• Paul M. Sullivan, Jr.

ERISA Insurer Owes Widow $450,000

Soohyun Cho cashed out her disabled husband's life insurance to pay for his exorbitantly expensive living needs after he became stricken with pancreatic cancer.


Her decision had been made easier because her employer's group life insurance plan provided her with a safety net. She applied for $500,000 in spousal life insurance coverage. Her employer collected premiums from her for paychecks for over a year and provided her with benefit statements indicating $500,000 in spousal coverage.


After she had enrolled, the life insurance company discovered that it did not have evidence of insurability application forms for a number of her employer's enrollees. It decided to ask for them from the employer, who was supposed to have obtained them from the employees.

Mrs. Cho's husband died. She claimed the $500,000 spousal benefit for which she had been paying premiums for over a year. The insurance company sent her a check for just $50,000, the basic amount of coverage, but denied her claim for the additional voluntary spousal life insurance benefit of $450,000.


The court found that the insurance company had made the employer its agent and had charged Mrs. Cho's employer it with enforcing the evidence of insurability requirement. When the employer failed to enforce the evidence of insurability requirement, it acted as agent for the insurance company. The insurance company was bound by the federal common law of agency and had itself therefore waived the requirement.


The court ordered the insurance company to pay Mrs. Cho $450,000, the $500,000 additional voluntary spousal benefit less the $50,000 basic benefit it had already paid.

See Cho v. First Reliance Standard Life. Ins. Co., Case. No. CV-18-4132- MWF(SKx) (U.S.D.C. C.D. Cal., March 5, 2020).

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