Yafei Huang v. Life Ins. Co. of N. Am.

• Decision Date: 16 September 2014
• Docket Number: Case No. 4:13CV00299 AGF.
• Citation: 47 F.Supp.3d 890
• Court: U.S. District Court — Eastern District of Missouri
• Parties: Yafei HUANG, Plaintiff, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant.

47 F.Supp.3d 890

Yafei HUANG, Plaintiff

v.LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant.

Case No. 4:13CV00299 AGF.

United States District Court, E.D. Missouri, Eastern Division.

Signed Sept. 16, 2014.

Phillip A. Tatlow, Jeffrey A. Herman, Bollwerk and Tatlow, LLC, St. Louis, MO, for Plaintiff.

Jamie L. Boyer, Stinson and Leonard LLP, St. Louis, MO, William E. Hanna, Christopher J. Leopold, Stinson and Leonard LLP, Kansas City, MO, for Defendant.

MEMORANDUM AND ORDER

AUDREY G. FLEISSIG, District Judge.

Plaintiff Dr. Yafei Huang brings this action against Defendant Life Insurance Company of North America, for damages and equitable relief pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001. Defendant issued a basic and supplemental life insurance policy (“Policy”) to Plaintiff's husband, Dr. Ping Liu (“Liu”). After Liu's death, Defendant denied Plaintiff's claim for supplemental life insurance benefits on the ground that Liu failed to report a change in his health status.

In her first amended complaint, Plaintiff alleges that the “Incontestability Clause” of the Policy violates Mo.Rev.Stat. § 376.697(3), and Plaintiff seeks to reform the terms of the Incontestability Clause to conform to the Missouri statute (Count I). Plaintiff asserts that under the terms of the Policy, as reformed pursuant to Mo.Rev.Stat. § 376.697(3), Defendant may not deny Plaintiff's claim for benefits on the ground that Liu failed to report a change in his health status, and Plaintiff is therefore entitled to recover the supplemental life insurance benefits due under the Policy (Count II).

Plaintiff also asserts claims for equitable estoppel (Count III), promissory estoppel (Count IV), and waiver (Count VI), based on Defendant's alleged misrepresentations that Liu would qualify for supplemental benefits without having to satisfy an insurability or good health requirement. Finally, Plaintiff contends that Defendant breached its fiduciary duties under ERISA, as well as its common law duty of loyalty (Count V).

Now before the Court is Plaintiff's motion (Doc. No. 21) for summary judgment on Counts I, II, III, and V, and Defendant's motion (Doc. No. 46) for summary judgment on all Counts. For the reasons set forth below, both motions shall be GRANTED in part and DENIED in part.

BACKGROUND

Before discussing the facts in this matter, the Court will briefly address Defendant's argument that the affidavit submitted by Plaintiff in support of her motion for summary judgment should be disregarded as an impermissible supplement to the administrative record. Generally, a court's review of a denial of benefits under ERISA is limited to evidence that was before the plan administrator, particularly where the evidence could have been submitted to the administrator during the initial claims process. See, e.g., Davidson v. Prudential Ins. Co. of America, 953 F.2d 1093, 1095 (8th Cir.1992). Plaintiff asserts that this rule does not apply to claims for equitable relief and, in support of her assertion, cites numerous district court cases from other jurisdictions. See, e.g., Jensen v. Solvay Chems., Inc., 520 F.Supp.2d 1349, 1355–56 (D.Wyo.2007). The Court need not decide whether the affidavit is admissible because, while Plaintiff's affidavit provides more details regarding some of the evidence contained in the administrative record, the affidavit's additional details do not alter the Court's decision regarding the motions for summary judgment.

Unless otherwise indicated, the facts set forth below are undisputed. The Policy was issued to Liu's employer, St. Luke's Hospital (“Hospital”), in Missouri on April 1, 2001 and states that it “shall be governed” by Missouri law. (Doc. No. 26–5 at 38.) The Policy states that it is “made up of the Policy, the application of the Employer, a copy of which is attached to the Policy, and the applications, if any, of the Insureds.” (Doc. No. 26–5 at 84.) The Policy selects Defendant Life Insurance Company of North America as the plan's fiduciary under ERISA and grants Defendant “authority, in its discretion, to interpret the terms of the Plan documents, to decide questions of eligibility for coverage or benefits under the Plan, and to make any related findings of fact.” (Doc. No. 26–5 at 77.)

The Policy contains an Incontestability Clause, which states:

All statements made by the Employer or by an Insured are representations not warranties. No statement will be used to deny or reduce benefits or as a defense to a claim, unless a copy of the instrument containing the statement has been furnished to the claimant. In the event of death or legal incapacity, the beneficiary or representative must receive the copy.

(Doc. No. 26–5 at 84.)

The Policy offers Basic life insurance benefits, as well as Voluntary Term Life Insurance options, which provide supplemental benefits. The policy also states that, during the annual re-solicitation period, “an Employee who is eligible for the Voluntary Term Life Insurance portion of this Policy but who has not previously enrolled may become insured under the Policy, by satisfying the Insurability Requirement.” (Doc. No. 26–5 at 44.) The “Insurability Requirement” states that “[a]n eligible person will satisfy the Insurability Requirement for an amount of coverage on the day the Insurance Company agrees in writing to accept him or her as insured for that amount. To determine a person's acceptability for coverage, the Insurance Company will require evidence of good health and may require it be provided at the Employee's expense.” (Id. at 86.)

Liu was employed as a full-time physician at the Hospital for approximately two and a half years. The Hospital provided Liu with the Policy as part of an employee welfare benefit plan within the meaning of 29 U.S.C. § 1002(1). As Liu's wife, Plaintiff was the primary beneficiary of the Policy.

At the beginning of Liu's employment, he was offered two types of life insurance benefits under the Policy: (1) “Basic Benefits,” equal to one times his salary (“basic benefits”), and (2) supplemental “Voluntary Benefits,” equal to up to four times his original salary (“supplemental benefits”). At this time, Liu's life was insured for $100,000 through Plaintiff's employer's benefit plan. Liu initially elected to receive only basic benefits, equal to one times his salary, and was automatically approved and enrolled for these benefits.

It is unclear whether Plaintiff or Liu received a copy of the Policy before Liu's death. Plaintiff alleges that Liu never received the complete Policy. (Doc. No. 26 at 74.) And in an email to Defendant requesting a complete copy of the Policy after Liu's death, Plaintiff noted that she only had the “employer-provided pamphlet” but nothing with “detailed terms and conditions.” (Doc. No. 26–1 at 2.) Plaintiff alleges that the only plan document she received before Liu's death was the summary plan description. The summary document states only that “[t]o enroll for supplemental life coverage, you must complete a separate Cigna enrollment form” and that “evidence of good health may be required to enroll.” (Doc. No. 26 at 24) (emphasis added).

Defendant disputes whether Plaintiff and Liu received a complete copy of the Policy before Liu's death by pointing to a letter from Plaintiff's counsel to Defendant in which counsel states that he is attaching a copy of an “insurance policy ... which is blank” and that “[t]his is the insurance policy that [Liu] was given at the time when he was [sic. ] first worked here.” (Doc. No. 26 at 20–21.) However, it is not clear from the record what document was attached to counsel's letter or whether this document was the Policy discussed above.

In 2009, Liu and Plaintiff considered discontinuing Liu's life insurance from Plaintiff's employer and purchasing supplemental benefits through Defendant under the Policy. Plaintiff alleges that before taking action in this regard, the couple was told that Liu would automatically qualify for supplemental benefits if Liu submitted an application for such benefits (“Application”) during the annual enrollment period, and the couple was not told that Liu would have to meet any insurability or good health requirement. (Doc. No. 26 at 20–21, 38–39.) It is unclear from the administrative record who Plaintiff alleges made this representation, whether this person was employed by Defendant, rather than by the Hospital or another entity, and what exactly this person said. For example, at various times throughout the administrative process, Plaintiff's attorney alleged in letters to Defendant that “Dr. Liu and his wife changed their positions in reliance on St. Lukes [sic. ] Hospital and Cigna Group Insurance Company's¹ representations that they would insure them for life insurance,” that Liu “was told” by an unidentified speaker “that he would elect to be able to increase his coverage up to four (4) times his salary but would not have to prove evidence of good health or insurability,” and that “St. Luke's and your company promised Mr. Liu the right for him to get increased coverage without disclosing to him that you would not insure him if he had a change in medical condition or a worsening of his condition.” (Doc. No. 26 at 20–22, 38–40.) Likewise, Plaintiff's first amended complaint alleges that “[t]he couple was promised and was told,” again by an unidentified person, “that [Liu] would automatically qualify for insurance coverage and thus not be subject to any conditions or limitations, since [Liu] had already been issued insurance for which he automatically qualified.” (Doc. No. 17 at 3.) Plaintiff's affidavit is somewhat more precise. It states that “[t]he Cigna representative told us that Ping would automatically qualify for additional benefits up to four times his salary. The only thing Ping had to do was fill out the application and submit it during the annual reenrollment period in November of 2009.” (Doc. No. 27 at 1.) However, neither Plaintiff's...