In Van Loo v. Cajun Operating Co, No. 14-cv-10604 (E.D. Mich. Sept. 17, 2015), the Eastern District of Michigan, a Sixth Circuit district court, held that the requirement for evidence of insurability was triggered based on the total amount of insurance as opposed to the amount of supplemental life insurance. Additionally, while acknowledging a split between the Sixth and Ninth Circuits on the matter, the court found that there was no right to contribution or indemnification between co-fiduciaries under the Employee Income Retirement Act of 1974 (ERISA).
Factual and Procedural Background
Donna Van Loo was an employee of cross-plaintiff Cajun Operating Company d/b/a Church’s Chicken (Church’s). Church’s provided life insurance to its employees, including Van Loo, through cross-defendant Reliance Standard Life Insurance Company (Reliance Standard). Church’s acted as the plan administrator. The policy required that insureds submit an evidence of insurability (EIF) form for certain coverage elections to be effective. Van Loo never submitted an EIF. After her death, her parents, plaintiffs Donald and Harriet Van Loo, submitted a claim. Reliance denied benefits in excess of the guaranteed-issue amount.
The plaintiffs sued Church’s and Reliance Standard. After initial motion practice, the remaining claims were a denial of benefits claim against Reliance Standard and a breach of fiduciary duty claim against Church’s. See Van Loo v. Cajun Operating Co., 64 F. Supp. 3d 1007 (E.D. Mich. 2014) and Wilson Elser’s Alert on that case published in December 2014. Church’s subsequently filed a cross-claim against Reliance Standard, asserting that Reliance Standard caused Van Loo’s failure to submit the EIF. Reliance Standard moved to dismiss the cross claim and Church’s moved to amend its cross claim. The district court granted Reliance Standard’s motion to dismiss and denied Church’s motion to amend.
The Decision
Evidence of Insurability
The policy stated, “Amounts of insurance over $300,000 are subject to our approval of a person’s proof of good health.” In examining the policy, the court referred to the term “amount of insurance” as defined under the Schedule of Benefits and found that the definition included both basic life and supplemental life. As such, the court stated that “amount of insurance” refers to the sum of the insured’s basic and supplemental benefits. The court specifically noted “that the phrase ‘amounts of insurance’ rather...
