Erisa and Disability Benefits Law Blog

This case arises out of a disputed claim for life insurance benefits under an ERISA plan. 

Shortly after Michael Kehoe was diagnosed with prostate cancer, he elected to increase the amount of his life insurance benefits offered through his employer's plan.  He selected “additional life insurance 2 x the earning,” doubling the basic life insurance coverage that he already had in place.  His employer began deducting premiums each month for the supplemental coverage.

After Mr. Kehoe died a few months later, his wife made a claim for the life insurance proceeds.  Unum Life Insurance Company agreed to pay the regular benefit, but refused to pay the supplemental benefit.  Among other things, Unum Life claimed that it did not owe the additional benefit because Mr. Kehoe had not provided "evidence of insurability" as required by the plan.  

Mrs. Kehoe sued Unum Life and others to recover the supplemental benefit.  She argued that her husband’s employer knew about his prostate cancer and had received a physician's statement addressing the cancer diagnosis.  As a result, she argued that Unum Life did have evidence of insurability.  Unum Life countered that general knowledge about his cancer or the doctor's report did not equate to evidence of insurability.

The federal district court in Louisiana first considered the plan language regarding insurability.  The plan defined “evidence of insurability” as a “statement of your . . . medical history which Unum will use to determine if you . . . [are] approved for medical coverage.”  In addition, the Summary Plan Description stated that evidence of insurability is the same as “proof of good health.”  Based on this language, the court held in favor of the defendants:

Based upon the explicit language in the Plan and the Summary Description of the Plan, the Court is compelled to find that Unum did not abuse its discretion in determining that the evidence submitted by Mr. Kehoe was insufficient to qualify as “evidence of insurability.”  Essentially, evidence of insurability is evidence which suggests that Mr. Kehoe's health was sufficient to qualify him for additional coverage.  [Mr. Kehoe’s treating physician’s] report does not provide documentation of Mr. Kehoe's physical condition; rather, the report is brief and is limited to Mr. Kehoe's diagnosis with metastatic prostate cancer and his diminishing health.  The report details Mr. Kehoe's recent hospitalizations resulting from his condition, and further, notes his indefinite release from work.  This report does not reflect on Mr. Kehoe's “good health” and cannot qualify as evidence of insurability.  It is unreasonable to infer that Unum, as both insurer and claims administrator, would provide Mr. Kehoe with supplemental life insurance following his cancer diagnosis.

Similarly, Unum's alleged general awareness of Mr. Kehoe's diagnosis is insufficient to qualify as proof of good health. In effect, plaintiff's argument would shift the good health burden to Unum to prove Mr. Kehoe was not in good health. 

(Citations and footnotes omitted.)  For these and other reasons (including the finding that Unum Life also did not  approve any purported evidence of insurability as required by the plan), the court concluded that the denial of the supplemental life insurance did not constitute an abuse of discretion.  The cire is Kehoe v. Ryder Truck Rental, Inc., 2006 WL 2414197 (E.D. La. Aug. 17, 2006).