Fier v. Unum Life Ins. Co. of America, 629 F.3d 1095 (9th Cir. 2011)
Facts and holding: In 1992, Robert Fier (“Fier”) was shot in the neck and rendered permanently quadriplegic. He filed a claim for benefits with Unum Life Insurance Company of America (“Unum”) under his ERISA-governed Accidental Death and Dismemberment Insurance Policy (“AD&D policy”).
UNUM denied Fier’s claim because the AD&D policy defined loss of hands or feet as “dismemberment by severance at or above the wrist or ankle joint” and, although Fier was a quadriplegic, his limbs were still physically attached to his body.
Fier filed suit in District Court asserting a claim for declaratory relief that he was entitled to benefits under the AD&D policy, among other claims. The District Court held that Fier was ineligible to receive benefits under the AD&D policy because his limbs were not physically severed from his body. Fier appealed to the Ninth Circuit, arguing that although his limbs remained physically attached to his body, he had no functional use of them due to the “severance” of his spinal cord.
As a matter of first impression, the Ninth Circuit construed the policy’s terms in their “ordinary and popular sense” and concluded that the phrase “dismemberment by severance” is unambiguous and required “actual, physical separation.” (The same result was reached by the Second Circuit in Cunninghame v. Equitable Life Assurance Society of the United States, 652 F.2d 306, 307 (2d Cir. 1981).) Accordingly, Unum did not owe Fier benefits under the AD&D policy.
Lessons Learned: Although a reasonable interpretation of the intent of the policy might be to award benefits to an insured who has completely and permanently lost all use of his limbs, courts will not rewrite the terms of a policy if they are clear and unambiguous.
Note that when disability policies provide total disability benefits for presumptive loss of both hands or legs, and the policy does not specifically require severance of the limbs, courts often view the requirement as being satisfied by the functional loss of use of the limbs. See generally Couch on Insurance 3d, Chapter 146:58 (1998).