After determining that the policy in question was governed by ERISA, the U.S. Fifth Circuit reversed summary judgment:  “Under the terms of its policy, Guardian maintained its right to cancel any coverage thereunder when less than two employees are insured. That right vested when Pam Edwards became the sole participating employee effective November 1, 2019. Because Guardian could cancel the plan at any time and for any reason, its discretionary authority would normally permit the cancellation here under the generous abuse of discretion standard.  But insurers can waive their discretionary cancellation rights under ERISA. The waiver inquiry focuses on the unilateral action of the insurer in failing to raise at the outset a known right.”  In this case, “Guardian waived its right to cancel Pam Edwards’s plan by continuing to accept premium payments from Allure for 26 months after its cancellation right vested….  Guardian’s delay in cancellation prejudiced Pam because she was unable to conduct business over the last ten months of her life due to her mental and physical deterioration.  Guardian cannot now avoid its obligation to Jimmy Edwards after accepting Allure’s premiums for 26 months.”

 

Edwards v. Guardian Life Ins. Of America, No. 24-60381, 2025 WL 1718263 (5^th Cir. June 20, 2025).