Failure to furnish evidence of insurability (EOI) has long been a means for insurance companies to avoid payment of claims.  That is especially the case with group insurance typically governed by ERISA.  EOI is an issue when someone seeks to obtain group insurance above certain levels or applies for group insurance after the open enrollment or commencement of employment. It is understandable that the insurance company does not wish to take on coverage for an undisclosed risk, such as a recently arising physical issue. Fair enough.

However there have been many times when the insurer goes too far with EOI.  Usually this involves a situation where the insured believes the coverage is in place and in fact has been paying premiums for the coverage for some time.  A recent case shows the aggressive posture of Prudential Insurance Company attempting to use EOI to seek dismissal of a lawsuit.  There were several mistakes made and the insured was given the impression that short-term disability and long-term disability were in place and in fact premiums were deducted for at least 18 months. Raising EOI under these circumstances is not fair to the insured.

In Hamilton v. Logic20/20, Inc., No. C24-916RSL, 2025 U.S. Dist. LEXIS 266756 (W.D. Wash. Dec. 29, 2025), Prudential and Logic20/20 sought dismissal of a lawsuit for ERISA disability benefits under Rule 12 (b)(6) of the Federal Rules of Civil Procedure. The plaintiff had alleged that for 2 years she had a reasonable belief that she was covered by disability insurance through her workplace and in fact paid premiums for 18 months. When she first went to work for her employer, she was under age 25 and could still be on her parent's insurance so she was advised not to sign up for the company insurance until she turned 26. It was not explained to her at that time that signing up later would require evidence of insurability. When she did sign up, she was then informed of the EOI requirement. However, through a series of mistakes the premiums were subsequently deducted from her paycheck without the required EOI. She assumed EOI was waived and this was to rectify the unfairness of being told to wait for insurance.

She was exposed to Covid and then eventually received a diagnosis of long Covid. This also aggravated pre-existing conditions of irritable bowel syndrome and Ankylosing Spondylitis.  She filed a claim and eventually she was paid all short-term disability benefits. She then transitioned her claim into long-term disability. Even though Prudential received 18 months of premiums, it refused to pay the claim. After exhausting all claim remedies, Ms. Hamilton filed the lawsuit. She alleged several claims including breach of fiduciary duty, for failing to disclose that it would insist on the EOI requirement while at the same time collecting premiums. Prudential and Logic20/20 sought dismissal of that lawsuit. Both also contended that Ms. Hamilton was not a plan participant due to lack of EOI, and therefore she had no statutory standing.

In response, the plaintiff objected to the motions but also requested the court to take judicial notice of several matters which involved EOI:

1.  The April 18, 2023, Settlement Agreement between the Prudential Insurance Company of America and the United States Department of Labor"; (This involved EOI issues where Prudential was investigated by the DOL for its practice of using EOI to deny claims after accepting premiums for 3 months or more.)

2. The Employee Benefits Security Administrator April 19, 2023 news release, 'US Department of Labor reaches settlement with Prudential Insurance Company of America to revise life insurance practices that denied claims'.

3. The March 13, 2023 ORDER Unsealing Order Following Court Trial in Cho v. First Reliance Standard Life Insurance Company, Case No. 2:18-cv-04132-MWF-SK, Dkt. No. 69, U.S.D.C. Central District of California; and

4. The March 5, 2020 ORDER Following Court Trial in Cho v. First Reliance Standard Life Insurance Company, Case No. 2:18-cv-04132- MWFSK, Dkt. No. 72, U.S.D.C. Central District of California." Id.

The court granted the motion to take judicial notice.  Those documents clearly noted the pervasiveness of the EOI problem. It was on the rise. While the EOI defense has been increasingly used, it also appears that there is push back on that, when equitable issues arise. Challenging the EOI requirement because of a breach of fiduciary duty has strict time limits that run upon knowledge of unfairness or when it should have been reasonably known. The EOI game is an old one, but it can be tricky to play. Watch for it and take action sooner than later.