Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-14-03401/USCOURTS-ca8-14-03401-0/pdf.json

Parties Involved:
Yafei Huang
Appellant
Life Insurance Company of North America
Appellee

Document Text:

United States Court of Appeals

For the Eighth Circuit

___________________________

No. 14-3401

___________________________

Yafei Huang

lllllllllllllllllllll Plaintiff - Appellant

v.

Life Insurance Company of North America

lllllllllllllllllllll Defendant - Appellee

____________

Appeal from United States District Court 

for the Eastern District of Missouri - St. Louis

____________

 Submitted: June 9, 2015

 Filed: September 3, 2015

____________

Before GRUENDER, MELLOY, and BENTON, Circuit Judges.

____________

MELLOY, Circuit Judge.

Plaintiff Yafei Huang appeals the district court's grant of summary judgment

1

on claims related to a denial of life insurance benefits by Life Insurance Company of

North America ("LINA"), the ERISA plan administrator for her deceased husband’s

The Honorable Audrey G. Fleissig, United States District Judge for the

1

Eastern District of Missouri.

Appellate Case: 14-3401 Page: 1 Date Filed: 09/03/2015 Entry ID: 4313180 
former employer. LINA denied benefits, determining that Huang’s deceased

husband, Ping Liu, breached a requirement in the application by failing to notify

LINA of a cancer diagnosis he received after applying for insurance but before a

policy issued. In granting summary judgment, the district court held LINA’s

determination and the underlying interpretation of the plan were not unreasonable. 

We affirm the judgment of the district court. 

I.

On November 12, 2009, Liu, a physician in a residency program, elected basic

life insurance coverage fromLINA through his employer’s ERISA plan in the amount

of his salary, $46,858.49. He also elected supplemental coverage in the amount of

approximately four times his salary.

The summary plan description provided by Liu’s employer stated, “To enroll

for supplemental life insurance coverage, you must complete a separate Cigna

enrollment form. Please note: evidence of good health may be required to enroll.”2

The application for insurance was a short, 2 1⁄2 page form containing several short

health questions, notifying the applicant of a possible need for medical tests, and

setting forth an ongoing change-of-health disclosure requirement.

A portion of the application entitled “Section A” sought “yes” or “no” answers

and asked:

Within the last 5 years has the proposed insured been:

• diagnosed with any of the conditions shown in items A

through J below,

Emphasis in original. Cigna owns LINA. 2

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• told by a medical professional he/she has or may have any

of the conditions shown in items A through J below,

• or been treated by a medical professional for any of the

conditions shown in items A through J below?

. . .

J. Cancer, Tumor, Leukemia, Hodgkin’s Disease, Polyps or Mole?

The final half page of the form contained two lines at the top for the applicant's name

and social security number. Below those lines, a box with centered text stated,

“AGREEMENTS AND AUTHORIZATION” in six-point font, the same

font used in the balance of the document. Beneath this boxed header the following

text appeared:

To the best of my knowledge and belief all written, telephonic and

electronic info I gave is true and complete. I understand that my

insurance will not go into effect unless I am actively at work on the

effective date. I also understand that coverage for each of my

dependents will not go into effect unless the person is not confined in a

hospital or institution, or receiving certain medical treatment. The

conditions for the requested insurance to be effective are described in

the policy and certificate. The approval of this request by the Insurance

Company is one of those conditions. I understand and agree that:

(1) This request will be a part of the policy that provides the

insurance.

(2) I may need to provide more medical info.

(3) I may need to take medical tests and report the results to

the Insurance Company.

(4) I must report any change in my health that happens before

the insurance is effective.

(5) Requested insurance will not be effective for a person if

the person does not meet the underwriting requirements on

the date insurance is to be effective.

Liu and Huang both signed the third page shortly beneath this quoted material. 

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On December 14, 2009, approximately one month after submitting his

application, Liu received a cancer diagnosis. On March 1, 2010, the insurance

became effective. And, on April 23, 2010, Liu passed away. 

Huang requested a payment of benefits under Liu’s policies on May 15, 2010. 

On July 7, 2010, LINA paid Huang the basic life insurance benefit of $46,858.49. At

that time, LINA asserted that an investigation was required prior to payment of

supplemental benefits because Liu passed away less than two years after the

insurance went into effect. LINA obtained and reviewed Liu’s medical records,

which revealed that Liu had been experiencing symptoms without a diagnosis for at

least two months prior to submitting his November 12 application. It is undisputed

LINA first received notice of Liu’s cancer diagnosis during this review of medical

records.

On January 19, 2011, LINA sent Huang a copy of Liu’s application with a

denial letter stating:

The medical records received were reviewed by our Medical

Underwriting Department to determine insurability on the date that the

Evidence of Insurability form was completed. While the form was

completed accurately at the time it was submitted, a diagnosis of cancer

prior to the coverage approval date was not disclosed to Life Insurance

Company of North America. The Evidence of Insurability Form states

under the Agreement Authorization Section that any changes in your

health prior to the insurance effective date must be reported. If the new

diagnosis had been submitted, it would have resulted in a decision that

Mr. Liu would not be insurable for additional life insurance.

On March 16, 2011, Huang notified LINA she intended to appeal the denial of

benefits. In her notice, she requested, “a copy of the claims file,” “all documents

relied upon in denying . . . and evaluating his claim,” and “a copy of the plan

documents.” On May 16, 2011, LINA provided the requested documents. On July

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14, 2011, Huang filed an appeal, asserting that the denial of benefits was improper. 

She also asserted that she and Liu had allowed other insurance to lapse based on a

representation from LINA that Liu could obtain the supplemental insurance benefits. 

In response, LINA requested additional information about the alleged

representation. Huang responded that Liu was told he would not have to provide

evidence of good health or insurability, but she did not identify the person who made

the alleged representation by name, job description, or title. She explained that,

through her own employer, she had held $100,000 of life insurance on Liu and that,

in reliance on the representation, she allowed the $100,000 of life insurance to lapse. 

She did not identify when the statement was made or when she allowed the other

insurance to lapse. On March 20, 2012, LINA denied Huang’s appeal.

Huang then filed a six-count suit in the district court. In Count 1, she sought

reformation of particular plan language to bring the plan into compliance with

Missouri law. In Count 2, she sought a payment of benefits under the supplemental

policy. In Count 5, she alleged a breach of fiduciary duty and sought a $100,000

equitable surcharge representing harm in the form of the death benefit under the

lapsed policy on Liu’s life through Huang’s employer. 

3

Huang did not contest the assertion that Liu failed to notify LINA of the cancer

diagnosis he received between submission of his application and issuance of the

policy. Rather, she argued LINA was precluded by Missouri law and plan language

from relying on the disclosure requirement in the application because LINA had

failed to provide Liu with a copy of the policy containing the application prior to

Liu’s death. Huang argued that Missouri law requiresinsurersto give insureds copies

of their insurance applications prior to death as a means to allow the insureds to

correct any misstatements that might later defeat coverage.

Counts 3, 4, and 6 are not at issue in this appeal. 

3

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On her fiduciary-duty claim, Huang argued the alleged representation fromthe

unnamed person at LINA caused her to allow the other insurance to lapse. She also

argued the application was presented in a format that wasso misleading and generally

difficult to understand that the application itself amounted to a breach of the plan

administrator's fiduciary duty toward covered employees. 

On cross motions for summary judgment, the district court ruled in favor of

Huang on Count 1, finding that Missouri insurance law required that the plan

language be changed as shown below:

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 insured. In the event of death or legal

incapacity, the beneficiary or representative must receive the copy.

The district court ruled in favor of LINA on all other claims. Regarding Count

2, the claim for benefits under the policy, the district court extended deference to the

ERISA plan administrator’s (LINA’s) interpretation of the plan. The court

concluded LINA had interpreted the plan reasonably when determining that delivery

of the application to Huang during the claims process satisfied the plan’s delivery

requirement. In reaching this conclusion, the court noted that both the plan language

and a Missouri statute governing the contents of insurance policies expressly

permitted delivery of the application to “the beneficiary or representative.” 

Regarding Count 5, the breach-of-fiduciary-duty claim, the district court stated

the representation, as described by Huang, remained vague: she did not identify the

speaker or the date of the representation; she did not identify the date on which she

allowed the other insurance to lapse; and she, “at most,” made the vague assertion

that someone at LINA had stated Liu would qualify for coverage if he submitted an

application. The court also concluded the representation was not actually untrue

because Liu did qualify for coverage at the time he submitted the application. The

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denial of benefits was based on his later failure to satisfy an express condition of the

application. The representation had accurately indicated an application wasrequired,

and Huang did not allege the representation had indicated there was an absence of a

duty to comply with conditions in the application. 

The district court held in the alternative that the representation was not material

and reliance on the representation was unreasonable. In reaching this conclusion, the

court described a representation as material “if there is ‘a substantial likelihood that

it would mislead a reasonable employee in the process of making an adequately

informed decision regarding . . . benefits to which she might be entitled.’” Kalda v.

Sioux Valley Physician Partners, Inc., 481 F.3d 639, 644 (8th Cir. 2007) (quoting

Krohn v. Huron Mem’l Hosp., 173 F.3d 542, 551 (6th Cir. 1999)). The district court

found that, because the representation as described by Huang still made clear that an

application was required, it would not have been reasonable to allow the other

insurance to lapse without reviewing the application to see its requirements. The

court concluded review of the application put Liu and Huang “on clear notice” that

Liu “must report any change in [his] health status that happens before the insurance

is effective.”

Finally, the court found the format of the application sufficiently clear to reject

Huang’s formatting-based fiduciary-duty argument as a matter oflaw. Huang appeals

the judgment as to Counts 2 and 5. 

II.

We review the district court’s summary judgment ruling de novo, including the

question of “whether the district court applied the appropriate standard of review to

the administrator’s decision.” Wakkinen v. UNUM Life Ins. Co. of Am., 531 F.3d

575, 580 (8th Cir. 2008) (citation omitted). 

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On appeal, Huang raises three arguments. First, she argues the district court

erred in deferring to LINA’s interpretation of the plan finding the application could

be relied upon to deny benefits. Second, she argues the district court erred in finding

no misrepresentation or omissions upon which to base a breach of fiduciary duty. 

And third, she argues the district court erred in rejecting her claim that the font size

and overall appearance of the application was so infirm and misleading as to amount

to a breach of fiduciary duty.

A. Interpretation of the Policy and Missouri Law

The ERISA plan for Liu’s employer granted LINA “the 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.” When an ERISA plan grants the plan administrator discretion to interpret

a plan, we generally review the interpretation and the resulting grant or denial of

benefits only for an abuse of discretion. See Johnson v. United of Omaha Life Ins.

Co., 775 F.3d 983, 986–87 (8th Cir. 2014). When the plan administrator is also the

claims-paying entity, we take the financial conflict ofinterest into considerationwhen

conducting our review. See Brake v. Hutchinson Tech. Inc. Grp. Disability Income

Ins. Plan, 774 F.3d 1193, 1196 (8th Cir. 2014). The simple fact a conflict exists,

however, does not eliminate the administrator’s discretion or change our review of

the administrator’s decision to de novo review. See id. (“[W]e take this inherent

financial conflict of interest into account in deciding whether an abuse of discretion

has occurred.”). Applying this deferential standard, we will not disturb the plan

administrator’s decision “if it isreasonable, that is, supported by substantial evidence

. . . [which] means ‘more than a scintilla but less than a preponderance.’” Darvell v.

Life Ins. Co. of N. Am., 597 F.3d 929, 934 (8th Cir. 2010) (citations omitted). 

The reformed plan language as quoted above precludesthe insurer fromrelying

on a “statement” in an “instrument” unless a copy of that instrument is provided to

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the insured. The plan also states, “In the event of death or legal incapacity, the

beneficiary or representative must receive the copy.” In light of thislanguage and the

absence of any express plan language requiring that the copy be provided to the

insured prior to death, we conclude it was reasonable for LINA to find that delivery

of the application to Huang during the claims process satisfied the plan language. 

Huang was Liu’s personal representative as well as the beneficiary under the policy.

Huang nevertheless argues that the plan language requiring LINA to furnish

a copy of the application to the representative or beneficiary is a duty in addition to,

rather than a substitute for, the duty to furnish a copy to the insured himself prior to

his death. To support this argument, Huang raises two related points. We find

neither sufficient to show that LINA’s interpretation is unreasonable.

First, Huang argues LINA interpreted only the original plan language, not the

reformed plan language, and as such, there is no underlying decision to which we

must defer. Had the district court’s reformation under Count 1 effected a material

change to the language at issue in the present dispute, we might agree. The change

in the plan language, however, merely replaced the word “claimant” with the word

“insured” as noted above. Using either the reformed or the original language, the

next sentence in the plan permitted delivery of the application to a “beneficiary or

representative.” We, therefore, do not view the reformation as material to LINA’s

interpretation of the particular language at issue in this appeal. This reformation of

the plan language does not permit us to amend our standard of review. 

Second, Huang argues that LINA’s interpretation of the plan language fails to

comport with Missouri law, the purpose of the disclosure requirement, and caselaw

from other states interpreting similar requirements. Specifically, Huang notes that

ERISA does not preempt otherwise generally applicable state insurance law directed

towards insurance companies and regulating the business of insurance. See, e.g.,

United of Omaha v. Bus. Men’s Assurance Co. of Am., 104 F.3d 1034, 1040–41 (8th

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Cir. 1997) (discussing application of the “savings clause” of 29 U.S.C. §

1144(b)(2)(A), which limits the scope of ERISA preemption). And, Huang cites

Missouri Revised Statutes § 376.697(3) and Johnson v. Prudential Life Ins. Co., 519

S.W.2d 111 (Tex. 1975), for the proposition that delivery of an application to an

insured must occur prior to the insured’s death. According to Huang, the disclosure

requirement is intended to permit an insured to correct errors that might later defeat

coverage. Relying on Johnson, Huang asserts that LINA’s interpretation of the plan

unfairly permits insurersto catch unsuspecting policyholders bywaiting silently, until

the policyholder has died, to comb through the application for statements that might

defeat coverage. See Johnson, 519 S.W.2d at 113 (“It has often been held that it is

the underlying legislative intention to require that the insured have the material terms

of the contract at hand during his lifetime in order that he might examine and correct

any misrepresentations which have been made the basis of the insurance coverage.”). 

Looking first at section 376.697(3), we conclude the statute does not support

Huang’s argument. Rather, section 376.679(3) illustrates why LINA’s interpretation

of the plan is reasonable. The relevant language of section 376.697(3) provides, “no

statement made by any person insured shall be used in any contest unless a copy of

the instrument containing the statement is or has been furnished to such person or, in

the event of death or incapacity of the insured person, to his beneficiary or personal

representative.” (Emphasis added). Use of the word “or” plainly sets off delivery of

the instrument to the representative as a permissible alternative duty, not merely as

an additional duty. The plan language, in contrast, sets forth the duty to furnish the

instrument in two separate sentences without use of the conjunction “or.” 

Accordingly, the plan language at least arguably is ambiguous as to whether the duty

to provide the instrument to the representative is an alternative duty or an additional

duty. Given this arguable ambiguity, LINA exercised its discretion and interpreted

the plan in a manner consistent with the statutory language. 

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Further, it isimportant to note that LINA indicated in its initial denial letter that

Liu had completed the application completely and accurately. Liu did not receive his

cancer diagnosis until after he submitted his application, and LINA at no time alleged

that Liu’s application itself contained any coverage-defeating statements. Therefore,

Huang’s policy argument, which is based on the need for an applicant to receive and

review his own statements to ensure the absence of errors, lacks any real application

in this case. Huang seeks to exclude reliance on the application in an effort to prevent

LINA from relying upon the disclosure duty; she does not seek to prevent LINA from

relying on any statement Liu made in his application. 

Because the express statutory language in Missouri plainly sets forth delivery

of the instrument to the beneficiary as an alternative, rather than an additional duty,

and because Huang’s public-policy/legislative-intent argument is contrary to the plain

language (and inapplicable to the present facts), we reject her arguments. While her

arguments are not uncompelling in the abstract, they cannot defeat the plain language

of the statute. At a minimum, they cannot establish that LINA abused its discretion

when interpreting the plan and denying benefits.

B. Breach of Fiduciary Duty—Representation

The district court held as a matter of law that the fiduciary-duty claim failed

even if an unknown representative fromLINA had represented that Liu would qualify

for coverage upon submission of an application. The court found this purported

representation was not, in fact, untrue because Liu qualified for coverage after

submitting his application. The court also found in the alternative that the

representation was notmaterial, orreliance upon the representation was unreasonable,

because the representation referenced the need for an application and said nothing

that might excuse compliance with conditions in the application. 

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The Supreme Court in Cigna Corp. v. Amara, 131 S. Ct. 1866, 1881 (2011),

recognized that an equitable claim for surcharge may be permitted in some situations

based upon an ERISA fiduciary’s breach of a duty towards a covered employee. The

Court also noted that “detrimental reliance” is not always required to prove an

equitable claim alleging a breach of fiduciary duty. Id. Rather, “[t]o the extent any

such requirement arises, it is because the specific remedy being contemplated imposes

such a requirement.” Id. To explain when such proof would and would not be

required, the Court stated, “[A]ctual harm may sometimes consist of detrimental

reliance, but it might also come from the loss of a right protected by ERISA or its

trust-law antecedents.” Id. 

Here, the harm alleged is of the type that requires reliance. Huang does not

allege harm in the form of a loss of an ERISA-protected right. Rather, she alleges

specifically that she and Liu relied upon the representation when deciding to let a

different policy lapse. To prove her claim, however, the reliance must be reasonable

and the statement by the fiduciary must be material. Kalda, 481 F.3d at 644 (“a

substantial likelihood that it would mislead a reasonable employee in the process of

making an adequately informed decision”) (emphasis added) (quoting Krohn, 173

F.3d at 551).

We agree with the district court that reliance on the representation in this case

was not reasonable. First, the questions in the application seeking health information

were routine questions to identify health concerns that might trigger further inquiry. 

The ongoing duty to report changes in health post-application simply ensured the

answers to the questions in the application remained current until the time of policy

issuance. There is nothing unclear or unusual about these written requirements, and

these requirements are consistent with the language of the summary plan description

stating that “evidence of good health may be required to enroll.” Second, the

representation Huang relies upon is a vague oral representation from an unknown

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source uttered at an unidentified time that does not speak to the actual basis for

coverage denial. 

Here, the clarity and pedestrian nature of the written requirements, coupled

with the uncertainty and vagueness surrounding the purported oral representation,

establish that the district court was correct to deem any reliance on the oral

representation unreasonable. Cf. Murphy v. FedEx Nat’l LTL, Inc., 618 F.3d 893,

900 (8th Cir. 2010) (“We have held that an estoppel-based FMLA claim cannot

succeed based on vague representations, the reason being that a reasonable person

would not be entitled to rely on those representations.”).

4

C. Breach of Fiduciary Duty–Application Clarity/Format

Finally, we agree with the district court that, as a matter of law, the application

and summary plan description adequately and fairly presented to Liu and Huang the

requirements for supplemental insurance. The document was clear. As already noted,

it was a short, 2 1⁄2 page document. The final half page contained scant text, but, as

quoted above, stated than an applicant “may need to provide more medical info,”

“may need to take medical tests and report the results,” and “must report any change

LINA also argues that, as a matter of law, an equitable claim based on oral 4

representations cannot succeed where the oralrepresentations are contrary to express

plan or application language. We need not in this appeal identify the outer limits of

permissible equitable claims against plan administrators. Even if we were to

conclude as a general matter that an oral statement contrary to written plan or

application language might, in some circumstances, support equitable or fiduciaryduty claims for relief (relief of a type different from plan benefits), the purported

representation in this case could not. See Amara, 131 S. Ct. at 1878–80 (not

addressing oralrepresentations, but clarifying that “other appropriate equitable relief”

in 29 U.S.C. § 1132(a)(3) may be available for breach-of-fiduciary-duty claims);

Silva v. Metro. Life Ins. Co., 762 F.3d 711, 723–27 (8th Cir. 2014) (not addressing

oral representations, but applying Amara). 

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in . . . health that happens before the insurance is effective.” This duty was not

buried in a lengthy document nor hidden in textsmaller than the balance of document. 

It was sandwiched conspicuously between a line where Liu was required to write his

name and social security number and a signature block where Liu and Huang signed

and dated the policy. In addition, the section at issue was offset with a clear header,

and the fontsize, while small, isreadable even in a copied formprovided to our court. 

No reasonable jury could find a breach of fiduciary duty based on the appearance of

the application. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251–52 (1986)

(stating that the inquiry on summary judgment is “whether the evidence presents a

sufficient disagreement to require submission to a jury or whether it is so one-sided

that one party must prevail as a matter of law”).

III.

For the foregoing reasons, we affirm the judgment of the district court.

______________________________

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