The Meaning of “Intent” in Insurance Law

by Gene Killian

If you’re involved in the legal business for any length of time, every once in a while, you’ll come across a case in which the facts are so horrible, and the result so seemingly wrongheaded, that you can’t help but feel that our entire system has failed. A recent decision from the Third Circuit, Arena v. RiverSource Life Insurance Co., sadly falls into that category.

Christine Arena was a successful in-house attorney for Time Warner. She had a wonderful family, with four healthy children, and was active in the Catholic Church and in her community, including serving as the President of a charitable foundation.

Because of some issues with anxiety, possibly caused by financial stress, Christine made an appointment to see a psychiatrist. The psychiatrist prescribed Klonopin and Zoloft.  These medications have the potential for serious side effects, including depression and suicidal thoughts and behaviors. There are also concerns that Zoloft can lead to anxiety and impulsivity. Christine’s anxiety didn’t abate, so the psychiatrist increased the dosage, and added another antidepressant to the mix.

Christine continued to work, but not long after being prescribed the drugs, and when her family was not home, she took two of her husband’s leather belts, wrapped them around her neck, and hanged herself.  She was discovered by her eleven-year-old daughter. She died nine days later. The police report listed the incident as a suicide attempt, and the medical examiner listed her manner of death as suicide, although neither the police nor the M.E. made any inquiry into her state of mind.

Christine had two life insurance policies from RiverSource, but both contained a suicide exclusion clause.  The clause in one of the policies, for example, provided: “If the insured, whether sane or insane, dies by suicide within two years from the Policy Date, our liability is limited to an amount equal to the total premiums paid.” The other policy contained a similar clause.

The insurance company denied coverage, based on the suicide exclusions. Christine’s husband, Gianfranco, then filed suit in state court, and the insurance company promptly removed the case to federal court (of course), which is generally considered to be a more hospitable forum for carriers.

The federal court granted summary judgment to the insurance company, and the ruling has now been affirmed by the appeals court. This is so, despite the fact that New Jersey law requires, as an element of suicide, that the decedent had an actual intent to end her life. Here, Mr. Arena had expert medical evidence that Christine suffered from a medication-induced disorder that altered her state of consciousness to the point that she was unable to understand the consequences of her actions. He also had testimony from Christine’s treating physicians, who confirmed that, because of the ill effects of the drugs, Christine was not capable of understanding the consequences of hanging herself. Lastly, Mr. Arena had testimony from Christine’s family, friends and colleagues, all of whom said that she would never have intended to end her own life had she been thinking clearly.

Soviet dictator Josef Stalin once supposedly said:  “It is enough that the people know there was an election. The people who cast the votes decide nothing. The people who count the votes decide everything.”  Which is another way of saying, you may think you have a decent case.  But the only thing that matters is who’s really making the decision.

In the view of the federal appeals court judge, the medical evidence was not “legally material,” so there was no need to allow a jury trial. The Court wrote: “The parties do not dispute that Christine took two of her husband’s leather belts, moved a chair from another bedroom into a bathroom, fastened the belts together and wrapped one around her neck, and arranged the belts in a manner to effect a hanging. Nor do they dispute that she in fact stepped off the chair and hanged herself. These actions are sufficient circumstantial evidence to establish not only that Christine had ‘awareness’ that those actions would end her life but also that she intended to do so.”

They are?  That seems circular.  The question isn’t whether she did those things.  The question is whether she consciously knew what she was doing.  In my non-judicial opinion, a jury should have been allowed to assess the credibility of the medical evidence.  I note that the Court waited until page 11 of a 12-page decision to write, dismissively:  “True enough, in actions for insurance benefits, the insurance company bears the burden of proving that an exclusion to coverage applies.”

As someone who’s practiced in New Jersey for 30 years, I can tell you that a state court judge would’ve been far more likely to allow this case to go to a jury.

I obviously do not wear judicial robes, and I mean no disrespect to the highly regarded federal judge who wrote the opinion. But we are all a product of our experience and background.  Here, the judge was a former prosecutor, and also, while in private practice, a Delaware corporate lawyer who had specialized in intellectual property law.  He was appointed to the bench by President Bush in 2006.  In short, someone who may not be fond of gray areas.   And, sadly for Mr. Arena and his children, getting a federal appeals court decision overturned is nearly impossible.

The bottom line is this: Insurance companies want to litigate their claims in federal court for a reason. The judges there tend to be more conservative and more insurance-company-friendly. (That is not even remotely suggesting that anything improper took place here.  I am only saying that judges are people too, and they have a worldview that informs their decisions.) Any time you allow a judge or jury to decide your case, whether in state court or federal court, though, you’ve just given up control of the matter, and you have no idea what will happen. So, if you can settle a claim, you should seriously think about it. Some claims, like this one, are difficult to settle, because the insurance company knows it has no real financial incentive to compromise. The carrier figures, from an economic perspective, why not file for summary judgment, which will likely be granted, and if we lose, then we can talk settlement?  But as a policyholder, you should still try to push settlement talks at the appropriate time.   See whether you can get the numbers into a range where you have a decision to make.

I know that’s unfair. You paid for the coverage.  Why should you have to compromise?

But it’s the real world.