In Smith v. Liberty Life Ins. Co., ___ F.3d ___, 2008 WL 2689247 (5th Cir. July 10, 2008), the Fifth U.S. Circuit Court of Appeals held that a policy's intoxication exclusion barred a claim arising out of a drug addict's death.
Liberty Life Insurance Company issued an insurance policy to Saxon Mortgage Services, Inc. By its terms, the policy authorized Saxon to offer coverage to mortgage debtors whose loans it serviced on behalf of other lenders and pay off the debtor's mortgage in the event of the debtor's accidental death. The policy did not provide coverage for death caused from the influence of either alcohol or drugs not taken under the advice of a physician (intoxication exclusion). In March 2004, Whitney and Pamela Smith enrolled.
Whitney Smith had a 20-year history of "severe drug and alcohol abuse." In August 2004, Whitney Smith, while under the influence of drugs not taken under a physician's advice, died in a car accident. After Liberty denied Pamela Smith's claim under the intoxication exclusion, she sued.
The district court granted summary judgment in Liberty's favor and the Fifth Circuit affirmed, finding that the intoxication exclusion applied because it was "uncontroverted" that drugs contributed to Whitney Smith's death and that Louisiana law only requires that drugs or alcohol have contributed to -- rather than exclusively caused -- the accident in order for the intoxication exclusion to apply. The court also rejected Pamela Smith's claim that the drugs would not have affected her husband in the same way as a non-user based on his addiction because expert "testimony about (his) tolerance in general was not linked to the level of intoxication demonstrated by the undisputed evidence."
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