Life Insurance And Illegal Drug Use Exclusions

Life insurance lawyers will have clients approach after a claim for life insurance benefits has been denied because of a denial based on an exclusion for use of illegal drugs. A 2016, 5th Circuit opinion is a good read for how the courts look at these situations. The style of the opinion is, Eleanor Crose v. Humana Insurance Company.
The facts in the case show Ronald Crose died after ingesting ecstasy. Humana denied the claim for life insurance benefits by Eleanor citing the following exclusion in the policy:
“Causation Exclusions . . . Loss due to being intoxicated or under the influence of any narcotic unless administered on the advice of a health care practitioner.”
Eleanor sued for breach of contract, unfair insurance practices, and violations of the prompt payment of claims act. Humana filed a motion for summary judgment based on the exclusion and the court granted the motion.
Generally, for an insurance company to be liable for a breach of its duty to satisfy a claim presented by its insured, the insured must prove that its claim falls within the insuring agreement of the policy. There is no dispute that the Croses are seeking benefits ordinarily covered by the Humana policy. Because the dispute is instead over the application of an exclusion, the burden shifts to Humana to show that the exclusion applies. For the exclusion to apply, Humana must show that the term “narcotic” includes ecstasy and that Mr. Crose’s stroke was “due to . . . being under the influence” of ecstasy. We begin with the definition of “narcotic.” Insurance policies are controlled by rules of interpretation and construction which are applicable to contracts generally. Because “narcotic” is not defined by the policy, we are tasked with determining whether the term has a definite or certain legal meaning. In other words, the terms of an insurance policy must be given their plain and ordinary meaning unless there is evidence that the parties intended otherwise. But, when a term is susceptible to multiple reasonable interpretations, then it is ambiguous. f ambiguous, the term is to be construed liberally in favor of the insured and strictly against the insurer.
Ms. Crose contends that the district court erred by finding that “narcotic” is not ambiguous and by rejecting her definitions of “narcotic,” derived from federal and state law, as well as pharmacological uses of the term, that she submitted to the district court. Those definitions limit “narcotic” to drugs derived from a plant and classify ecstasy as a “hallucinogen” instead of a “narcotic.” Humana counters that Ms. Crose’s definitions are technical in nature, and therefore unreasonable. We agree with Humana.
Texas law dictates that the terms of an insurance policy be given their ordinary and generally-accepted meaning unless the policy shows the words were meant in a technical or different sense. This means that technical definitions of policy terms are unreasonable unless the policy provides otherwise. Concluding otherwise would ignore the policy’s language or give the contract’s text a meaning never intended.
The district court found that the ordinary and generally-accepted meaning of narcotic is a drug affecting mood or behaviour which is sold for non-medical purposes, esp. one whose use is prohibited or under strict legal control but which tends nevertheless to be extensively used illegally. Neither party contends that the policy allows technical definitions of the term.Therefore, Ms. Crose’s definitions of narcotic, which are derived from state and federal statutes and pharmacological uses of the term, are unreasonable.
Next, the Court had to determine the use of “due to” in the exclusion.
The Texas Supreme Court has found that “due to” in an insurance policy is more than simple cause in fact and requires a more direct type of causation. While not specifically assigning a standard, the Texas Supreme Court did distinguish it from the lesser burden of causation derived from the phrase “arise out of” which requires only “but for causation.”
Although the Texas Supreme Court has not precisely defined the standard of causation for the term “due to” in an exclusionary clause, we hold that “due to” requires a showing of proximate causation. Humana must therefore show that Mr. Crose’s use of narcotics was a “significant” or “substantial” cause of his stroke, but not that it was the only cause.
There is ample evidence in the record that ecstasy can lead to a stroke. For example, an expert witness for Ms. Crose stated in his report that ecstasy causes hypertension and that “hypertension is the most common attributable risk factor” associated with strokes. The same report included medical journal articles confirming that a short- and long-term side effect of ecstasy use is hypertension. A second expert report included testimony stating that the “use of ecstasy can increase the odds of suffering an ischemic stroke or intracerebral hemorrhages.” Humana’s expert also testified and included attachments to his report showing that ecstasy can cause a stroke.
Second, Mr. Crose’s medical records strongly suggest that his ingestion of ecstasy contributed to his stroke. The emergency room physician that treated Mr. Crose, Dr. Bogitch, stated in his assessment that Mr. Crose had “very little past medical history” and no family history of strokes. Dr. Bogitch also stated that Mr. Crose had used ecstasy the night before he was admitted, and arrived at the hospital with “a very large . . . hemorrhage.” Another physician, Dr. Hinze, “suspected that Mr. Crose’s stroke was due to uncontrolled hypertension likely from his ecstasy ingestion . . . which would account for his symptoms and could produce a hypertensive state, which would exacerbate if not initiate his stroke.” Mr. Crose’s medical records show that an otherwise healthy man, with no medical or family history of strokes, took ecstasy, which led to hypertension and eventually a stroke. Finally, the temporal proximity between an otherwise healthy man taking ecstasy and then experiencing severe headaches and having a stroke is relevant proof of causation. The record therefore results in a clear causal line: 1) ecstasy causes hypertension, 2) hypertension is the leading cause of stroke, 3) Mr. Crose ingested ecstasy, 4) he then presented side effects of hypertension, and 5) shortly after presenting these symptoms, Mr. Crose had a stroke which his doctors noted was caused by hypertension Because it is undisputed that Mr. Crose used ecstasy prior to his stroke and his medical records show that Mr. Crose had no medical or family history of hypertension or strokes, the ingestion of ecstasy was a significant cause of Mr. Crose’s stroke.