7th Circuit Upholds Policy Exclusion Involving Pilot With Expired Medical Certificate

Pilot hat and medical supplies

The Seventh Circuit Court of Appeals found that an insured is precluded from coverage for damages arising out of a fatal plane crash in May 2020, affirming the lower court ruling that an exclusion applies where the pilot lacks a valid and current medical certificate.

The unanimous panel opinion, authored by Judge John Lee sitting in Eastern District of Wisconsin, held that the policy unambiguously excludes coverage for any accident, like this one, where the pilot lacks a valid and current FAA medical certificate.  In this case, David Schmutzler, the owner and president of Jadair, secured an aircraft insurance policy from American National Property & Casualty Company covering a Cessna Airplane.

The Coverage Identification Page expressly states the following:

The Aircraft must be operated in flight only by a person having the minimum qualifications shown below.  The pilot must have a current and valid (1) medical certificate; (2) flight review and (3) pilot certificate with necessary ratings.



A Policy Endorsement, which is slightly different, states that the pilot of the Cessna “must have” an FAA medical certificate, flight review, and pilot certificate. But, it does not expressly state, as does the Coverage Identification Page, that there is no coverage if the pilot does not meet the qualifications or requirements.

Schmutzler was piloting the company-owned Cessna in May 2020 when he crashed and died in Burlington, Wisconsin. Schmutzler originally had a valid medical certificate when he applied for the policy in June 2019. However, his certificate expired in August that year, and he was without valid medical credentials at the time of the crash.

Jadair sued American National in September 2021, seeking coverage under the American National aircraft policy for damages to the plane and for Schmutzler’s medical bills. American National ultimately prevailed in the case, with U.S. District Judge J.P. Stadtmueller granting the insurer’s motions for summary judgment and declaratory judgment in October finding that the policy did not cover the accident because Schmutzler lacked a current and valid FAA medical certificate and such was required for coverage.

On appeal, Jadair argued that the endorsement in the policy abolishes the medical-certificate exclusion because the endorsement to the Coverage Identification Page omits the phrase “there is no coverage.” Jadair argues that this creates an exception to the medical-certificate exclusion and reinstates coverage of the present claim.

The Seventh Circuit Court of Appeals rejected Jadair’s argument and reasoned that the Endorsement is consistent with the Coverage Identification Page and may be read as adding to, rather than displacing policy provisions. Schmutzler was still bound by the unambiguous policy language of the Coverage Identification Page and the medical-certification requirement, which he failed to satisfy. The Court found that as Schmutzler did not maintain an active health certificate at the time of the accident, coverage is excluded.

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