Court Rejects Benefits Denial for Participant Driving with no License

March 25, 2008 ( - The U.S. District Court for the Western District of Tennessee has ruled that the third-party administrator for a medical benefits plan was wrong in denying a claim for benefits for a participant who had a car accident while driving with no license or insurance.

The court concluded that the claims administrator’s decision to deny benefits on the basis that the accident was caused by Damon Weatherspoon’s lack of car insurance or a driver’s license violated the terms of the plan since those acts could not have caused the accident. The medical benefit plan had a provision that it did not cover charges arising out of the participation in any illegal act.

Further, the court said there was insufficient evidence in the record that Weatherspoon had been using alcohol or other intoxicants before the accident to support claims administrator’s denial of benefits on that basis. The only evidence in the record that Weatherspoon was driving under the influence is the crash report in which the officer who arrived at the scene said he suspected Witherspoon had been drinking.

According to the opinion, a claims administrator employee concluded that based on the medical record, “we can not determine whether [Weatherspoon] was intoxicated or on drugs.”

After Weatherspoon was involved in a one-car accident he was transported to a hospital where he incurred a bill of over $400,000. Weatherspoon was charged with driving without a license and car insurance, but was not charged with driving under the influence because results of a blood test were pending.

The claims administrator, which the court noted did not have discretionary authority to interpret plan provisions, denied coverage of his medical expenses based on the plan provision excluding injuries arising from engagement in illegal acts. The hospital sued the health benefit plan arguing that the Weatherspoon’s accident could not have been caused by the illegal acts for which he was charged.

The case is Shelby County Healthcare Corp. v. Majestic Star Casino LLC Group Health Benefit Plan, W.D. Tenn., No. 06-2549, 3/20/08.