Articles Posted in Life Insurance

Life Insurance Lawyers should find this interesting in case they did not already know it.  It is a 2023 opinion from the U.S. Court of Appeals for the Fifth Circuit.  The opinion is styled, In The Matter Of Frank W. Gordon; Judith B. Gordon, John Patrick Lowe v. Frank W. Gordon; Judith B. Gordon.

Lowe is the duly appointed Chapter 7 Trustee of the bankruptcy estate of the Gordons.

The Gordons claimed the surrender value of two life insurance policies as exempt from the bankruptcy proceedings under Texas state law..  Lowe objected to the exemption and the bankruptcy court overruled the objection.  This appeals Court affirms the District Court ruling.

Life Insurance Attorneys need to understand that an employer cannot make itself the beneficiary of an employees life insurance policy.  This is discussed in a 1998, opinion from the 14th District Court of Appeals.  The opinion is styled, Tamez, et al v. Certain Underwriters at Lloyd’s, London, International Accident Facilities, Inc., et al.

In 1991, National Convenience Stores (NCS) purchased an accidental death insurance policy from Lloyd’s.  The policy provided that Lloyd’s would pay NCS $250,000 upon the accidental death of any NCS Texas employee killed during the course and scope of employment with NCS.  NCS did not have workers’ compensation insurance.

Ramon Tamez and Cheryl McCarthy were both killed while employed by NCS, although it was disputed whether McCarthy was in course and scope.  NCS filed a claim for proceeds under the policy as a result of the death of both individuals.  NCS was paid by Lloyd’s, but NCS later returned the benefits paid as a result of McCarry’s death stating McCarty was not in course and scope at the time of her death.  The representatives of both Tamez and McCarty sued Lloyd’s and NCS in an attempt to recover the benefits under the policy.  The primary issue in dispute is whether NCS had an insurable interest in the life of its employees.  The causes of action asserted against Lloyd’s included breach of contract, breach of the duty of good faith and fair dealing, conspiracy, conversion, and violations of the Texas Insurance Code.  As to NCS, the representatives alleged that NCS held the insurance benefits in a constructive trust for their benefit.

Here is a 2004 opinion from the Dallas Court of Appeals that just does not seem right.  The opinion is styled, Royal Maccabees Life Insurance Company v. James.

The insurer was sued by the surviving spouse of a police officer seeking an additional 50,000 in life insurance proceeds after the insurer paid the basic $50,000 upon the officer’s death.  It was undisputed that the insured applied for and paid premiums for over four years for the additional $50,000 in coverage.  It was also undisputed, however, that the insurer never sent a letter to the insured approving the disputed benefit as required by the life insurance policy.  The insurer denied the additional $50,000 in coverage and refunded the premiums paid for this coverage.  The trial court entered judgment on the jury finding that the insurer breached the contract, committed fraud, and violated the DTPA, the Texas Insurance Code, and the duty of good faith and fair dealing.  The judgement included mental anguish damages, punitive damages, attorney’s fees and pre-judgment interest.  This appeal followed.

The Dallas Court of Appeals reversed and rendered judgment in favor of the insurer on the breach of contract, bad faith and the Insurance Code claims and remanded the remaining claims for a new trial.  The appellate court concluded that an insurer’s acceptance of premiums for additional life insurance coverage for more than four years prior to the insured’s death did not waive a policy provision that written approval from the insurer was required before the employee would be entitled to additional life insurance benefits.  he Court began it’s analysis by reviewing the breach of contract claim and recognizing well established principles of Texas insurance law holding that waiver and estoppel cannot be used to create insurance coverage.  The court reviewed policy language that the insured alleged was conflicting, ambiguous and supported a finding of coverage.  Applying equally well settled principles of Texas insurance law holding that jurists should attempt to harmonize two allegedly conflicting provisions, the court found that one of the provisions applied to the first $50,000 of coverage which did not require the insurer’s written approval, while the other provision required written approval for amounts above $50,000.

When a life insurance claim is denied due to non-payment of premiums, what can be done.  First, see an experienced life insurance lawyer.  Second, be aware of cases like this 2000 opinion from the San Antonio Court of Appeals.  It is styled, MacIntire v. Armed Forces Benefit Ass’n.

Linda and Scott MacIntire submitted a joint application for term life insurance to the Armed Forces Benefit Ass’n (AFBA) in April of 1996.  The payments were to be made automatically via a computerized bank deposit scheme, but for unknown reasons, the payments were never made.  The few payments made were not enough to keep the policy in force an it lapsed on March 31, 1998 according to AFBA.  Scott died from a terminal illness in August 1998 and Linda inquired regarding the policy in September of that year.  Upon discovery of the failed automatic deposit setup, Linda tried to pay delinquent payments directly to AFBA, but AFBA denied the payments and coverage, stating that Scott’s policy had already been canceled.  Linda sued AFBA, alleging violations of the Texas Insurance Code, the DTPA, breach of contract, negligence, breach of the duty of good faith and fair dealing, breach of implied warranty, ambiguity of contract, seeking to recover the death benefits and additional damages.  The trial court granted AFBA’s motion for summary judgment on the basis that no genuine issue of material fact existed.  Linda appealed, claiming that genuine issue of material fact existed in her claims of breach of contract, DTPA violations, Texas Insurance Code, breach of duty of good faith and fair dealing, and negligence.

The summary judgment in favor of AFBA was upheld.  The Appellate Court held that an Insurer had no duty to advise the insured of a cancellation due to nonpayment.  The Appellate Court held that the insurance contract was not ambiguous and the breach did not occur since the contract was no longer in force.  Regarding implied warranty, the Court held that “implied warranty for good and workman like performance was applicable to tangible goods and products, and no precedent existed for applying the doctrine to insurance companies.  Regarding the issue of good faith and fair dealing, the Court examined the two prong test used by the Texas Supreme Court: (1) there is an absence of a reasonable basis for denying or delaying payment of benefits under the policy and (2)the carrier knew or should have known that there was not a reasonable basis for denying the claim or delaying payment of the claim.  The Court ruled that AFBA had a reasonable basis for denying the claim.  Plaintiff also asserted claims under the DTPA and TExas Insurance Code, to which the Court stated that, if an insurer had a reasonable basis for denial of the claim – however erroneous – that the insurer enjoys immunity from statutory bad faith under the Texas Insurance Code and the DTPA.

Life Insurance Attorneys need to know this 2023 case from the United States Fifth Circuit Court of Appeals.

The law regarding denial of life insurance claims can be tough but for an experienced life insurance attorney there are many aspects of the law in this area of litigation that are favorable.  But some favorable laws doesn’t equate to an automatic win at trial.  The case at issue is styled, Mirna Guzman v. Allstate Assurance Company.  The resulting trial was not favorable to Guzman and an appeal followed.  Here is what the appeals court said.

Mirna Guzman sued Allstate after Allstate denied her claim for benefits based on Allstate’s assertion that Mr. Guzman lied on his application for life insurance when he answered in the negative his health history regarding his history of seizures, tobacco and nicotine use.

Can an insurance company be responsible for what the selling agent did that was wrong?  The answer is, it depends.

Because it depends on the actions or in-actions of the agent, a person must always get the advice of an experienced Life Insurance Lawyer.

Here is a 1999 opinion from the San Antonio Court of Appeals that provides some guidance under the particular facts of the case.  The opinion is styled, Noseff v. Tower Life Insurance Company.

Hey wait a minute, the life insurance company accepted premiums for over four years and now they are denying the claim.

Here is an interesting fact scenario from a 2004, Dallas Court of Appeals opinion.  The opinion is styled, Royal Maccabees Life Insurance Company v. James.

Here are some of the Facts in the case:  The insurance company was sued by a surviving spouse of a policy officer seeking an additional $50,000 in life insurance proceeds after the insurer paid the basic $50,000 upon the officer’s death.  It was undisputed that the insured applied for and paid premiums for over four years for the additional $50,000 in coverage.  It was also undisputed, however, that the insurer never sent a letter to the insured approving the disputed benefit as required by the insurance policy.  The insurer denied the additional $50,000 in coverage and refunded the premiums paid for this coverage.  The trial court entered judgment on the jury finding that the insurer breached the contract, committed fraud, and violated the DTPA, various sections of the Texas Insurance Code, and the duty of good faith and fair dealing.  The judgment included mental anguish damages, punitive damages, attorney fee’s and pre0judgment interest.  This appeal followed.

What if life insurance policy benefits use to a lapse in payment?  Talk to an experienced life insurance lawyer.

Here is a 2000, opinion from the San Antonio Court of Appeals dealing with this issue.  The opinion is styled, MacIntire v. Armed Forces Benefit Ass’n.

Here are the Facts:  Linda and Scott MacIntire submitted a joint application for term life insurance to the Armed Forces Benefit Ass’n (AFBA) in April of 1996.  The payments were made automatically via a computerized bank deposit scheme, but for unknown reasons, the payments were never made.  The few payments that the MacIntires did make were not enough to keep the policy in force and it lapsed on March 31, 1998 according to AFBA.  Scott MacIntire died from a terminal illness in August of 1998 and Linda inquired regarding the policy in September of that year.  Upon discovery of the failed automatic deposit setup, Linda tried to pay delinquent payments directly to AFBA, but AFBA denied the payments and coverage, stating that Scott’s policy had already been cancelled.  Linda sued AFBA, alleging violation of the Texas Insurance Code, violation of the DTPA, breach of contract, negligence, breach of duty of good faith and fair dealing, breach of implied warranty, ambiguity of contract, seeking to recover the death benefits and additional damages.  The trial court granted AFBA’s motion for summary judgment on the basis that no genuine issue of material fact existed.  Linda appealed, claiming that genuine issues of material fact existed in her claims for breach of contract, breach of implied warranty and ambiguity of contract, DTPA violations, Texas Insurance Code, Section 541.060, breach of duty of good faith and fair dealing, and negligence.

Life insurance claims that are denied by an insurance company should always be put in front of an attorney who handles life insurance claims.  The vast majority of the time an attorney experienced in handling life insurance claims can help.

Here is a 2005 opinion from the Fifth Circuit Court of Appeals that serve as an example of why claims denials should be presented to an experienced life insurance lawyer.  The opinion is styled Monumental Life Insurance Company v. Hayes-Jenkins.

Here are the Facts:  In November 2000, the insureds, husband and wife, purchased a house executing a mortgage note and an escrow agreement with the lender.  Two months later the lender, by agreement with the insurer, mailed an unsolicited application for a mortgage life insurance policy underwritten by the insurer.  All the enclosed materials promised a payoff of the mortgage balance up to $300,000 in the event of one of the insured’s death and emphasized a “no risk” 30 day trial.  The insureds promptly completed and mailed the application.  The husband died four days after the policy became effective, but before the mortgage company issued the first month’s premium payment and the wife demanded that the proceeds of the mortgage policy be applied to liquidate the remaining loan balance pursuant to the terms of the policy.  The insurer refused and filed a declaratory judgment action seeking a ruling that at the time of the husband’s death the policy was not in forced for failure by the insured to pay the required premium.  The wife counterclaimed against the insurer for breach of contract and violations of the Texas Insurance Code and DTPA.  She also filed a third-party complaint against the mortgage lender asserting claims for breach of the escrow agreement, negligence, and violations of the DTPA and Insurance Code.  The district court granted the insurer and the lender’s motion for summary judgement, dismissing all of the wife’s counterclaims and third party claims and this appeal followed.

Here is a 2007, United States Fifth Circuit Court of Appeals opinion dealing with life insurance claims and “Good Health” clauses.  The opinion is styled, Assurity Life Insurance Company v. Grogan.

The insured purchased a $1,000,000.00 whole life insurance policy from the carrier with the condition precedent for coverage that the policy did not go into effect until the “first full premium was paid during the Proposed Insured’s lifetime and continued good health.”  Shortly after purchasing the policy, the insured had a biopsy performed on a lump on his neck and was diagnosed with Hodgkin’s disease.  The insured died from complications a few months later.  The carrier brought a declaratory judgement action seeking a declaration that the life insurance policy never took effect due to the failure of a condition precedent.  The wife counter-claimed for breach of contract.  The carrier subpoenaed the insured’s medical records, which showed that the insured had ongoing medical treatment for issues related to the lump on his neck for the past several years.  The trial court held for the wife, finding that the insurance policy did take effect and that the wife was entitled to the proceeds.  The carrier appealed.

The Fifth Circuit Court of Appeals reversed, holding that the “good health” condition precedent for coverage had not been met because although the Hodgkin’s disease had not been officially diagnosed before the policy took effect, it had manifested itself earlier through the insured’s ongoing neck problems.  The court found that the “good health” condition precedent was well established in Texas law and this case presented no exception which warranted coverage.  The policy unambiguously stated that in order for it to take effect, the insured/proposed insured must make the first premium payment while in good health.