                NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 09a0265n.06
                              Filed: April 7, 2009

                                             No. 08-3347

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT


KURT JOHNSON,

        Plaintiff-Appellee,

                v.                                                       On Appeal from the United
                                                                         States District Court for the
CONNECTICUT GENERAL LIFE INSURANCE                                       Northern District of Ohio at
COMPANY, a/k/a Cigna Group Insurance,                                    Akron

        Defendant-Appellant,

IVAX CORP AND SUBSIDIARIES EMPLOYEE
BENEFIT PLAN, and IVAX CORPORATION,

        Defendants.

                                                                 /

Before:         GUY, CLAY, and COOK, Circuit Judges.

        RALPH B. GUY, JR., Circuit Judge.                D e f end a n t C o n n e c tic u t G e n e r a l L if e

Insurance Company (Connecticut General) appeals from the district court’s decision to enter

judgment on the administrative record in favor of plaintiff Kurt Johnson, as beneficiary, on

his claim for benefits under an ERISA-governed group supplemental life insurance policy

obtained by his wife, Kristen Johnson, less than two years before her death.1 Connecticut


        1
        There is no challenge to the district court’s determination that the life insurance was part of an
employee benefit plan governed by ERISA, or, therefore, that the plaintiff’s original state-law claims were
preempted. Plaintiff filed an amended complaint asserting an ERISA claim for benefits.
No. 08-3347                                                                                  2

General asserts that the district court erred by: (1) considering and allowing discovery

regarding Connecticut General’s alleged conflict of interest; (2) finding that the Ohio statute

addressing false statements in applications for life insurance was not preempted by ERISA;

and (3) concluding that Connecticut General’s denial of the claim was arbitrary and

capricious. After review of the record and the applicable law, we affirm.

                                              I.

       On November 15, 2003, during an open enrollment period, Kristen Johnson applied

for additional life insurance under a policy she already had through her employer. She

completed a supplemental enrollment form at the time of application, and submitted to a

paramedical exam and interview on December 26, 2003. Connecticut General approved the

additional coverage on January 8, 2004, without conducting a review of her medical records.

The policy provided that any increase in coverage would be incontestable after the increase

has been in force for two years.

       On October 4, 2005, 20 months after the increase was approved, Kristen Johnson was

sent to the emergency room, went into a coma, and died the next day. The death certificate

identified cardiac arrest and pulmonary embolism as causes of death, and noted that

hypertension was a contributing condition. Kurt Johnson, Kristen’s husband, made a claim

for benefits in November 2005. Connecticut General paid the $88,000 benefit due under the

original insurance policy, but took the claim for the $174,000 in additional insurance benefits

under review. Claim Specialist Linda Canavan requested three years of medical records from

Drs. Coleflesh and Ballas, and then asked plaintiff to identify any other doctors his wife had
No. 08-3347                                                                                                  3

seen.2 Plaintiff called and provided the names of Drs. Morisetty and Parepally. With records

from Drs. Coleflesh, Morisetty, and Parepally, the claim was sent to medical underwriting

for review in January 2006.

        In a March 20, 2006 letter, Connecticut General informed plaintiff of its decision to

rescind the additional coverage on the grounds that the insured had made material

misrepresentations in the supplemental enrollment form. Specifically, Connecticut General

explained that although Kristen Johnson had disclosed a history of hypothyroidism diagnosed

in April 2002,

        [t]he medical records from Riverside Medical of Ohio indicated that she was
        diagnosed with hypertension in 2002; palpitations; asthma and shortness of
        breath documented in records from July 2, 2002 and January 16, 2003 and
        polycystic ovarian disease. Kristen Robinson-Johnson had the opportunity and
        obligation to disclose her full medical history at the time of application, in
        response to Questions B, C, E and G and a second opportunity in response to
        Questions 5, 9 and 10 at the time of her paramedical exam.

Connecticut General concluded that if it had been aware of her medical history, the additional

coverage would not have been approved. In May 2006, plaintiff, through counsel, appealed

from the denial and disputed that the medical records referenced by Connecticut General

reflected prior diagnoses of hypertension, palpitations, or cystic ovarian disease. The

shortness of breath, plaintiff argues, was determined not to be asthma but rather ventilatory

muscle weakness due to the hypothyroidism.

        Connecticut General denied plaintiff’s appeal on June 26, 2006, reiterating the

conditions that had not been disclosed and stating more precisely that Kristen Johnson had

        2
         The administrative record includes a notation that Dr. Ballas would not release records on plaintiff’s
authorization and required “estate papers.”
No. 08-3347                                                                                  4

“advised her physician that she was hospitalized in 2002 for hypertension.” This time,

Connecticut General specified that coverage would have been denied if the insured had

disclosed “her full medical history of hypothyroidism, hypertension and palpitations.”

Connecticut General would later concede that the insured had no history of palpitations or

polycystic ovarian disease prior to the application for additional insurance. In addition,

Connecticut General clarified that it was actually the combination of “hypothyroidism” and

“hypertension” that would have resulted in an automatic denial of coverage.

       This action, filed in January 2007, asserted state law claims for declaratory judgment

and breach of contract. On Connecticut General’s motion to dismiss, the district court agreed

that the state law claims were preempted by ERISA’s enforcement provisions; found that

plaintiff should be permitted to amend to assert an ERISA claim for benefits; and concluded

that an Ohio statute nonetheless provided the applicable “rule of decision” for plaintiff’s

ERISA benefit claim. After discovery concerning Connecticut General’s apparent conflict

of interest and briefing on the merits, the district court concluded that Connecticut General’s

decision to rescind coverage was arbitrary and capricious. The district court granted

plaintiff’s motion for judgment on the administrative record, and this appeal followed.

                                              II.

       Both the district court and this court review a decision denying ERISA benefits de

novo, unless—as is the case here—the plan gives the administrator discretionary authority

to determine eligibility for benefits or to construe the terms of the plan. Kalish v. Liberty

Mut./Liberty Life Assur. Co., 419 F.3d 501, 506 (6th Cir. 2005). When the administrator is
No. 08-3347                                                                                     5

given such discretion, the denial of benefits is reviewed under the arbitrary and capricious

standard. Id. (citing Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)).

Where there is an inherent conflict of interest, the standard is not altered but the conflict must

be weighed as a factor in determining whether the decision was arbitrary and capricious. Id.;

see also Metro. Life Ins. Co. v. Glenn, 128 S. Ct. 2343 (2008).

A.     Application of Ohio Rev. Code § 3911.06

       Connecticut General argues that the district court erred in applying this state law as

the “rule of decision” in its review of the ERISA claim for benefits. There is no dispute that

Ohio Rev. Code § 3911.06 “relates to” an employee benefit plan and would be preempted

by § 514(a) of ERISA unless exempted from preemption by § 514(b)(2)(A) of ERISA, which

“saves” from preemption the “law of any State which regulates insurance, banking, or

securities.” 29 U.S.C. § 1144(a) and (b)(2)(A). Whether ERISA preempts a particular state

statute is a question of law that we review de novo. Crabbs v. Copperweld Tubing Prods.

Co., 114 F.3d 85, 89 (6th Cir. 1997).

       The ERISA saving clause has garnered the attention of the United States Supreme

Court in UNUM Life Insurance Co. v. Ward, 526 U.S. 358 (1999); Rush Prudential HMO,

Inc. v. Moran, 536 U.S. 355 (2002); and Kentucky Association of Health Plans, Inc. v. Miller,

538 U.S. 329 (2003). In Miller, the Court made what it called a “clean break” from its

previous reliance, albeit to varying degrees, on three factors used to determine whether a

state law regulates the “business of insurance” for purposes of the McCarran-Ferguson Act.

Miller, 538 U.S. at 341. The Court explained that its reliance on the three McCarran-
No. 08-3347                                                                                                       6

Ferguson factors in the ERISA context had “misdirected attention, failed to provide clear

guidance to lower federal courts, and . . . added little to the relevant analysis.” Id. at 339-40.

Articulating a new test, the Court in Miller held that to be deemed a law that “regulates

insurance,” a state law must satisfy two requirements: (1) “the state law must be specifically

directed toward entities engaged in insurance”; and (2) “the state law must substantially

affect the risk pooling arrangement between the insurer and the insured.” Id. at 342.

        Applying the test from Miller, the district court found that both requirements were met

in the case of Ohio Rev. Code § 3911.06, which provides that:

               No answer to any interrogatory made by an applicant in his application
        for a policy shall bar the right to recover upon any policy issued thereon, . . .
        unless it is clearly proved that such answer is willfully false, that it was
        fraudulently made, that it is material, and that it induced the company to issue
        the policy, that but for such answer the policy would not have been issued, and
        that the agent or company had no knowledge of the falsity or fraud of such
        answer.

In doing so, the district court acknowledged this court’s decision in Davies—which held that

a similar Ohio statute fell outside the savings clause—but found that the reasoning in Davies

had been implicitly overruled by the Supreme Court’s subsequent decisions in Ward and

Miller.3 Davies v. Centennial Life Ins. Co., 128 F.3d 934 (6th Cir. 1997). For the reasons

that follow, we agree.4

        3
           The statute at issue in Davies, Ohio Rev. Code § 3923.14, similarly provides that the falsity of a
statement in the application for sickness and accident insurance shall not bar the right to recovery “unless
it is clearly proved that such false statement is willfully false, that it was fraudulently made, that it materially
affects either the acceptance of the risk or the hazard assumed by the insurer, that it induced the insurer to
issue the policy, and that but for such false statement the policy would not have been issued.”
        4
          Although Davies has been cited in two recent cases, neither case addressed the continuing validity
of its reasoning or even involved interpretation of ERISA’s saving clause. See Metro. Life Ins. Co. v.
Conger, 474 F.3d 258, 267 (6th Cir. 2007); Taylor v. Visteon Corp., 149 F. App’x 422, 426 (6th Cir. 2005).
No. 08-3347                                                                                     7

       1.      Specifically Directed

       The first requirement under Miller is that the state law be “specifically directed toward

entities engaged in insurance.” 538 U.S. at 342. In Davies, this court applied the previously

articulated test that asked, first, whether the state law was “‘ specifically directed’ toward the

insurance industry.” Davies, 128 F.3d at 941 (quoting Pilot Life Ins. Co. v. Dedeaux, 481

U.S. 41, 50 (1987)). This court noted that although § 3923.14 appeared, at first glance, to

be specifically directed at the insurance industry, that was not necessarily the case since the

statute had “its roots firmly planted in the general principles of Ohio contract law.” Id.

Having said that, however, the court in Davies concluded only that this was a “close

question.” As the district court recognized, this reasoning is undermined by the Supreme

Court’s subsequent decision in Ward.

       Specifically, the Court in Ward concluded that California’s notice-prejudice

rule—which prevents an insurer from denying a claim as untimely unless it was prejudiced

by the delay—was saved from preemption by § 514(b)(2)(A). Applying the first prong of

the pre-Miller test, the Court distinguished the Mississippi law that was found not to be

specifically directed toward the insurance industry in Pilot Life and held that California’s

notice-prejudice rule was specifically directed toward the insurance industry. “It is no doubt

true that diverse California decisions bear out the maxim that ‘law abhors a forfeiture’ and

that the notice-prejudice rule is an application of that maxim. But it is an application of a

special order, a rule mandatory for insurance contracts, not a principle a court may pliably

employ when the circumstances so warrant.” Ward, 526 U.S. at 370-71.
No. 08-3347                                                                                  8

       Here, § 3911.06 is firmly applied to insurance contracts and prevents an insurer from

denying coverage for an insured’s innocent misrepresentation. Plaintiff emphasizes that §

3911.06, previously designated Ohio Rev. St. § 3635, was enacted for the purpose of

abrogating the general principle that an innocent misrepresentation would render an

insurance policy void. See John Hancock Life Ins. Co. v. Warren, 51 N.E. 546, 547 (Ohio

1898). We find that, like the notice-prejudice rule in Ward, § 3911.06 is an application of

a special order, a rule mandatory for life insurance contracts, and not a principle that may be

broadly applied. The district court did not err in finding, notwithstanding Davies, that §

3911.06 is a state law “specifically directed toward entities engaged in insurance.” Miller,

538 U.S. at 342.

       2.     Substantially Affect Risk Pooling Arrangement

       The second part of the pre-Miller test asked whether the state law regulated the

“business of insurance” as that term is defined for purposes of the McCarran-Ferguson Act.

Davies, 128 F.3d at 940-41. The three McCarran-Ferguson criteria, in turn, ask whether the

state law has the effect of transferring or spreading policyholder risk; whether the state law

regulates an integral part of the policy relationship; and whether the state law is limited to

entities within the insurance industry. Id. at 940. Finding that none of these factors were

present, the court in Davies concluded in part that the statute did not “spread” policyholder

risk because “[a]lthough it forces the insurer to bear the legal risks associated with innocent

misrepresentations in an insurance application, § 3923.14 does not alter the risks for which

the insurer and insured originally contracted—specific accident and medical costs.” Id. at
No. 08-3347                                                                                                9

942.

        Miller, however, made a “clean break” from the McCarran-Ferguson factors and

requires only that “the state law must substantially affect the risk pooling arrangement

between the insurer and the insured.” Miller, 538 U.S. at 342 (emphasis added). The Court

in Miller held that, by expanding the number of providers from whom an insured may receive

health services, Kentucky’s “any willing provider” statute “alter[s] the scope of permissible

bargains between insurers and insureds in a manner similar to the mandated-benefit laws we

upheld in Metropolitan Life, the notice-prejudice rule we sustained in [Ward], and the

independent-review provisions we approved in Rush Prudential.” 538 U.S. at 338-39.

        Particularly pertinent to this case is the Court’s clarification that this requirement

“does not require that the state law actually spread risk.” Id. at 339 n.3 (emphasis added).

Specifically, the Court added that “[t]he notice-prejudice rule governs whether or not an

insurance company must cover claims submitted late, which dictates to the insurance

company the conditions under which it must pay for the risk that it has assumed. This

certainly qualifies as a substantial effect on the risk pooling arrangement between the insurer

and insured.” Id. Similarly, § 3911.06 alters the scope of permissible bargains by dictating

the conditions under which the insurer may deny recovery for misrepresentations in the

application for life insurance. The district court did not err in finding that the second Miller

requirement was met in this case.5


        5
          We recognize that, even after Miller, the Fifth Circuit adhered to its pre-Miller view with respect
to the spreading of risk requirement in Provident Life & Accident Insurance Co. v. Sharpless, 364 F.3d 634,
640-41 (5th Cir. 2004). Our reading of Miller, however, cannot be reconciled with the conclusions in
Davies or Sharpless.
No. 08-3347                                                                                 10

       3.     Conflict Preemption

       Finally, Connecticut General correctly argues that the saving clause must be

interpreted in light of the preemptive force of the comprehensive enforcement scheme in §

502(a) of ERISA. 29 U.S.C. § 1132(a). As recognized in Pilot Life and Rush Prudential,

“[u]nder ordinary principles of conflict pre-emption, . . . even a state law that can arguably

be characterized as ‘regulating insurance’ will be pre-empted if it provides a separate vehicle

to assert a claim for benefits outside of, or in addition to, ERISA’s remedial scheme.” Aetna

Health, Inc. v. Davila, 542 U.S. 200, 217-18 (2004). There is no suggestion, however, that

application of § 3911.06 as a rule of decision in any way duplicates, supplements, or

supplants ERISA’s civil enforcement remedies. Conflict preemption under § 502(a) is not

implicated when the state law simply supplies the relevant rule of decision in an ERISA

claim for benefits under § 502(a)(1)(B). Ward, 526 U.S. at 376-77.

B.     Conflict of Interest

       An inherent conflict of interest exists when, as in this case, an insurance company is

both the administrator determining eligibility for benefits and the insurer responsible for

paying the benefits out of its own pocket. Glenn, 128 S. Ct. at 2346. The Court in Glenn

made clear that the significance of the conflict to that determination will depend on the

circumstances of each case. Id. at 2346. “[A]ny one factor will act as a tiebreaker when the

other factors are closely balanced, the degree of closeness necessary depending on the

tiebreaking factor’s inherent or case-specific importance.” Id. at 2351. A conflict of interest

“should prove more important (perhaps of great importance) where circumstances suggest
No. 08-3347                                                                                   11

a higher likelihood that it affected the benefits decision” and “less important (perhaps to the

vanishing point) where the administrator has taken active steps to reduce potential bias and

to promote accuracy.” Id. Conceding that such a conflict existed in this case, Connecticut

General makes two distinct arguments: first, that it was error to allow discovery concerning

the conflict; and, second, that it was error to take the conflict into consideration absent proof

establishing that the conflict affected the benefit decision.

       The Court in Glenn rejected the latter argument and held that a reviewing court should

consider the conflict as one of many factors in determining whether the benefit denial was

an abuse of discretion. Id. at 2346; see also id. at 2353 (Roberts, C.J., dissenting) (“I would

instead consider the conflict of interest on review only where there is evidence that the

benefits denial was motivated or affected by the administrator’s conflict.”). In addressing

how the conflict ought to be taken into account, the Court provided the following

admonition:

               Neither do we believe it necessary or desirable for courts to create
       special burden-of-proof rules, or other special procedural or evidentiary rules,
       focused narrowly upon the evaluator/payor conflict. In principle, as we have
       said, conflicts are but one factor among many that a reviewing judge must take
       into account. Benefits decisions arise in too many contexts, concern too many
       circumstances, and can relate in too many different ways to conflicts—which
       themselves vary in kind and in degree of seriousness—for us to come up with
       a one-size-fits-all procedural system that is likely to promote fair and accurate
       review. Indeed, special procedural rules would create further complexity,
       adding time and expense to a process that may already be too costly for many
       of those who seek redress.

Id. at 2351. Accordingly, it was not error for the district court to consider the conflict as a

factor in determining whether the denial of benefits was an abuse of discretion without
No. 08-3347                                                                                 12

requiring proof that the conflict affected the benefit decision.

       We review for abuse of discretion the district court’s decision to allow limited

discovery concerning the conflict of interest. Green v. Nevers, 196 F.3d 627, 632 (6th Cir.

1999). In reviewing the merits of a decision denying ERISA benefits, the court is limited to

the administrative record available to the administrator at the time of final decision. Wilkins

v. Baptist Healthcare Sys., 150 F.3d 609, 615 (6th Cir. 1998); Marks v. Newcourt Credit

Group, Inc., 342 F.3d 444, 457 (6th Cir. 2003). An exception is recognized, however, when

evidence outside the record “is offered in support of a procedural challenge to the

administrator’s decision, such as an alleged lack of due process afforded by the administrator

or alleged bias on its part.” Wilkins, 150 F.3d at 619 (Gilman, J., concurring). “This also

means that any prehearing discovery at the district court level should be limited to such

procedural challenges.” Id.

       We have noted in a few ERISA cases that discovery might have been appropriate

under the circumstances. See Kalish, 419 F.3d at 507; Calvert v. Firstar Fin., Inc., 409 F.3d

286, 293 n.2 (6th Cir. 2005). In other cases, we have affirmed the denial of discovery and

explained that a “mere allegation of bias is not sufficient to permit discovery under Wilkins’

exception.” Putney v. Med. Mut. of Ohio, 111 F. App’x 803, 807 (6th Cir. 2004); see also

Likas v. Life Ins. Co. of N. Am., 222 F. App’x 481, 486 (6th Cir. 2007); Huffaker v. Metro.

Life Ins. Co., 271 F. App’x 493, 504 (6th Cir. 2008). Although Connecticut General argues

that these cases should be interpreted to impose a threshold evidentiary showing of bias as

a prerequisite to discovery under Wilkins, the Supreme Court’s admonition in
No. 08-3347                                                                                               13

Glenn discouraging the creation of special procedural or evidentiary rules for evaluating

administrator/payor conflicts of interest counsels against it. That does not mean, however,

that discovery will automatically be available any time the defendant is both the administrator

and the payor under an ERISA plan. The limitation on discovery recognized in Wilkins is

a result of the determination that matters outside the administrative record are ordinarily not

relevant to the court’s review of an ERISA benefit decision. District courts are well-

equipped to evaluate and determine whether and to what extent limited discovery is

appropriate in furtherance of a colorable procedural challenge under Wilkins. Plaintiff

offered more than a mere allegation of bias, and the district court did not abuse its discretion

by allowing plaintiff to conduct limited discovery concerning the conflict that existed in this

case.6

C.       Abuse of Discretion

         Applying § 3911.06 as the substantive rule of decision, and considering the conflict

in this case, we must determine whether the decision to rescind coverage for material

misrepresentation was arbitrary and capricious. The decision will not be found to be

arbitrary and capricious “so long as ‘it is possible to offer a reasoned explanation, based on

the evidence, for a particular outcome.’” Kalish, 419 F.3d at 506.

                [A]n insurer can satisfy the requirements of [§] 3911.06, so as to
         establish an answer to an interrogatory by an applicant as a bar to recovery
         upon a policy, by clearly proving that


         6
         Although Connecticut General also complains that plaintiff was permitted “essentially unlimited
discovery,” the district court’s order allowed limited discovery into the post-claim underwriting that
provided the basis for the decision denying plaintiff’s claim for benefits. We will not review the scope of
the specific discovery requests because there appears to have been no objection raised in the district court.
No. 08-3347                                                                                           14

                (1)     the applicant willfully gave a false answer

                (2)     such answer was made fraudulently

                (3)     but for such answer the policy would not have been issued and

                (4)     neither the insurer nor its agent had any knowledge of the falsity
                        of such answer.

Jenkins v. Metro. Life Ins. Co., 173 N.E.2d 122, 125 (Ohio 1961). When there is no evidence

that the insured made an honest mistake, the insured’s false statement will be deemed to have

been willfully false and fraudulently made as a matter of law. Id. at 126. Recent decisions

interpreting § 3911.06 have held that an insurer is not required to prove fraudulent

intent—only that the applicant knowingly provided a false answer. Spencer v. Minn. Life Ins.

Co., 493 F. Supp.2d 1035, 1038 (S.D. Ohio 2007) (citing Blakely v. Security Dollar Bank,

No. 2000-T-105, 2001 WL 848581 at *3 (Ohio Ct. App. 2001)).7

        When the insured died within the two-year contestability period, Connecticut General

conducted a misrepresentation review and rescinded the additional coverage for failure of

the insured to disclose her full medical history. The initial denial was based on Kristen

Johnson’s failure to disclose that she was diagnosed with hypertension in 2002 and that she

had a history of palpitations, asthma and shortness of breath, and polycystic ovarian disease.

The final denial in June 2006 indicated more specifically that coverage would have been

denied if Kristen Johnson had disclosed “her full medical history of hypothyroidism,

hypertension and palpitations.” In the course of the litigation, Connecticut General conceded


        7
         It is not clear whether federal common law would impose a less onerous burden upon an insurer
seeking to rescind coverage for material misrepresentation. See, e.g., Shipley v. Arkansas Blue Cross and
Blue Shield, 333 F.3d 898, 902-04 (8th Cir. 2003) (applying federal common law).
No. 08-3347                                                                                                 15

that Kristen Johnson had no prior history of palpitations or polycystic ovarian disease.8

Connecticut General also clarified that it was specifically the combination of hypothyroidism

and hypertension that would have resulted in a complete denial of coverage if it had been

disclosed. Since her hypothyroidism was disclosed, the critical question for us is whether it

was arbitrary and capricious, taking into account the existing conflict of interest, for

Connecticut General to conclude from the evidence before it that Kristen Johnson knowingly

failed to disclose a prior diagnosis or treatment for “high blood pressure” in the application

for additional coverage.

        The enrollment form, signed by Kristen Johnson on November 15, 2003, asked, in

pertinent part, whether: “During the last five years, has the proposed insured been diagnosed

with or received treatment by/from a member of the medical profession for any of the

conditions listed in questions below?” Kristen Johnson marked “No” in response to Question

B, which listed conditions including “high blood pressure,” “shortness of breath,” and “heart

murmur.” She answered “Yes” to Question C, which asked about “thyroid disorder,” and

other conditions like “asthma,” or “other disease or disorder of the respiratory tract.” In the


        8
          This series of revisions to the stated basis for rescinding Johnson’s coverage is significant. In
reviewing Johnson’s appeal, Connecticut General disavowed its initial determination that Kristen Johnson
failed to disclose her history of asthma and polycystic ovarian disease. In fact, during her deposition
testimony, Kimberly Ruch, the claims underwriter who reviewed Johnson’s claim, expressly acknowledged
that it was a mistake to conclude that Kristen Johnson’s medical records indicated that she had been
“diagnosed” with either condition. And during this litigation, Connecticut General also has retreated from
its position that Kristen Johnson failed to disclose her history of heart palpitations. Standing alone, these
mistakes do not show that Connecticut General’s review process was influenced by a conflict of interest, and
probably are insufficient to demonstrate that its decision to deny Johnson’s claim was arbitrary or capricious.
Nevertheless, these mistakes “raise questions about the thoroughness and accuracy of the benefits
determination,” and thus are another “factor to consider in our overall assessment” of the quality of
Connecticut General’s review. Calvert v. Firstar Fin., Inc., 409 F.3d 286, 295 (6th Cir. 2005). A review
marred by numerous oversights and mistakes may result in an arbitrary and capricious decision. Id.
No. 08-3347                                                                                  16

space provided, she stated that she had hypothyroidism starting in April 2002, and was

receiving ongoing treatment with Synthroid. In signing, the insured attested that her

statements were true and correct to the best of her knowledge. The medical questionaire

completed on December 26, 2003, asked: “Have you ever had or been told you had high

blood pressure, heart or lung disease?” The insured indicated “No,” and listed under details

“Appendectomy – 1-82” and “Hypothyroidism – 4-02.” Coverage was approved.

       To be sure, there is no dispute that in August 2004, after the application and before

her death, Kristen Johnson was diagnosed with hypertension and began treatment with

Diovan. Dr. Coleflesh made the diagnosis in August 2004, and Dr. Morisetty indicated

hypertension as a current diagnosis in September 2004. These reports are part of the

administrative record. Dr. Morisetty’s report also related that the insured had a history of

“erratic blood pressure” in April 2002. Dr. Morisetty’s report specifically related that Kristen

Johnson had seen “an endocrinologist because of erratic blood pressure and feeling dizzy

with near syncope [fainting] after the first pregnancy,” but said “[t]hey could not find a

reason for this.” This is the history that Connecticut General claims the insured knowingly

failed to disclose in response to the questions about high blood pressure.

       Indeed, Connecticut General’s denial letter referenced a medical report dated July 2,

2002, in which Dr. Nashtawati stated that “during her pregnancy, she had a lot of problems

with blood pressure and had a lot of fainting and [a] workup for that including tilt table test

and echocardiogram.” The same report went on to state that: “Her labile blood pressure with

fainting is now gone.” Neither this report, nor Dr. Morisetty’s report two years later, states
No. 08-3347                                                                                  17

that she had or was treated for hypertension in 2002. Rather, these reports reflect that Kristen

Johnson experienced “problems with blood pressure,” experienced “erratic” or “labile” blood

pressure, and had symptoms of near syncope or fainting.

       Connecticut General’s underwriting materials define “hypertension” as “sustained

elevation in blood pressure above that considered acceptable for the individual’s age and

gender.” Also, normal blood pressure is defined as less than 140/85 mmHg. Connecticut

General’s medical underwriting guidelines also expressly distinguish sustained hypertension

from labile hypertension, stating that “[l]abile (or ‘white coat’) hypertension” is defined by

“a fluctuating blood pressure with some levels clearly elevated,” and noting that the

condition “may evolve into sustained hypertension.” The underwriter who recommended

rescission testified in discovery that “labile” blood pressure refers to changing blood

pressure, up or down, and acknowledged that having labile blood pressure is not the same

as having hypertension. Further, as the district court observed, the administrative record

included three normal blood pressure readings taken during the 18-month period preceding

her application for additional coverage. None of them were recorded while she was

prescribed medication for high blood pressure. Specifically, the administrative record

reflects a blood pressure reading of 102/62 on July 2, 2002; a blood pressure reading of

114/78 on January 16, 2003; and a blood pressure reading of 124/78 at the time of the

paramedical exam on December 26, 2003. It was not until after the insurance was in force

that plaintiff was diagnosed with hypertension and began to take medication to control her

high blood pressure.
No. 08-3347                                                                                18

       It is apparent from the wording of the final denial—stating that the insured had

“advised her physician that she was hospitalized in 2002 for hypertension”—that Connecticut

General was relying on the records of Dr. Parepally. Specifically, a November 29, 2004

letter sent by Dr. Parepally to Dr. Morisetty reported that the insured had preeclampsia with

her first child 2 ½ years earlier, had been taking Diovan for high blood pressure for the last

four months, and “was diagnosed with hypertension in 2002.” A handwritten notation on a

medical intake form of the same date noted under hospitalizations: “1981 Apendect” and

“2002 Hypertension.” Another handwritten chart, however, noted more vaguely that she had

a 2002 hospitalization for “Blood Pressure.”

       As the district court emphasized, these references were based on the history recorded

in November 2004, after she had been diagnosed and was being treated for hypertension, and

those brief notations in the history alternately referenced “hypertension” and “blood

pressure.” Considering that the insured apparently explained more fully to Dr. Morisetty in

September 2004, just a few months before seeing Dr. Parepally, that what she experienced

were problems with erratic blood pressure, dizziness, and near syncope, we find that the

statement in Dr. Parepally’s report cannot provide a reasoned basis for concluding that the

insured knowingly failed to disclose that she had been hospitalized for or diagnosed with

hypertension or high blood pressure in 2002. We find that Connecticut General’s reliance

on these records, to the exclusion of more specific histories provided regarding the same

episode and three normal blood pressure readings over the 18-month period that preceded

the application, was arbitrary and capricious.
No. 08-3347       19

      AFFIRMED.
No. 08-3347                                                                                 20

       COOK, Circuit Judge, dissenting. With “the critical question for us [being] whether

it was arbitrary and capricious . . . for Connecticut General [“CG”] to conclude from the

evidence before it that Kristen Johnson knowingly failed to disclose a prior diagnosis or

treatment for ‘high blood pressure’ in the application for additional coverage,” (Majority Op.

at 15), I would hold that CG’s administrative action withstands our least demanding

scrutiny—arbitrary-and-capricious review. See Hunter v. Caliber Sys., Inc., 220 F.3d 702,

710 (6th Cir. 2000).


       Despite setting up the issue as concerning Johnson’s failure to disclose any prior

diagnosis or treatment for high blood pressure, the majority reaches its decision to label CG’s

rescission arbitrary and capricious by scrutinizing the administrative record for the timing of

a definitive diagnosis of hypertension. Focusing on hypertension varies the question and

skews the answer. If hypertension were the condition that the enrollment application and

questionnaire probed, I could agree with the majority that CG’s medical underwriting review

should have discounted any post-application diagnoses as irrelevant. But because the

administrative record provides ample bases for the conclusion that Johnson knowingly failed

to disclose “a prior diagnosis or treatment for ‘high blood pressure,’” CG’s decision cannot

be judged arbitrary and capricious.


       First, Johnson’s answers during the supplemental enrollment process contradict what

the administrative record shows she told her own doctors. She admitted to Dr. Nashawati

on July 2, 2002—over a year prior to completing the forms at issue here—that she had “a lot
No. 08-3347                                                                               21

of problems with blood pressure” during pregnancy, including labile blood pressure. Labile

blood pressure includes erratic fluctuations between low and high pressure, and includes a

hypertensive element. (Ruch Dep. at 101-02). Yet, she did not disclose any blood pressure

problems on her application. And on a follow-up questionnaire, she answered “no” to a

question that asked: “Have you ever had or been told you had high blood pressure, heart or

lung disease?” This record evidence alone should foreclose finding that CG arbitrarily and

capriciously concluded that Johnson knowingly failed to disclose prior high blood pressure.

But CG relied on other evidence too.


       The administrative record confirms that during her first pregnancy—just nineteen

months before applying for the supplemental insurance—Johnson suffered bouts of

preeclampsia, a pregnancy-related disorder “characterized by high blood pressure and the

presence      of   p r o t e in   in   the   u r i n e .”   See   Preeclampsia   Foundation,

http://www.preeclampsia.org/about.asp (emphasis added). Following her postpartum visit,

Dr. Patricia Rubin wrote:


       She states that during the last trimester of her pregnancy, she began to get
       hypertensive . . . . Here in the hospital she had been on Aldomet and had also
       been on magnesium sulfate drip for hypertension. She states in the last
       trimester of her pregnancy she had also been having some problems with
       headache which may be attributable to her hypertension. She states that prior
       to her pregnancy, she did not have any problems with high blood pressure.
No. 08-3347                                                                                22

And Johnson later reported this prior preeclampsia, as well as “erratic blood pressure and

feeling dizzy with near syncope [fainting] after the first pregnancy” to Dr. Morisetty. Like

her labile blood pressure, her problems with preeclampsia alone—undisclosed in the

application process—support CG’s conclusion that she knowingly failed to disclose “prior

diagnosis or treatment for high blood pressure.”


       Johnson’s labile blood pressure and preeclampsia history also explain Dr. Parepally’s

report of “hypertension” and the reasonableness of CG’s reliance on it. The district court and

majority alike criticize this report, the district court noting that “[n]othing shows what

supports Parepally’s history.” But taken in context, Dr. Parepally’s conclusion looked to

Johnson’s history of labile blood pressure and preeclampsia—both conditions with

hypertensive components, even though they are not by definition “hypertension.” And the

fact that Dr. Parepally’s report recited that Johnson told him that she had been hospitalized

for   blood   pressure   in   2002—the    year   before   she   applied   for   supplemental

coverage—supplied CG with insight as to what Johnson knew about her own medical history.

It was not unreasonable then for CG to extrapolate from Parepally’s report that Johnson knew

of her high-blood-pressure treatment and diagnosis when she completed the application for

additional coverage.


       In disregarding the pertinent question posed by the enrollment form and the

application, prior diagnosis or treatment for high blood pressure, in favor of a focus on
No. 08-3347                                                                                 23

hypertension, the majority offers the following explanation for rejecting CG’s reasons for

denying coverage:


       Neither [Dr. Parepally’s] report, nor Dr. Morisetty’s report two years later,
       states that she had or was treated for hypertension in 2002. Rather, these
       reports reflect that Kristen Johnson experienced ‘problems with blood
       pressure,’ experienced ‘erratic’ or ‘labile’ blood pressure, and had symptoms
       of near syncope or fainting.


(Majority Op. at 16). In the same vein, the majority highlights the pre-2002 records

indicating “labile” blood pressure, not hypertension—offering the rationale that “having

labile blood pressure is not the same as having hypertension.” (Majority Op. at 17). But the

majority set out to ask “whether it was arbitrary and capricious . . . for Connecticut General

to conclude . . . that Johnson knowingly failed to disclose . . . ‘high blood pressure’,” not

hypertension. The district court made the same mistake, examining the record for signs of

hypertension when it should have focused on diagnosis or treatment for high blood pressure.


       CG’s application process sought truthful answers regarding Johnson’s medical history,

including any history of “high blood pressure,” the common term typically understood by lay

persons. It probed a broader range of medical conditions than just hypertension—presumably

to evaluate a broader range of underwriting risks, such as a history of elevated blood pressure

problems. See MacKenzie v. Prudential Ins. Co. of Am., 411 F.2d 781, 782 (6th Cir. 1969)

(explaining that underwriters rely on truthful application answers to properly evaluate

whether to issue coverage). When Kristen Johnson died at age 37, within two years of
No. 08-3347                                                                              24

applying for $174,000 of additional life insurance, from a condition that, if disclosed in

conjunction with her hypothyroidism, would have disqualified her under CG’s underwriting

guidelines, CG appropriately reviewed whether Johnson knew about medical history related

to high blood pressure. Maybe CG would have approved the additional coverage even if she

disclosed prior high blood pressure. But the disclosure, to which CG was contractually

entitled, would have given CG a fair opportunity to evaluate whether the labile blood

pressure, preeclampsia, or both, when experienced by an applicant disclosing thyroid

problems, warranted either further inquiry or rejection due to the additional risk.


       Faced with this administrative record evidencing Johnson’s knowing failure to

disclose “prior diagnosis or treatment for high blood pressure,” I cannot agree to the

majority’s labeling CG’s decision as arbitrary and capricious and thus respectfully dissent.

I would reverse the district court judgment.
