EVIDENCE OF INSURABILITY

1. 2019 ANNUAL EDUCATION CONFERENCE EVIDENCE OF INSURABILITY

2. EVIDENCE OF INSURABILITY – ERISA Adam E. Formus, EsquireKelly D. Simpkins, Esquire 2nd VP & Counsel Wells Marble & Hurst, PLLC The Guardian Life Insurance Company of America Post Office Box 131 700 South Street Jackson, MS 39205 Pittsfield, MA 01201 601-605-6940 (Direct) 413-995-4731 (Direct) KSimpkins@wellsmar.com Adam_Formus@glic.com Cynthia L. Maskol, Esquire Wilson Elser 500 E. Pratt Street, Suite 600 Baltimore, Maryland 21202 410-962-5288 (Direct) Cynthia.Maskol@wilsonelser.com 2019 Annual Education Conference

3. EVIDENCE OF INSURABILITY – ERISA • The Employee Retirement Income Security Act of 1974 (ERISA) is the federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans. • ERISA applies to private-sector employers that maintain welfare benefit plans for their employees, regardless of the size of the employer. • In general, ERISA applies to: defined-benefit and defined-contribution retirement funds; insurance plans (life, health, disability); health reimbursement accounts; flexible spending accounts; dental insurance plans, prescription plans, and vision plans; disability insurance plans; long-term care insurance plans; and severance plans. 2019 Annual Education Conference

4. EVIDENCE OF INSURABILITY - erisa • 29 U.S.C. 1132(a)(1)(B) – Provides a private cause of action to a plan participant (employee) or beneficiary to enforce the right to be paid a Plan benefit. These claims often arise where plan fiduciaries or administrators deny a claim for benefits or pay only a portion of a claim for benefits that the plaintiff alleges are due under the plan. • 29 U.S.C. 1132(a)(3) – Provides a private cause of action to a plan participant (employee), beneficiary, or the Secretary of Labor against a Plan fiduciary for breach of a fiduciary duty.  A person is a fiduciary under ERISA to the extent that that person: Has or exercises any discretionary (decision-making) authority or control over the management or administration of the plan. Fiduciary duties include: (1) the duty of loyalty; (2) the duty to act prudently; (3) the duty to diversify plan assets; and (4) the duty to act in accordance with Plan documents. • 29 U.S.C. 1104(a)(1)(B) - Imposes a "prudent person" standard by which a Plan fiduciary’s decisions and disposition of assets are measured, and mandates that "a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and — (A) for the exclusive purpose of: (i) providing benefits to participants and their beneficiaries."

5. EVIDENCE OF INSURABILITY – how to evaluate your evidence Most common fact patterns that will transform a case from 1132(a)(1)(B) to a more dangerous case alleging 1132(a)(3) breaches of fiduciary duty: • The underwriting process is or must be performed after the applicant has died; • The underwriting decision is or must be made after the proposed insured has died; • The application is completed on-line; • Policy premiums are withheld/paid prior to application/coverage approval or policy issue; • Coverage is determined by a post-claim true-up; and • The Carrier is not the Plan or claim administrator.

6. EVIDENCE OF INSURABILITY – litigation factors EXPECT THE FOLLOWING FACTORS TO BE CONSIDERED BY THE COURT: • Clarity of the Plan and Summary Plan Description; • Clarity of communications regarding evidence of insurability, denials, and premium refunds; • Responsibilities imposed on the Insurer, versus the participant; • Discretionary/fiduciary duties imposed on the Insurer, versus the employer; • Insurer’s exercise of discretion, regardless of Plan documents; • Institutional/imputed knowledge of the Insurer re: premiums and missing evidence of insurability; • Amount and number of premiums collected; • Party responsible for withholding and submitted premiums (Employer, TPA, Insurer); • Underwriting timeframe; and • Sufficiency of Underwriting to determine insurability.

7. EVIDENCE OF INSURABILITY – SURVEY OF THE CIRCUITS

8. EVIDENCE OF INSURABILITY – 1ST CIRCUIT MainE, Massachusetts, New HampshirE, PUERTO RICO, RHODE ISLAND Schwartz v. Keolis Commuter Svcs. and Unum Life, 2018 WL 1411202 (U.S.D.C. D. Mass, a 1st Cir. Dist. Court Case). • Holding: On the parties’ cross-motions for Summary Judgment, the Court ruled in favor of Unum (having discretionary authority under an ERISA Plan for determining benefit eligibility) that it did not breach its statutory duty under 29 U.S.C. §1104(a)(1)(B) by not allowing decedent to remain enrolled under a Plan where additional Supplemental Group Life benefits of $500,000 would have otherwise been payable and where prior submitted Evidence of Insurability was rejected — employer cannot bind coverage by accepting enrollment forms, collecting premiums from the employee, and remitting premium to Unum. • Facts: • Decedent, Sofiya Schwartz was employed by MA Bay Commuter Railroad Co. LLC in February 2005; she enrolled in a voluntary life insurance plan offered by her employer through Unum, eventually providing $111,000 in base coverage; • In 2008, Schwartz requested supplemental life benefits up to 4X her salary; and, because of late entry, EOI was required; 2019 Annual Education Conference

9. Evidence of insurability – 1st CIRCUIT (CONT’D) • Facts (cont’d): • In March 2009, Unum denied the additional coverage due to history of myelopathy; • In 2014, MA Bay was awarded the contract for operating commuter rails to Keolis Commuter Services; • Keolis extended employment to Schwartz and continued Unum’s Group Benefit coverage previously offered through MA Bay; • In November 2014, Schwartz again applied for 4X salary supplemental life benefits and completed enrollment forms through Keolis -- who accepted the forms, confirmed coverage, processed employee-paid monthly deductions, and forwarded a list bill to Unum identifying the collected premiums – all without confirming coverage with Unum or determining if Unum would require another EOI (Schwartz was not specifically identified on the list bill for the coverage sought); and • Schwartz died on August 28, 2015; Unum paid the base benefit, but denied the supplemental benefit claim because no EOI was submitted, and Unum had no record of the additional coverage sought by Schwartz in 2014 (which would have prompted a request for supplemental EOI). 2019 Annual Education Conference

10. EVIDENCE OF INSURABILITY – 1ST CIRCUIT (Cont’d) • Issue: Whether new employer’s (Keolis) acknowledgment of enrollment forms seeking $500,000 in supplemental group life, and subsequent deduction of premiums from decedent’s paychecks (paid by insured for 8 months), created coverage for supplemental group life insurance not otherwise available under the plain terms of the Plan in light of Unum’s prior denial of the Evidence of Insurability form submitted in 2009? • Findings: • Under ERISA, equitable estoppel claims are limited to statements that interpret the Plan, and cannot extend to statements that would modify the Plan; • Representations by Keolis, confirming enrollment, contradicted the Plan’s clear language/EOI requirements, and would necessarily strike that requirement (modify it) – however, existing precedent, Guerra-Delgado v. Popular, Inc. 774 F.3d 776, 782 (1st Cir. 2014), held that representations by an employer cannot modify a Plan where EOI is required, and equitable relief is unavailable; and • Unum cannot be held to have allowed Schwartz to enroll in the Plan, because it did not knowingly accept the premiums and did not wrongfully deny Plaintiff’s claims where that coverage was not available in the first instance. 2019 Annual Education Conference

11. Evidence of insurability – 2nd circuitConnecticut, Vermont, new York Siderides v. MONY Life Ins. Co., 104 F. Supp.3d 207 (U.S.D.C. D. Conn, a 2nd Cir. Dist. Court Case, 2015). • Holding: Ruling on MONY’s motion for summary judgment, the District Court held that letters routinely mailed to an insured, permitting payment of overdue premiums following lapse, do not modify a policy; however, there is an issue of material fact (precluding summary judgment) on whether MONY was estopped from enforcing EOI requirements that precluded summary judgment on the breach of contract claim. (This was a non-ERISA case.) • Facts: • Beneficiaries of 3 MONY Life Insurance Policies filed suit alleging, inter alia, breach of contract and equitable estoppel; • One policy was in force, and two had lapsed, providing for $800,000 in coverage upon death on June 7, 2010; • All three policies were identical, required quarterly premiums, and had a 31-day grace period for premium payments; and 2019 Annual Education Conference

12. EVIDENCE OF INSURABILITY – 2ND CIRCUIT (CONT’D) • Facts (cont’d): • Insured was habitually late (34 times over a 9-year period), and made premium payments beyond the 31-day grace period; • MONY routinely provided insured’s an additional 20 days beyond 31-day grace period to reinstate without EOI or adding interest (8%) on late premiums (despite those requirements being contained in the Policy); • Each time the insured was late, his policies were reinstated without EOI, and without being charged, in contradiction of express policy terms; • When the insured died on June 7, 2010, the 31-day grace period had expired on June 2, 2010, and insured’s son paid the premiums on June 14, 2010 (within the 20-day restoration period); and • MONY denied the claim on July 26, 2019 under the 2 lapsed MONY policies, taking the position that insured died before required premiums were paid, and that the policies had lapsed after the 31-day grace period. 2019 Annual Education Conference

13. EVIDENCE OF INSURABILITY – 2ND CIRCUIT (CONT’D) • Issue: Whether MONY’s acceptance of late premiums during the 20-day restoration period without EOI or interest modified the policies’ reinstatement language; or, alternatively, whether MONY’s acceptance of late premiums in the past equitably estopped its later enforcement of the policy terms. • Findings: • MONY’s prior reinstatement of coverage outside the grace period did not modify the contracts; and • MONY’s offer to reinstate without an unambiguous statement that the policies had terminated, and outside of the grace period did create a material fact in dispute that the insured reasonably believed that payment within the 20-day restoration (after the grace period) would continue to be accepted -- a jury question of whether MONY’s conduct estopped it from denying coverage. 2019 Annual Education Conference

14. Evidence of insurability – 3rd circuitDelaware, new jersey, virgin islands, pennsylvania Gadsby v. United of Omaha Life Ins. Co. and Facility Solutions Group, 2019 WL 1405845 (U.S.D.C. E.D. PA, a 3rd Cir. Dist. Court Case). • Holding: Following Motions to Dismiss, the Court concluded that Plaintiff has stated a plausible cause of action premised on the theory that United cannot contest the validity of life insurance benefits under the Policy if it failed to previously enforce the EOI requirement, insofar as it accepted premiums for a full year without advising the insured that EOI deficiency – therefore, failing to submit EOI is not fatal to a 29 U.S.C. §1132(a)(1)(B) claim if the insurer is found to have waived the EOI requirement. • Facts: • Decedent, Richard Lounsbury, began working for FSG on April 30, 2013, and received $10,000 in basic life coverage; • In 2015, decedent purchased an additional $200,000 in voluntary life coverage, and between January 2016-2017 FSG regularly deducted life insurance premiums from decedent’s pay for the supplemental coverage and remitted those premiums to United; 2019 Annual Education Conference

15. EVIDENCE OF INSURABILITY – 3RD CIRCUIT (CONT’D) • Facts (cont’d): • Decedent died January 23, 2017, and United denied Plaintiff’s claim for $200,000 in voluntary life coverage, because United had not received EOI, required when enrollment occurred more than 31 days after eligibility for insurance; • Plaintiff did not appeal United’s denial of coverage; • Under the Policy, EOI is required for insurance elected more than 31-days after eligibility; • Employer had accepted the enrollment forms, deducted premiums and remitted premiums to United; and • Exhaustion of administrative remedies (filing an appeal) would have been futile under ERISA precedent. 2019 Annual Education Conference

16. Evidence of insurability – 3rd circuit (cont’d) • Issue: Whether United’s acceptance of premiums for one year (for insured’s voluntary life insurance coverage ($200,000)), without requiring EOI which would otherwise have been required, established a plausible waiver claim precluding United’s motion to dismiss; and/or, whether Plaintiff’s failure to exhaust administrative appeal remedies precluded judicial relief. • Findings: • In light of United’s acceptance of premiums and failure to require EOI -- knowing that decedent had applied for voluntary life coverage after 31-days of eligibility – did plausibly establish a viable waiver claim; and • Plaintiff’s failure to appeal United’s determination did not bar Plaintiff’s claim because it would have been futile, inasmuch as United was shown by clear and positive showing to have maintained the unwavering stance that coverage would never have been granted without EOI. 2019 Annual Education Conference

17. EVIDENCE OF INSURABILITY – 4TH CIRCUITMaryland, south Carolina, north Carolina, virginia, west virginia Gordon v. Cigna, 890 F. 3d 463 (4th Cir. 2018). • Holding: Summary judgment affirmed for insurer, because errors leading to participant’s reduced life insurance coverage were caused by mistakes of his employer. • Facts: • UCG (employer) was administrator of the life plan and LINA was insurer; • UCG was responsible for day-to-day operations including billing; eligibility verification; beneficiary designation, and submitting applications for voluntary coverage; • LINA was responsible for handling claims and appeals; • Structure meant that UCG and not LINA maintained all employee-level coverage data, calculated premiums and collected those premiums via payroll deduction; • Gordon’s coverage included $50,000 basic life insurance, and option to purchase $250,000 voluntary life insurance; 2019 Annual Education Conference

18. Evidence of insurability – 4th circuit (cont’d) • Facts (cont’d): • $100,000 of voluntary coverage was guaranteed issue, and the additional $150,000 required EOI; • Employee/Gordon attempted to purchase $250,000 but did not submit an EOI; • UCG withheld premiums for $250,000 and remitted premiums to LINA; • Gordon died 10 months after enrolling in the Plan; and • LINA denied claim for additional voluntary coverage for failure to submit EOI. • Issue: Whether CIGNA’S retention of excess premiums created a fiduciary duty on the part of CIGNA where there was not one before. 2019 Annual Education Conference

19. Evidence of insurability – 4th circuit (cont’d) • Findings: • Mere retention of excess premiums does not create a fiduciary duty where none existed before; • CIGNA had no meaningful way of knowing that it had received an overpayment; • Whether an entity is a fiduciary depends upon the activity at issue, and the Plan documents gave CIGNA discretionary authority only as to claim decisions; • The Plan documents did not required CIGNA to notify Gordon that he had not completed the EOI; • But, “Our inquiry does not end with the Plan documents” to determine if CIGNA de facto performed specified discretionary functions with respect to management or administration of the Plan; and • No de facto functions found with respect to administration of the Plan. 2019 Annual Education Conference

20. EVIDENCE OF INSURABILITY – 4TH CIRCUIT (CONT’D) Prince v. Sears Holding Corp., 848 F.3d 173 (4th Cir. 2017). • Holding: District Court’s dismissal of complaint without prejudice affirmed. • Issue: Whether Sears’ deduction of premiums prior to denial is preempted by ERISA. • Facts: • In November 2011, Prince submitted an application to his employer, Sears, for $150,000 life insurance coverage on his spouse; • In May 2011, Sears acknowledged coverage in a letter to the employee, and began withholding premium for the $150,000; • Prudential sent a letter to Prince advising that coverage would not be effective until EOI was received; • Spouse subsequently discovered she had Stage IV liver cancer;

21. EVIDENCE OF INSURABILITY – 4TH CIRCUIT (CONT’D) • Facts (cont’d): • In 2012, Sears sent a letter to Prince stating that his spouse’s coverage had never become effective, because the “EOI questionnaire had not been submitted”; • Spouse’s wife died on May 26, 2014; and • Plaintiff did not dispute that he never submitted the EOI. • Findings: • Rather than argue that withholding premiums constituted a waiver of EOI under 502(a)(3), plaintiff argued that the common law claims of misrepresentation and constructive fraud (based upon withholding of premiums) were not preempted by ERISA; • “Regardless of whether his claims attack Sear’s actions prior to the denial or in issuing the denial, these claims are enforceable under section 502(a)…..and therefore are preempted”; and • Court dismissed the claim without prejudice for plaintiff to refile as an ERISA claim after exhausting administrative remedies.

22. Evidence of insurability – 5th circuitLouisiana, Mississippi, texas Baker v. Metropolitan Life Ins. Co, 364 F. 3d 624 (5th Circuit 2004). • Issues: Whether participant was eligible for supplemental coverage when not actively at work and without submitting EOI; and, whether employer’s approval of claim for benefits was an abuse of discretion. • Facts: • Baker enrolled in Burlington’s Plan which provided basic life equal to his salary and supplemental life equal to his salary; • Burlington acquired another company and sought proposals to create a new employee benefit program for both companies; • Baker went on STD after diagnosis of cancer; • While on STD, Baker received an enrollment notice to all employees for enrollment in the new MetLife benefits Plan; • Baker increased coverage to 6 times his salary, and his election was confirmed by Burlington although he was advised it would not become effective until 1/1/99.

23. EVIDENCE OF INSURABILITY – 5TH CIRCUIT (CONT’D) • Facts (cont’d): • Baker died on 1/15/99; spouse submitted claim for six times salary; and MetLife paid basic but denied claim for supplemental benefit; • Plan was not finalized until October but made retroactive to 1/1/99; • Burlington gave spouse a nonrecourse loan equal to 6 times his salary, and spouse assigned the proceeds of her cause of action to Burlington; and • Burlington argued that it had discretionary authority, and determined that an employee on STD was “actively at work.” • Findings: • Plan gave both Burlington and MetLife discretionary authority to interpret the Plan, and Met Life was required to give Burlington’s claim decision full force and effect so long as the decision was not arbitrary and capricious; • Burlington’s determination that Baker was “Actively at Work” contradicted the plain terms of the Plan, and was an abuse of discretion; and • Baker provided no “evidence of [his] good health,” a requirement for increasing coverage under the Met Life Plan.

24. EVIDENCE OF INSURABILITY – 5TH CIRCUIT Smith v. Kohler, 2013 WL 3212501 (N.D. Miss.). • Holding: Summary Judgment awarded to Kohler and Unicare Life and Health Ins. Co. • Issues: Whether defendants breached fiduciary duties under ERISA for failure to provide sufficient notice of requirement of EOI for supplemental life benefits and additional ADD benefits. • Facts: • Basic life benefit was $10,000, and Plan offered option to purchase supplemental life and ADD of $25,000, $50,000 and $100,000. ADD coverage could not exceed the amount of selected supplemental life; • During open enrollment in October 2008, decedent elected to enroll for $100,000 in supplemental life and $100,000 in ADD; • Decedent received an on-screen open enrollment confirmation of his decision to increase his supplemental life coverage to $100,000 and his ADD to $100,000; 2019 Annual Education Conference

25. Evidence of insurability – 5th circuit (cont’d) • Facts (cont’d) • EOI was required for supplemental amounts above $25,000; • Employer only deducted premiums for the $25,000, and not additional $75,000 in supplemental life and ADD; and • Employee died on July 23, 2009. • Findings: • Employees who receive on-line confirmation also receive an on-screen notice that EOI is required to obtain higher level of coverage; • Included in the record was a screen capture of the open enrollment notice that advised applicant that insurer required a signed copy of the [EOI] form completed on line, that the form would be mailed to employee with a self-addressed/stamped envelope to return to Kohler, that Kohler would then forward the EOI to the insurer, and that insurer would approve or deny higher supplemental coverage based on EOI;

26. EVIDENCE OF INSURABILITY – 5TH Circuit (cont’d) • Findings (cont’d): • No evidence in the record that decedent ever provided the EOI to employer or insurer; • The Court “noted that there is also no evidence in the record that Unicare had approved the increased coverage by deducting the appropriate amounts from Decedent’s paycheck to reflect a $100,000 level of benefits for both policies”; and • Treated the complaint as a claim for benefits because 502(a)(3) not specifically plead; rather only common law breach of fiduciary duty.

27. EVIDENCE OF INSURABILITY – 6TH CIRCUITKentucky, michigan, ohio, tennessee Brown v. United of Omaha Life Ins. Co., 661 Fed. Appx. 852 (6th Cir. 2016). • Holding: Denial of coverage based on no evidence of insurability was arbitrary and capricious. • Issue: Whether the insurer’s interpretation of the Plan as requiring evidence of insurability was arbitrary and capricious. • Facts: • 12/16/11 Insured submitted Benefit Election Authorization for $30,000 through automated call-in system; • Hartford approved the coverage with an effective date of 2/1/12; • Hartford Plan did not require EOI; • Employer terminated relationship with Hartford on 2/1/12 and offered optional coverage through United; • Agreement with United stated that only coverage in effect as of 1/31/12 was grandfathered in; 2019 Annual Education Conference

28. EVIDENCE OF INSURABILITY – 6TH CIRCUIT (CONT’D) • Facts (cont’d): • On 2/1/12 Employer began deducting premiums for $30,000 optional insurance, and paycheck said “OPT LIFE INSUR”; • Beginning 3/21/12 through death on 11/27/12, Employer withheld additional premiums corresponding with $181,000 of voluntary insurance; and • Claim denied for failure to provide EOI as required under the policy and coverage was not in effect on 1/31/12. • Findings: • Plaintiff asserted claim for benefits under (a)(1)(B) and equitable relief under (a)(3); • Court found abuse of discretion, because: • Plan language did not require participants to submit EOI if they were eligible for insurance with Hartford and elected to participate in the prior Plan through his 12/16/11 call; and 2019 Annual Education Conference

29. EVIDENCE OF INSURABILITY – 6TH CIRCUIT (CONT’D) • Findings (cont’d): • Coverage was $181,000, because “the increase in deductions is evidence enough of a request by Brown for the increase.” “Because there was no evidence of Salary in the record, we cannot say with fair assurance that $1550,000 was the lesser amount?” • United never requested EOI, which it was required to do under the Plan; • The Plan states “EOI is proof of health acceptable to us. This proof may be obtained through questionnaires, physical exams or written documents, as required by Us”; • The Court remanded for determination of plaintiff’s annual salary, to determine benefits to which he was entitled under the (a)(1)(B) claim; • The Plan also stated we “may issue without requiring Evidence of Insurability” up to $150,000”; and • Court reversed dismissal of the (a)(3) claim for a determination of whether other equitable relief is warranted. For example, if the salary allows him only $150,000 maximum, but he paid premiums for an amount of $181,000, equitable relief may be had for the $31,000 difference.

30. EVIDENCE OF INSURABILITY – 7TH CIRCUITIllinois, Indiana, wisconsin Bjelopetrovich v. Unum Life Ins. Co., 275 F. Supp. 3d 939 (N.D. Ill. 2017). • Holding: Denial of voluntary life insurance benefits for failure to provide EOI was not an abuse of discretion. • Issue: Whether the Plan language provided a basis for distinguishing between “Basic” and “Voluntary” life insurance. • Facts: • Plan provided for two distinct “Life Insurance Plan” coverages, each with its own terms and conditions; • After the initial election period, employee could “apply for coverage only during an annual enrollment period. Evidence of insurability is required for any amount of insurance”; • Employees could change Life Insurance Coverage” by “applying for additional units at anytime during the plan year…..Evidence of Insurability is required for any amount of life insurance applied for during the plan year”; • Employees could also apply for additional benefit units during an annual enrollment period but “Evidence of insurability is required for any amount of life insurance over the amount shown in the LIFE INSURANCE BENEFITS AT A GLANCE”; 2019 Annual Education Conference

31. EVIDENCE OF INSURABILITY – 7TH CIRCUIT (CONT’D) • Facts (cont’d): • Mr. B did not elect voluntary insurance at initial enrollment; • After initial enrollment, Mr. B. mistakenly checked the box labeled “Initial enrollment…” and requested $100,000 in voluntary coverage; • Mr. B. did not submit EOI, despite warning that EOI was required if he did not elect coverage during initial enrollment; • Employer deducted premiums for 3 months for $100,000 in coverage; and • Unum denied claim for $100,000 voluntary life insurance benefit for failure to submit EOI. • Findings: • Court rejected plaintiff’s argument that there was no basis to distinguish between “basic” and “voluntary” life insurance; and • Court affirmed the denial of voluntary life insurance benefits despite the withholding of premium for 3 months. 2019 Annual Education Conference

32. EVIDENCE OF INSURABILITY – 8TH CIRCUITMinnesota, Nebraska, north Dakota, Arkansas, Iowa, Missouri Huang v. Life Insurance Company of North America, 801 F.3d 882 (8th Cir. 2015). • Holding: Upheld summary judgment in favor of carrier/claim fiduciary on claim determination, plan/policy interpretation, and claims of fiduciary breach. • Issues: • Whether alleged oral representation that is inconsistent with plan and application language can form the basis for an equitable claim against the plan administrator. • Whether allegedly unclear/misleading application language can form the basis for an equitable claim against the plan administrator. • Whether an “equitable claim for surcharge” is an appropriate remedy for harm that is not in the form of a loss of an ERISA-protected right.

33. EVIDENCE OF INSURABILITY – 8TH CIRCUIT • Facts: • SPD and application stated that evidence of good health “may be required” for supplemental life insurance, and imposed ongoing duty to disclose change in health; • Supplemental life coverage issued without underwriting requirements or evidence of insurability; • HOWEVER: Applicant died (during contestability period) and contestability investigation revealed cancer diagnosis between application and policy issue dates -- coverage rescinded and claim denied. • Beneficiary appealed on grounds that: • (1) Interpretation of plan/policy language was unreasonable (29 U.S.C. 1132(a)(1)(B)); • (2) LINA had not provided copy of application to insured during his lifetime (fiduciary duty / Missouri law); • (3) LINA application was vague and misleading (fiduciary duty); and • (4) LINA employee (unidentified) promised supplemental coverage would be issued and in reliance beneficiary allowed $100,000 policy with another carrier to lapse; (3) d that coverage would be issue and had not been provided to the applicant (estoppel/detrimental reliance / equitable surcharge);

34. EVIDENCE OF INSURABILITY – 8TH CIRCUIT • Findings: • LINA did not abuse its discretion. The benefit determination was reasonable. • LINA did not violate the application delivery requirement. Both the plan and Missouri law provided that the application could also be delivered to a beneficiary – which occurred here during the appeal process. • LINA application and plan description adequately and fairly presented the requirements for supplemental insurance, as a matter of law. Change in health requirement was conspicuous, and both applicant and beneficiary verified having read it. • Discussing CIGNA Corp. v. Amara, 563 U.S.421, 131 S.Ct. 1866 (2011), an equitable claim for surcharge may be appropriate based upon breach of fiduciary duty / misrepresentation, and detrimental reliance is not always required; however, there must be reliance that is reasonable, and the statement of the fiduciary must be material. • Here, the Court said that the “clarity and pedestrian nature of the written requirements coupled with the uncertainty and vagueness surrounding the purported oral representation would deem any reliance on the oral representation unreasonable.”

35. EVIDENCE OF INSURABILITY – 9THcIRCUITAlaska, Arizona, guam, Hawaii, Idaho, montana, Nevada, Oregon, California, washington Salyers v. Metropolitan Life Insurance Co., 871 F.3d 937 (9th Cir. 2017). • Holding: Agency relationship between employer and carrier justified reversal and finding that MetLife waived its right to require evidence of insurability by application of an agency theory to ERISA. • Issues: • Whether the beneficiary/employee was afforded a full and fair review of her claim; • Whether carrier waived evidence of insurability by not requesting it prior to death; and • Whether failure to request evidence of insurability estopped carrier from relying on it to deny the claim. • Facts: • Employee applied for $20,000 dependent life insurance on husband; • SPD and Enrollment Form language was inconsistent – SPD said no evidence of insurability up to $50,000; Enrollment Form said evidence of insurability may be required.

36. EVIDENCE OF INSURABILITY • Facts (cont’d): • Employer erroneously recorded coverage as $500,000 and deducted premiums for that amount coverage for 4 months – with no evidence of insurability requested/required; • At next open enrollment (January 1, 2014) employee “increased” dependent life coverage to $250,000, and enrollment guide at that time also said coverage will not take effect until approved by Met Life; • Employer adjusted coverage and premium correctly to $250,000 – again, no evidence of insurability was requested/required; • Insured husband died on January 10, 2014; • When asked by insurer for enrollment file and evidence of insurability, the employer recognized its data entry error and revised an Employer Statement to reflect $30,000 in coverage – the amount it believed the insured would have been eligible to purchase without evidence of insurability; • MetLife paid $30,000, and employer revised excess premiums deducted from employee’s pay;

37. EVIDENCE OF INSURABILITY • Facts (cont’d): • MetLife employee placed his opinion in the file – that the $250,000 death benefit should have been paid (?) • Holdings: • The Court appeared to criticize the employer/MetLife’s creation of a “compartmentalized system” in which the employer was responsible for interacting with plan participants and the carrier remained largely ignorant of coverage elections, and agreed with the employee/plaintiff that the purported ignorance of the facts does not negate its obligations under agency law; • District Court’s decision reversed and case remanded for entry of judgment for employee of remaining $220,000 in coverage.

38. EVIDENCE OF INSURABILITY – 10TH CIRCUITColorado, Kansas, new Mexico, Utah, Wyoming, Oklahoma Adamson v. UNUM Life Insurance Company of America, 455 F.3d 1209 (10th Cir. 2006). • Holding: Errors do not bind different coverage, and policy language said employer was not agent of carrier. • Issues: • Whether policy language interpretation was abuse of discretion; • Whether payment for higher coverage bound higher coverage; and • Whether employer’s clerical error bound insurer under agency theory.

39. EVIDENCE OF INSURABILITY • Facts: • Employee applied and paid premium for $50,000 of life insurance on her husband, requiring no evidence of insurability – policy provided for double face amount payment for accidental death; • Employee subsequently requested increased coverage on her husband to $200,000 (also double payment for accidental death) on July 26, 1995; • Increased coverage under supplemental insurance required evidence of insurability and additional premium; • Employee asserts that she did not receive letter from Unum requesting paramedical exam in relation to increased coverage (letter had wrong zip code); however, husband was killed in a construction accident on October 23, 1995, and employee made a claim for $400,000 on November 13, 1995; and • Unum paid $100,000 (double payment on the no evidence of insurability coverage originally purchased).

40. EVIDENCE OF INSURABILITY • Findings: • Unum followed the terms of the plan and its conclusion was “sufficiently supported by facts within its knowledge”; • No evidence existed that the employee had paid premium consistent with $200,000 in coverage; • Policy language excluded liability for clerical error; • Policy language precluded imposition of an agency relationship between employer and carrier.

41. EVIDENCE OF INSURABILITY – 11TH CIRCUITAlabama, Florida, Georgia Lightning v. CONSECO Life Insurance Company, 2008 WL 11335090 (D.Ga. 2008). • Holding: By offering additional time to reinstate without evidence of insurability and knowledge that insured was uninsurable, carrier does not waive right to enforce evidence of insurability requirement after that extension; and, insured did not create coverage by making premium payments after policy termination. • Issues: • Whether carrier conduct inconsistent with policy language requiring proof of insurance constitutes permanently waives right to enforce that condition to reinstatement; and • Whether payments made to carrier after policy lapse • Facts: • Plaintiff was beneficiary (but not owner) to individual life insurance policy, and paid the monthly premium; • Plaintiff was notified that bank’s auto pay to carrier of premium would be disrupted by bank merger;

42. EVIDENCE OF INSURABILITY • Facts (cont’d): • Plaintiff’s manual premium was return NSF, and policy subsequently lapsed and terminated; • Plaintiff attempted premium payments that were returned; • Reinstatement after policy termination required evidence of insurability (by the terms of the contract); and • Insured died without policy having been reinstated, or evidence of insurability having been presented. • Findings: • Policy lapsed prior to insured’s death (i.e., you can’t insure a life that does not exist); and • Conseco did not waive the Policy’s reinstatement requirements.

43. Evidence of insurability – d.c. circuit Orchin v. Great-West Life & Annuity Ins. Co., 133 F.Supp. 3d 138 (D.D.C. 2015). • Holding: Irrespective of prior knowledge of uninsurability, fraudulent inducement voided reinstatement without waiving evidence of insurability, and any reinstatement is voidable where insured is already deceased at time of reinstatement. • Issues: • Whether termination of coverage was effective when there is no notice of lapse/cancellation (statutorily required); and • Whether prior knowledge of uninsurability waives that condition precedent to reinstatement; and • Whether carrier’s agreement to unconditionally reinstate waived right to enforce evidence of insurability.

44. EVIDENCE OF INSURABILITY • Facts: • Individual life insurance coverage of $750,000 owned by Trust lapsed for non-payment of premium by trustee in 2016; • Insured died while coverage was in lapsed status; • Carrier constructively knew that insured was uninsurable (from prior business application that had been denied); • Trustee convinced carrier to make an exception to evidence of insurability requirement precedent to reinstatement . . . without disclosing that insured was already dead; • Upon discovery that the insured had died 3 days prior to reinstatement, carrier denied death benefit claim; and • Wife/beneficiary of coverage sued Trustee – which case was consolidated with this one. • Findings: • Trustee/Owner’s fraud, and insured life’s prior death, voided reinstatement.

45. Evidence of insurability – claim decision-making Claim Examiners as Risk Officers; and Issue spotting -- assessing the strengths and weaknesses of the Claim decision in an effort to avoid, or at least anticipate the likelihood of litigation.

46. EVIDENCE OF INSURABILITY – QUESTIONS QUESTIONS ?