A three-judge panel at the U.S. Court of Appeals for the 5th Circuit has ruled against Guardian Life, and in favor of a life insurance beneficiary, in a case involving a life policy cancellation notice.
Pamela Edwards, the owner of the Allure Salon in Starkville, Mississippi, bought a group life insurance policy that covered her and other Allure employees in 2007. In 2019, Edwards was the salon's only employee.
Edwards was diagnosed with cancer in 2019. She died in May 2022.
When Edwards' husband, Jimmy Edwards, filed a life insurance death benefit claim, Guardian told him that it had exercised a provision that let it cancel the policy once the salon had only one employee.
In September 2020, because of the COVID-19 pandemic, Guardian stopped sending out coverage cancellation notices. Guardian sent Pamela Edwards a coverage cancellation notice in January 2022.
After Pamela Edwards died, Jimmy Edwards sued in an effort to collect the death benefit. A district court judge granted a Guardian motion for partial summary judgment.
The policy was a group life policy governed by the federal Employee Retirement Income Security Act. Under ERISA, Guardian had the discretion to cancel the policy, according to an opinion written by Circuit Judge Andrew Oldham.
But Guardian waived its right to cancel the coverage after it put off sending the policy cancellation notice, Oldham wrote.
"Guardian's delay in cancellation prejudiced Pam because she was unable to conduct business over the last 10 months of her life due to her mental and physical deterioration," Oldham wrote. "Guardian cannot now avoid its obligation to Jimmy Edwards after accepting Allure's premium for 26 months."
Representatives for Guardian and Jimmy Edwards could not immediately be reached for comment.
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