District Court Rules that Guardian Did Not Waive Its Right to Cancel Group Life Insurance Plan Due to Low Participation

In Edwards v. Guardian Life Insurance of America, No. 1:22-CV-145-KHJ-MTP, 2024 WL 3404606 (N.D. Miss. July 12, 2024), Mississippi Northern District Judge Kristi H. Johnson, granted summary judgment to defendant Guardian Life Insurance Company of America, finding Guardian had canceled the subject group life insurance plan and, thus, recovery was not permitted.

This case arises from Plaintiff’s efforts to recover $85,000 in group life insurance proceeds following the death of his wife. Decedent owned and operated Allure Salon in Starkville, Mississippi. In December 2007, Guardian issued Allure Salon a group life insurance plan that covered decedent and three other full-time salon technicians. From January 15, 2015, through November 14, 2019, employee benefits were provided to three employees, including Decedent. The plan’s terms granted Guardian the right to cancel the plan on the “policy anniversary date or premium due date” if “less than two employees are insured.” Decedent was diagnosed with cancer in 2019. Later that year, in November 2019, Decedent became the only participating employee under the group plan, however, decedent still maintained the plan and paid monthly premiums.

In 2020, when the COVID-19 pandemic hit (between September 2020 and October 2021), Guardian suspended its practice of terminating plans that had dropped to one participant. Upon the end of the suspension period, Guardian cancelled the group plan effective January 15, 2022, due to low group participation. After the plan had been cancelled, Guardian did not receive any additional premiums from Allure Salon. Decedent passed away on May 27, 2022. The insurance agent who sold the group policy informed Plaintiff that his wife had a group life insurance policy and attempted to initiate a claim on his behalf. Guardian informed the agent of the January 2022 cancellation and provided the agent with the cancellation notices. The agent claims it is customary in the business that the agent is provided with notice of any cancellation and that no such notice was sent to the agent. Plaintiff sued for recovery of plan benefits under ERISA. (The Court dismissed Plaintiff’s state-law claims as they were preempted by ERISA.) Guardian moved for summary judgment on the ERISA claim.

The Court granted summary judgment to Guardian, finding that Section 1132(a)(1)(B) did not allow the recovery Plaintiff sought. The Court held that upon cancellation, the group life plan no longer existed, and Plaintiff had no claim for benefits under the plan. The Court further held that Plaintiff’s arguments — that Guardian (1) waived its right to cancel the plan for falling under the required participation level; and/or (2) did not properly provide notice and give Decedent the opportunity to convert to individual life insurance as allowed by the plan — did not preclude summary judgment.

The Court found unpersuasive Plaintiff’s assertion that Guardian waived its right to cancel the plan when it became aware that Decedent was the only participating employee at the end of 2019 yet continued to accept premium payments for over two years before choosing to cancel the policy. Reiterating that waiver must be an intentional relinquishment of a known right, the Court held there was no waiver because Guardian canceled the coverage per the plan’s terms and before Decedent passed away and Plaintiff brought the claim for benefits.

With regard to the notice of cancellation, the Court held that Guardian provided substantial evidence to support the presumption that it mailed both pre-cancellation and cancellation notices to Decedent. And Plaintiff offered no plan provision requiring Guardian to send such notices to the insurance agent. As such, the Court found no genuine issue of material fact existed as to whether Decedent was provided with notice of plan cancellation.

If Guardian or your insurer has denied or otherwise limited your life or disability insurance claim, contact us for assistance.