Life Insurance And Paperwork

Residents of Grand Prairie, Fort Worth, Arlington, Hurst, Euless, Bedford, and other places in Texas need to be able to read and understand the papers related to life insurance policies. The following case is a good example of this.
The case was decided in 2004, and was an opinion issued by the Dallas Court of Appeals. The style of the case is, Royal MacCabees Life Insurance Company v. Vicki James and The City of Mesquite. Here are some of the facts.
Donnie James was a police officer for the City of Mesquite who died on June 5, 1998. This dispute arises out of a group life insurance policy issued by Royal for City of Mesquite employees. Under the policy, an eligible employee could elect coverage in incremental amounts up to $100,000. It is contended that Donnie James was eligible for, elected, and paid premiums for $100,000 in benefits. There is no dispute as to the first $50,000 in benefits. Royal paid $50,000 after James death. The lawsuit arose out of Royal’s denial of the additional $50,000 in benefits for which Donnie James had paid premiums (through payroll deductions) for four years and ten months prior to his death.
Many of the facts are not in dispute. Donnie James had filled out and submitted an application for the disputed benefits and premium payments had been withheld from his check and paid to Royal. Royal had received these payments for almost five years. However, Royal never sent a letter approving the disputed benefits. After Donnie James’s death, Royal refunded the premiums it had collected.
Disputed evidence in the case was that Royal had requested additional information about Donnie from a doctor, but had no response. The doctors office testified that no such requests were to be found in the doctor’s files. Royal also produced a copy of an unsigned letter purportedly sent to the City of Mesquite disapproving Donnie’s application for lack of requested information. The City offered testimony that no such letter was in the City’s files. A Royal employee, Thomas Pinho, whose named appeared as signatory of the unsigned letter, testified that he did not recall writing the letter and would not have written such a letter as part of his employment duties at the time. Vickie James and The City of Mesquite offered evidence that eligible full time employees such as Donnie would be covered under the supplemental life insurance policy for amounts over $50,000 without written approval or review of evidence of insurability by Royal. Royal denied such representations were made.
At trial, the jury found Royal breached the insurance contract, violated the Deceptive Trade Practices Act, violated the Texas Insurance Code, breached its duty of good faith and fair dealing, and committed fraud. The jury also found that Royal acted knowingly, and awarded punitive damages and mental anguish damages. Royal then filed this appeal.
Royal had filed a motion for summary judgment on the grounds that, under the terms of the policy, there was no coverage as a matter of law. The court denied this motion.
In discussing the case, the court noted that there was no question, from the evidence submitted at trial, that Donnie complied with every obligation he had to submit information to Royal. There was also no question that no written approval was ever received from the company.
As Royal argued, the policy set forth a requirement for written approval. The “Requirement as to Good Health” section of the policy provided:
If a Certificateholder is eligible for an amount of life insurance in excess of $50,000, he must submit an individual health application and such other evidence of good health as may be required by the Company. It must be submitted to the Company at its Home Office.
a. If written approval is received from the Company, he will be eligible for the entire life and accident death and dismemberment coverage for his class shown on the Schedule of Benefits page.
b. If written approval is not received from the Company, he will be eligible for a maximum of $50,000 life insurance coverage.
There was an argument as to how the above language could be interpreted and as such under Texas law, it should be interpreted as to provide coverage.
The court in a lengthy discussion, discussed Texas law and how it applied to the policy language and to the facts in this case.
This case was reversed in some respects due to technical errors and remanded in other parts as to changes resulting from the parts of the case that were reversed. The case serves as a good case for lawyers to be aware of from a procedural aspect. The case is also a good example of the extent insurance companies will go to keep from paying a claim and why an experienced Insurance Law Attorney is needed. Without the attorney reviewing the policy and the facts of the case, the insurance company would simply get away without having to honor the life insurance contract.