In a case of first impression, the South Carolina Supreme Court held that methamphetamine is not a "narcotic" for purposes of an exclusionary clause in a mortgage life insurance policy.
The insured was a long-distance truck driver who died at the scene of a one-truck accident in Illinois. The death certificate listed the immediate cause of death as "blunt chest trauma," with "motor vehicle crash" as the underlying cause. It also listed "methamphetamine use" as an "other significant condition contributing to death but not resulting in the underlying cause given." The Illinois autopsy lab report was negative for narcotics but positive for both amphetamine and methamphetamine.
Liberty Life denied benefits under an exclusion that provided:
A Benefit will not be payable under this Certificate if your Accidental Death results directly or indirectly from:
. . .
(h) injury as a result of the insured being under the influence of any narcotic unless administered on the advice of a physician and taken in the dosage prescribed.
This exclusion was derived from S.C. Code Ann. § 38-71-370(9) (2002), which permits an exclusion "for any loss resulting from the insured being drunk or under the influence of any narcotic unless taken on the advice of a physician."
The beneficiary sought a declaratory judgment that methamphetamine in her husband's system while driving a truck was not a narcotic. She also alleged bad faith for violation of the South Carolina Unfair Trade Practices Act. The trial court granted summary judgment in favor of the beneficiary. Liberty Life appealed, and the South Carolina Court of Appeals reversed, holding that the exclusion applied.
The case then went to the South Carolina Supreme Court, which reversed the Court of Appeals, stating:
The Court of Appeals appears to have read the term "narcotic" in exclusion (h) to mean any drug widely known to be used illegally. In our view, the use of the term "narcotic" in the exclusion rather than "unlawful drug" or "unlawful use of drug" creates, at minimum, an ambiguity as ‘narcotic' is a defined type of controlled substance rather than a generic term for illegally used substances. If there is any ambiguity [internal cit. omitted] it must be construed in favor of the petitioner.
The policy did not define "narcotic," and the court expressed doubt that the term as codified in 1947 embraced methamphetamine, particularly in light of the fact that methamphetamine is considered under South Carolina law to be "a controlled substance." Thus, applying what it referred to as South Carolina's "state rules of insurance policy construction favoring the insured," the Supreme Court held that the ambiguous policy provision could not support denial of the claim, because methamphetamine was not a "narcotic" under the exclusion.
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