Opinion ID: 4517940
Heading Depth: 2
Heading Rank: 2

Heading: Conflicts of Interest and Lack of Good Faith

Text: Law of the case aside, North Cypress contends also that the district court erred in its evaluation of the conflicts of interest and inferences of lack of good faith that North Cypress raised. Under Humble, however, the abuse-ofdiscretion inquiry was obviated by the existence of prior legal authority supporting Cigna’s interpretation of identical or nearly identical language concerning insureds’ coinsurance obligations. Humble explained that “[o]ther courts have held that, where an administrator’s interpretation is supported by prior case law, it cannot be an abuse of discretion—even if the interpretation 9 Case: 18-20576 Document: 00515350925 Page: 10 Date Filed: 03/19/2020 No. 18-20576 is legally incorrect.” Humble, 878 F.3d at 484. Because, as North Cypress itself has acknowledged, the circumstances of this case match those in Humble, Cigna’s alleged conflicting interests and lack of good faith are immaterial. 7 If a benefit claimant (or, as here, assignee) challenges the disposition of a claim, and the court makes no finding of legal correctness to end the inquiry, then it must ordinarily consider whether the plan administrator’s interpretation was arbitrary and capricious. Humble, 878 F.3d at 483. The inquiry may generally include reviewing whether the plan administrator “had a conflict of interest, as well as the ‘internal consistency of the plan’ and ‘the factual background of the determination and any inferences of lack of good faith.’” North Cypress I, 781 F.3d at 195–96 (quoting Threadgill, 145 F.3d at 293). Under Humble, however, it may not be necessary to review these factors, at least “under the present circumstances,” where two other courts “effectively or explicitly concluded that the [insurer’s interpretation of the] provision at issue here was legally correct.” 878 F.3d at 485. 8 For some of the benefit decisions in Humble, one relevant and longstanding prior case, decided in 1991, was Kennedy v. Connecticut General Life Insurance Co., 924 F.2d 698 (7th Cir. 1991). Id. at 485. The Kennedy court ruled that Cigna’s interpretation of a “nearly-identical” provision as imposing a fee forgiveness restriction was legally correct. Kennedy, 924 F.2d at 701. The Humble court also relied on the district court’s first decision in this case, which although vacated in North Cypress I, was controlling during most of the period 7 The district court applied Humble, noting it need not decide the abuse of discretion factors, but it went on to reject, based on record evidence, each of North Cypress’s complaints concerning Cigna’s alleged conflicts of interest, internal inconsistency in the plan, and lack of good faith. We pretermit further discussion of these findings. 8The court in Humble cautioned that it did not adopt “a bright-line rule because even if a legally incorrect interpretation is supported by prior case law, employing the interpretation could cause a plan administrator to abuse its discretion.” 878 F.3d. at 485. 10 Case: 18-20576 Document: 00515350925 Page: 11 Date Filed: 03/19/2020 No. 18-20576 covering Cigna’s dealings with Humble Surgical Hospital and had also ruled Cigna’s interpretation to be correct. Thus, as in Humble, so it must be here: this court must adhere to the same reasoning and result concerning the same policy language. Cigna’s interpretation, having relevant legal support, could not in these circumstances be an abuse of discretion.