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Wichita Firemen's Relief Association v. Kansas City Life Insurance Co.

United States District Court, D. Kansas

February 21, 2017




         This action was brought by Plaintiff Wichita Fireman's Relief Association (WFRA) on behalf of its member, the late Captain Urban Eck, to recover an accidental death and dismemberment (AD&D) benefit in a life insurance policy issued by Defendant Kansas City Life Insurance Company (KCL)[1]. After proper application by WFRA, KCL paid the death benefit but denied the AD&D benefit. At trial, the jury found that Captain Eck's death was within the AD&D coverage, and awarded the plaintiff the $100, 000 benefit on Captain Eck's behalf.

         Now before the Court is Plaintiff WFRA's attorneys fee claim under K.S.A. § 40-256, which provides for the payment of fees if the insurer refused to pay the claim “without just cause or excuse.”[2] Following the jury trial the Court accepted additional evidence on this claim, and ruled that, to the extent relevant, the jury trial evidence would also be considered.

         Under Kansas law, K.S.A. §40-256 requires the court award attorneys fees if an insurer “has refused without just cause or excuse to pay the full amount of such loss.” This standard is satisfied if the plaintiff establishes that the denial of the claim was “frivolous, unfounded and ‘patently without any reasonable foundation.'” Hartford Cas. Ins. Co. v. Credit Union 1 of Kansas, 268 Kan. 121, 131, 992 P.2d 800 (1999) (citing Clark Equip. Co. v. Hartford Accident & Indemn. Co., 227 Kan. 489, 494, 608 P.2d 903 (1980)). “A refusal of payment is not unfounded or frivolous if there exists a good faith legal controversy as to coverage or a bona fide and reasonable factual dispute.” First Nat. Bank, Abilene, Tx. v. American States Ins. Co., 134 F.3d 382 (Table), 1998 WL 30246, *4 (10th Cir., Jan. 9, 1998) (citing Clark Equip. Co., 608 P.2d at 907)).

         Whether just cause exists is to be determined by the circumstances facing the insurer when payment is denied, judged as they would appear to a reasonably prudent person having a duty to investigate in good faith. Hartford Cas. Co., 268 Kan. at 131. “Whether an insurance company's refusal to pay is without just cause or excuse is determined on the facts and circumstances of each case.” Foster v. Stonebridge Life Ins. Co., 50 Kan.App.2d 1, 27, 327 P.3d 1014 (2014). It is not dispositive that a jury ultimately finds in favor of coverage. See, e.g., Kovach v. State Farm Gen. Ins. Co., No. 88-2099-S, 1989 WL 94574, *1 (D. Kan. July 28, 1989) (“The fact that the jury returned a verdict in favor of plaintiff on the issue of liability does not automatically entitle plaintiff to recovery of attorney's fees under the Kansas statute.”); Koch v. Prudential Ins. Co. of America, 205 Kan. 561, 565, 470 P.2d 756 (1970) (stating that fees are not to be awarded under § 40-256 “merely for the reason that it turned out at the trial” there was “no reason for denial of liability”).


         WFRA submitted the initial claim, which was denied after consideration by an ad hoc committee of KCL officials. The WFRA was provided a right to appeal by the contract, and did so, submitting some additional information.[3] The claim was denied again.[4] The facts provided to the KCL in the claim and appeal, including the medical conclusions by Captain Eck's physicians and the basic facts medical conclusions reached by KCL's medical director, were essentially in agreement.

         Captain Eck was a firefighter with the Wichita Fire Department. He was in apparent good health with no history of heart problems when, on December 13, 2009, he participated in fighting a large fire. He exerted himself physically in that activity, but there is no evidence this exertion was out of the ordinary for a firefighter. Immediately following the fire on December 13, he participated in routine medical monitoring. He uncharacteristically required a longer time to return to baseline vital signs. At his next duty shift on December 16, 2009, he reported feeling unusually tired and congested and could not recover as he normally did after exertion. He told others he felt he had never fully recovered from the December 13th fire.

         On December 18 and 19, 2009, Captain Eck sought medical care for these and other progressive symptoms of shortness of breath, chest tightness, and difficulty breathing while lying flat. He visited his physician and a cardiac specialist.

         Physicians concluded that Captain Eck had ruptured chordae tendineae, which are the parachute-string-like structures supporting a heart valve leaflet. This caused mitral valve insufficiency, which required surgery. It was found that Captain Eck had a pre-existing condition called myxomatous degeneration, a progressive condition which compromises the strength of the chordae. This condition, although asymptomatic, predisposed his heart to the rupture suffered when fighting the fire.

         Captain Eck was placed on medication, hospitalized and released, and surgery was scheduled for December 29, 2009. He returned to the hospital to undergo surgery to repair the rupture. During the surgery, the surgeon inadvertently kinked an artery, which caused a heart attack. The heart attack directly resulted in Captain Eck's death.[5] The physicians concluded that the rupture of the chordae was an acute event which happened as a result of extreme physical exertion while fighting the fire. The documents included the death certificate signed by his physician Dr. Koehler certifying that the “manner of death” was “natural.” Dr. Koehler could have chosen “accident” on that form.

         The AD&D policy provided coverage if Captain Eck's death resulted “directly and independently of all other causes from accidental bodily injuries.” A separate exclusion provided that “[n]o amount will be payable for loss caused by, contributed to or resulting from: 5) bodily or mental illness or disease of any kind, or medical or surgical treatment of the illness or disease.” The claim was reviewed by five officials from KCL who were assembled as a committee for the purpose of reviewing this claim after it was referred by the initial claims examiner through her superior. Those officials were Donna Shields (Manager of Customer Service and Claims), Anne Snoddy (Vice President of Claims), Dale Dake (Assistant Vice President of New Business), Matthew O'Connor (legal counsel), and Dr. Charlotte Lee (Medical Director)[6]. Snoddy, the Vice President of Claims had been with KCL more than 30 years. Shields, the Manager of Customer Service and Claims, reported to Snoddy. O'Connor, assistant general counsel, has been a practicing attorney for 18 years. Dake has been with KCL for 26 years and in the insurance industry 10 years before that.

         O'Connor performed some legal and medical research in association with the claim, and told the group that his research supported the denial of the claim. The exact nature of that research is unknown. O'Connor drafted the denial letter. There were no written policies or guidelines at KCL that governed the claim review. The committee did not request additional information. The five met twice before the initial denial and agreed that there was no coverage under the policy.

         After the first meeting, Dr. Lee was asked to clarify her conclusions in writing. She reached the following conclusions:

There is a question of whether or not the deceased died from an accidental cause of death. The claim is for accidental death benefits because of death due to injuries suffered from working in a fire December 13. The cause of death was stated to be a massive heart attack suffered because of surgery to repair a ruptured chordae tendinae of the mitral valve. The rupture was felt to have been acute and likely a result of extreme exertion during his fire-fighting activities on December 13. I do not have access to his medical records prior to his death, so will not comment on his previous cardiac status. There is reportedly a family history of coronary artery disease. He was found at autopsy to have myxomatous degeneration of the mitral valve, but it is not known whether this was known prior to death. Such a change in the valve is not an acute change, rather is either present at birth or comes about gradually over time.
After having continued shortness of breath, chest tightness, and difficulty breathing while lying flat, he had a cardiac evaluation that revealed mitral insufficiency with myxomatous degeneration of the mitral valve and a ruptured chordae. He underwent surgery to repair the valve and never recovered from surgery. At autopsy, he was found to have had a massive heart attack that ...

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