Legal Alert: Federal District Court Validates Insurer's Retention of Policy Proceeds Until Receiving Proof of Death

more+
less-

On August 20, 2013, the United States District Court for the District of Massachusetts dismissed a putative class action over an insurer’s alleged failure to timely pay life insurance policy death benefits to beneficiaries. Feingold v. John Hancock Life Insurance Co., No. 1:13-cv-10185-JLT (D. Mass.). In granting the insurer’s motion to dismiss, the court affirmed the insurer’s practice of requiring life insurance policy beneficiaries to submit proof of death before making any payments under the policy at issue.

The lawsuit challenged the insurer’s alleged practice of holding policy proceeds until receiving proof of the insured’s death, arguing that the insurer acted unreasonably in failing to investigate whether Plaintiff’s mother had died. Plaintiff alleged that the insurer routinely consulted the Social Security Administration’s Death Master File (DMF) to check whether annuity holders had died, so the company could halt those annuity payments immediately. At the same time, Plaintiff alleged, the insurer failed to routinely use the same database to check whether life insurance policy holders were deceased, allowing the insurer to wrongfully delay paying beneficiaries.

The insurer moved to dismiss Plaintiff’s state consumer protection claims, as well as his claims for conversion, unjust enrichment, breach of fiduciary duty and declaratory relief, arguing that Plaintiff sought to “discard settled law” by requiring payment or escheatment of life insurance proceeds where a beneficiary has made no claim on the policy.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Topics:  Death Benefits, Insurers, Life Insurance

Published In: Insurance Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sutherland Asbill & Brennan LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »