Opinion ID: 2843999
Heading Depth: 2
Heading Rank: 2

Heading: Breach of Fiduciary Duty—Representation

Text: The district court held as a matter of law that the fiduciary-duty claim failed even if an unknown representative from LINA 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 not material, or reliance 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. -11- 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 -12- 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 ½ 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 4 LINA also argues that, as a matter of law, an equitable claim based on oral representations cannot succeed where the oral representations 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 oral representations, 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). -13- in . . . health that happens before the insurance is effective.” This duty was not buried in a lengthy document nor hidden in text smaller 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 font size, while small, is readable even in a copied form provided 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”).