “employee welfare benefit plan” under the Employee Retirement Income Security Act of 1974 (“ERISA”).  As a general matter, a policy providing such benefits is an ERISA plan because a reasonable person can determine the intended benefits, the beneficiary class, the plan’s financing source, and the procedure for receipt of benefits, and the extent of the employer’s participation indicates an intent to provide an ERISA‑regulated plan.  Gaylor v. John Hancock Mut. Life Ins. Co., 112 F.3d 460, 464-65 (10th Cir. 1997).  The court reviews de novo under 28 U.S.C. § 1132(a)(1)(B) (1999) the defendant’s denial of benefits.  Gaylor, 112 F.3d at 466 (holding that the insurer’s grounds for denying the plaintiff’s AD&D benefits were inadequate).  Semtner v. Group Health Serv. of Okla., Inc., 129 F.3d 1390, 1393 (10th Cir. 1997).  When the employer’s or insurer’s interpretation of the plan is not reasonable, the court will find its decision limiting or denying benefits to be unreasonable.  Id. at 1393. The court will construe unambiguous plan documents as a matter of law.  Chiles v. Ceridian Corp., 95 F.3d 1505, 1511 (10th Cir. 1996).

Initially, the court looks to the plan itself to resolve questions as to the scope of benefits.  Id. at 1515.  When the court cannot determine the sponsor’s intent by the plan itself, the court looks to the summary plan document (“SPD”), which is considered one of the requisite […]