527 F.Supp.3d 22
D. Me.2021Background
- Decedent Myron Shields, employed by Duramax, elected voluntary group term life coverage equal to 3x salary (exceeding the plan's $100,000 guaranteed-issue limit); premiums were payroll-deducted for ~10 years.
- The Voluntary Life policy required United’s approval of "evidence of good health"/Evidence of Insurability (EOI) before coverage above $100,000 began; no EOI was submitted or approved for Myron.
- After Myron’s death in June 2018, United paid Basic Life plus $100,000 under Voluntary Life ($236,000 total) and denied the additional $100,000 above the GI limit for lack of approved EOI.
- Plaintiff (widow Lorna Shields) administratively appealed, then sued under ERISA § 1132(a)(1)(B) (benefits) and § 1132(a)(3) (equitable relief), arguing (among other theories) waiver, agency (imputing employer conduct to United), and breach of fiduciary duty.
- United subsequently refunded excess premiums to Duramax; the court reviewed United’s denial under the arbitrary-and-capricious standard (plan conferred discretion) and granted judgment for United on both counts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether United’s denial was arbitrary and capricious (plan interpretation) | The plan’s "other evidence of good health" language is broad; acceptance of premiums and decedent’s active work/attendance could constitute approval of coverage above GI. | The plan unambiguously required United to approve EOI before higher coverage began; no evidence was submitted or approved. | Denial was reasonable; United’s construction of the plan was not arbitrary or capricious. |
| Whether United waived the EOI requirement by accepting premiums for ~10 years | Acceptance of premiums and lack of notice constitute waiver of the EOI requirement; United knew or should have known. | United lacked actual knowledge of missing EOI; waiver cannot be used to create coverage beyond the policy. | Waiver not established (no actual knowledge); waiver cannot be used to create coverage. |
| Whether Duramax’s conduct can be imputed to United (agency/apparent authority) | Duramax acted as United’s agent in enrollment/EOI collection; employer statements and role justify imputing knowledge/waiver to United. | The group policy and record show Duramax did not have authority to act for United; no manifestation of assent or control establishing agency. | No agency shown on the record; Salyers-type agency theory not adopted here. |
| Whether United breached ERISA fiduciary duties under § 1132(a)(3) (equitable relief) | United breached duties by accepting premiums, failing to verify enrollment/EOI, and not informing participant of defect; seeks surcharge/reformation. | Any duty to advise participants about EOI rested with the plan administrator (Duramax); United had no fiduciary duty to check employer enrollment. | Plaintiff failed to show United breached fiduciary duties; § 1132(a)(3) relief denied beyond refunded premiums. |
Key Cases Cited
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989) (standard for judicial review of benefit denials; deferential review where plan grants discretion)
- Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (2008) (structural conflict of interest is a factor in abuse-of-discretion review)
- McDonough v. Aetna Life Ins. Co., 783 F.3d 374 (1st Cir. 2015) (determine applicable standard of review by inspecting plan documents)
- Niebauer v. Crane & Co., 783 F.3d 914 (1st Cir. 2015) (abuse-of-discretion standard asks whether decision is plausible given the record)
- Martinez v. Sun Life Assurance Co. of Canada, 948 F.3d 62 (1st Cir. 2020) (ERISA plan language ambiguity requires careful analysis; courts defer to reasonable administrator constructions)
- Madera v. Marsh USA, Inc., 426 F.3d 56 (1st Cir. 2005) (administrator’s decision must be upheld if there is any reasonable basis)
- CIGNA Corp. v. Amara, 563 U.S. 421 (2011) (§ 1132(a)(3) may provide equitable relief such as reformation or surcharge in appropriate cases)
- Salyers v. Metropolitan Life Ins. Co., 871 F.3d 934 (9th Cir. 2017) (employer actions attributed to insurer where record shows employer assumed responsibility for missing EOI)
- Sullivan-Mestecky v. Verizon Commc’ns Inc., 961 F.3d 91 (2d Cir. 2020) (insurer has no duty to police employer enrollment; core dispute may be with employer/plan administrator)
- Juliano v. HMO of N.J., Inc., 221 F.3d 279 (2d Cir. 2000) (waiver in coverage disputes generally inapplicable where issue is existence of coverage)