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Home > Blog > Fifth Circuit Affirms Dismissal of ERISA Plan Beneficiary’s Estoppel Claim Over Supplemental Life Insurance Benefits

Fifth Circuit Affirms Dismissal of ERISA Plan Beneficiary’s Estoppel Claim Over Supplemental Life Insurance Benefits

Yesterday, the Fifth Circuit Court of Appeals issued a decision in Talasek v. Nat’l Oilwell Varco, L.P., No. 21-20069, __F.4th__, 2021 WL 4860133 (5th Cir. Oct. 19, 2021), a matter involving a denial of ERISA-governed life insurance benefits.

Plaintiff-Appellant Erica Talasek was the beneficiary of her late husband’s group life insurance policy which he had through his employer, National Oilwell Varco, L.P. (“NOV”). NOV provided group coverage through a policy insured by Unum Life Insurance Company of America. At the end of 2013, Mr. Talasek received a Benefits Confirmation Statement from Unum reflecting his new elections which were to begin in 2014 but noted that several of his elections were suspended due to the lack of an Evidence of Insurability (“EOI”) form. The suspended elections included supplemental life insurance coverage for $300,000. After he submitted the EOI form in 2014 he was diagnosed with pancreatic cancer. As part of Unum’s review, it sent Mr. Talasek for blood and urine samples. Ultimately, Unum decided that it would not approve the insurance coverage listed in the benefits statement due to his abnormal lab results. Mr. Talasek did not appeal this decision. Notwithstanding this, NOV Benefits Service Center continued to send the Talaseks statements showing his 2013 elections and NOV was deducting premiums for this coverage from Mr. Talasek’s paychecks. The statements did not note that his coverage was suspended. Mr. Talasek died in 2017 and Plaintiff sought payment of the supplemental life coverage. Unum denied her application for this benefit.

Plaintiff sued Unum and NOV alleging estoppel, negligence, and violations of ERISA. The defendants prevailed on all claims at the district court. On appeal to the Fifth Circuit, Plaintiff only challenged the grant of summary judgment in favor of NOV on her estoppel claim. To survive summary judgment on an estoppel claim, a plaintiff must satisfy two elements: (1) there was a material misrepresentation and (2) the plaintiff relied reasonably and to her detriment on the material misrepresentation, under extraordinary circumstances. The district court found that Plaintiff did not satisfy both elements.

The Fifth Circuit parted with the district court in finding that Plaintiff satisfied the first element of her claim. It explained: “It is difficult to imagine a misrepresentation more likely to mislead a recipient. Every year for four years, Talasek and her husband received statements from NOV, purporting to identify the benefits elected and indicating the amount of the deduction for each element of coverage.” However, the court affirmed the district court’s decision because Plaintiff could not establish the second element of the estoppel claim—that reliance on the benefits statement was reasonable. The court explained that under Fifth Circuit precedent, “an employee cannot reasonably rely on informal documents in the face of unambiguous terms in insurance plans.” Here, the group life insurance policy, as explained in the Summary of Benefits, required Mr. Talasek to complete an EOI form and that Unum must approve the EOI before coverage takes place. This requirement was unambiguous. The Summary of Benefits also made clear that NOV’s representations were not Unum’s. The court found that it was not reasonable for Plaintiff to rely on NOV’s statements and deductions over the unambiguous group policy language. Though NOV’s misrepresentations were frustrating, Plaintiff failed to create a genuine dispute of material fact over the reasonable reliance aspect of the second element. As such, the court declined to consider whether extraordinary circumstances existed. Affirmed.

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