Court Case Shows Why Policy Language Must Be Specific: Meth Not Subject To Drug Exclusion

By Benjamin Carroll

A federal court refused to bar coverage under an accidental death insurance policy’s drug exclusion where an insured was found dead with a lethal level of methamphetamine in his system.

The court held that the exclusion did not apply because methamphetamine was not a “narcotic,” “hallucinogen” or a “prescription drug.” Although the intent of the insurer was most certainly to avoid coverage where a death was caused by the use of an illegal drug such as methamphetamine, the case provides another reminder that policy language must be drafted with sharp precision.

In Santos v. Minnesota Life, the U.S. District Court for the Northern District of California (2021 U.S. Dis. LEXIS 220244), Samuel Chong, a 55-year-old Apple employee, was found dead on his kitchen floor when police performed a well-being check at his home. Blood and dried vomit were found near his head.

The autopsy report listed his cause of death as “blunt force head trauma with subdural hematoma consistent with a fall to the back of the head” and listed “methamphetamine present” next to the “contributing” category. The toxicology report identified methamphetamine, amphetamine and Temazepam in his blood and urine. According to Minnesota Life’s the associate medical directors, the level of methamphetamine in Chong’s blood, was 70.6 times the average 15 mg dose and was in the “fatal range.”

The corrected death certificate listed the immediate cause of death as “blunt force head trauma with subdural hematoma” and listed “methamphetamine present” next to the “other significant conditions contributing to the death but not resulting in the underlying cause” section. The death certificate listed the death as “drug related” and checked off “accident” for the manner of death.

At the time of Chong’s death, he was covered by a Minnesota Life group accidental death and dismemberment policy provided to Apple employees. Chong’s cousin, as administrator of his estate, sued Minnesota Life for ERISA accidental death benefits coverage under the policy.

In denying coverage, the insurer relied on the policy’s drug exclusion, which stated as follows: “In no event will we pay the accidental death or dismemberment benefit where the insured's death or dismemberment results from or is caused directly or indirectly by any of the following: … (7) being under the influence of any prescription drug, narcotic or hallucinogen, unless such prescription drug, narcotic or hallucinogen was prescribed by a physician and taken in accordance with the prescribed dosage.”

Although the court concluded that Chong’s death was an accident, the court did not find the drug exclusion applicable to preclude coverage.

First, the court rejected Minnesota Life’s argument that methamphetamine could be considered a prescription drug under the exclusion merely because of the existence of an FDA-approved prescription medication, Desoxyn, which is labeled as “methamphetamine hydrochloride tablets.”

The court rejected this argument because there was no evidence that Chong was prescribed Desoxyn, and even though methamphetamine is capable of being prescribed as Desoxyn, methamphetamine is “not…ordinarily known as a prescription drug.” The court cited definitions on the National Institutes of Health website and noted that “the popular understanding” is that methamphetamine is an “illicit drug.”

Second, the court rejected Minnesota Life’s dictionary definition argument that methamphetamine is a “narcotic.” The court rejected what it called Minnesota Life’s “circular” argument relying on Merriam Webster’s definition of “narcotic” as “a drug … subject to restriction similar to that of addictive narcotics whether physiologically addicted and narcotic or not.”

Nevertheless, the court relied on a second definition of “narcotic” in Merriam’s as “a drug that soothes or dulls” and, relying on the NIH website which describes methamphetamine as a stimulant, held that it did not meet this definition either. Additionally, the court noted that narcotics are listed separately under federal law as a Schedule III drug while methamphetamine is labeled as a Schedule II drug.

Third, the court rejected the argument that methamphetamine is a hallucinogen. It reasoned that 1) none of the reviewing physicians concluded that Chong had overdosed on methamphetamine; 2) while an overdose of Desoxyn can cause hallucinations, methamphetamine “is not typically understood as a hallucinogen based solely on this extreme effect;” 3) methamphetamine is “commonly characterized as a stimulant” and 4) hallucinogens are listed separately under Schedule II drugs, a category that does not include methamphetamine.

As this case demonstrates, the precise wording of an insurance policy exclusion, like all policy language, matters. Adding specific language to the drug exclusion would have carried out the insurer’s intent: to exclude coverage for accidents caused by drugs. The insurer probably assumed that “narcotic” encompassed methamphetamine.

It is important to note that in other contexts, especially criminal matters, “methamphetamine” is often interchanged with “narcotics.” However, in the insurance coverage arena, clarity and exactness of policy language is often the difference. For example, adding wording to the drug exclusion’s definition to include “illicit drugs,” “Schedule I through V drugs as defined by the DEA,” or enumerated drugs like “methamphetamine” (among others) will provide insurers with more certainty that the intent of their drug exclusion will be enforced by courts.

Benjamin J. Carroll, Esq., is a partner at Barclay Damon, where he focuses his practice on defending insureds, insurers and businesses in cases involving wrongful death, catastrophic personal injury, products liability, construction accidents, insurance coverage and insurance fraud. He may be contacted at [email protected].