Yafei Huang v. Life Insurance Co. of North America
801 F.3d 892
| 8th Cir. | 2015Background
- Ping Liu applied (Nov. 12, 2009) for employer-provided basic and supplemental life insurance through LINA; he signed an application containing a written duty to report any change in health before coverage became effective.
- Liu was diagnosed with cancer on Dec. 14, 2009 (after application, before policy effective date of Mar. 1, 2010); he died Apr. 23, 2010.
- LINA paid the basic benefit but denied supplemental benefits after medical-record review showed Liu’s post-application cancer diagnosis had not been reported; LINA relied on the application’s disclosure requirement.
- Huang (beneficiary/personal representative) appealed and sued under ERISA asserting (1) the plan must be reformed under Missouri law to require delivery of the application to the insured before death, (2) wrongful denial of benefits, and (3) breach of fiduciary duty based on an alleged oral representation that no evidence of insurability was required and based on the application’s format.
- District court reformed plan language (minor wording change) but granted summary judgment to LINA on the benefits and fiduciary claims; court held LINA reasonably interpreted the plan, Huang’s alleged oral representation was too vague and reliance unreasonable, and the application’s format was not misleading.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether LINA may rely on the application to deny benefits where beneficiary received copy only after death | Huang: Missouri law requires insurer to furnish application to insured during life so insured can correct misstatements; thus LINA cannot rely on application because Liu never received it before death | LINA: Plan language and Missouri statute permit delivery to beneficiary/representative after death; delivery during claims process satisfied plan | Court: Held LINA reasonably interpreted plan; delivery to beneficiary/rep was permissible alternative, not an additional duty; affirmed denial. |
| Standard of review for administrator’s interpretation given conflict | Huang: reformation altered language so deference inappropriate | LINA: plan grants discretionary authority; conflict considered but deferential abuse-of-discretion review applies | Court: Applied abuse-of-discretion standard (considering conflict) and found LINA’s interpretation supported by substantial evidence. |
| Breach of fiduciary duty based on alleged oral misrepresentation that evidence of insurability not required | Huang: an unnamed LINA representative told Liu he wouldn’t need evidence of good health; Huang relied and let other coverage lapse | LINA: representation vague, unidentified speaker/date, did not contradict need to follow application terms; reliance unreasonable | Court: Held representation too vague and reliance unreasonable; even if made, it was not materially false because Liu did qualify at application time; claim fails. |
| Breach of fiduciary duty based on application format (small font/placement) | Huang: application format hid the duty to disclose changes in health, breaching fiduciary duty | LINA: application and SPD clearly disclosed the ongoing duty; format not misleading | Court: Held application and SPD were clear and conspicuous as a matter of law; no triable issue on appearance/format. |
Key Cases Cited
- Wakkinen v. UNUM Life Ins. Co. of Am., 531 F.3d 575 (8th Cir. 2008) (standard for reviewing administrator decisions)
- Johnson v. United of Omaha Life Ins. Co., 775 F.3d 983 (8th Cir. 2014) (abuse-of-discretion review where plan grants administrator discretion)
- Brake v. Hutchinson Tech. Inc., 774 F.3d 1193 (8th Cir. 2014) (consideration of administrator’s financial conflict in review)
- Darvell v. Life Ins. Co. of N. Am., 597 F.3d 929 (8th Cir. 2010) (substantial-evidence standard explained)
- Kalda v. Sioux Valley Physician Partners, Inc., 481 F.3d 639 (8th Cir. 2007) (materiality and reasonable reliance standard for fiduciary misrepresentations)
- Krohn v. Huron Mem’l Hosp., 173 F.3d 542 (6th Cir. 1999) (definition of materiality for reliance)
- Cigna Corp. v. Amara, 131 S. Ct. 1866 (U.S. 2011) (equitable relief under ERISA and context for surcharge/remedies)
- Murphy v. FedEx Nat’l LTL, Inc., 618 F.3d 893 (8th Cir. 2010) (vague oral representations cannot support estoppel/reliance)
- Silva v. Metro. Life Ins. Co., 762 F.3d 711 (8th Cir. 2014) (discussion of equitable relief under ERISA post-Amara)
- United of Omaha v. Bus. Men’s Assurance Co. of Am., 104 F.3d 1034 (8th Cir. 1997) (ERISA savings clause and interplay with state insurance law)