Life Insurance

Rescission Of Insurance Policy

May 2, 2015 | Mark S. Humphreys

Texas insurance lawyers need to have an understanding about the reasons an insurance can properly rescind a policy or to put it another way – the reasons an insurance company cannot properly rescind a policy.

As a general principle, prior to a loss an insurance company has the right to rescind a policy procured through mutual mistake or fraud. This was the ruling in a 1931, case from the Amarillo Court of Appeals and is still good law. The case is styled, Forrester v. Southland Life Insurance Company.

The 1980, Texas Supreme Court case styled, Mays v. Massachusetts Mutual Life Insurance Company has stated that an insurance company may rescind a policy based on the insured’s misrepresentation, if the insurance company pleads and proves the following elements:

Life Insurance Claims Denial

April 12, 2015 | Mark S. Humphreys

Fort Worth life insurance lawyers need to read the 1983 case Gloria Cartusciello v. Allied Life Insurance Company of Texas. The case is from the Houston Court of Appeals [1st Dist.].

The facts are simple and virtually undisputed. Michael Cartusciello obtained a credit life insurance policy from the Allied after executing an application on March 7, 1978, which stated in pertinent parts as follows:

I hereby certify that I am in good health and gainfully employed and that my age is as stated above,… I certify that I have read and that the information provided hereinbefore to the best of my knowledge is true and I understand that any false statement, inaccuracy, or misrepresentation material to the risk, may be used by Allied Life Insurance Company of Texas to contest a claim. I have not been attended by a physician or been a patient in a hospital within the last 12 months preceding the date of this Application for any of the following impairments: Diseases of the (1) heart, (2) lungs or respiratory system, (3) stomach or digestive system, (4) brain or nervous system, or (5) cancer to any part of the body, except as follows:

There Must Be Intent To Deceive

April 5, 2015 | Mark S. Humphreys

Palo Pinto life insurance lawyers who handle life insurance claims that are denied need to read this case from the Houston Division of Texas Southern District. The case is styled, Kirk v. Kemper Investors Life Insurance Company. The case deals with misrepresentations made in an application for life insurance.

This case arises from a life insurance policy issued by Kemper Investors Life Insurance Company (“KILICO”) to Walta G. Kirk, on March 14, 2002. Ms. Kirk passed away on August 31, 2003, while the policy was in effect. Because her death occurred within two years of the policy’s issuance, KILICO conducted a routine investigation, which revealed that Ms. Kirk had been treated for chest pain, respiratory disorder, mental disorder, and uncontrolled high blood pressure. Ms. Kirk had denied that she had ever had or been treated for any of these conditions in her application for the KILICO life insurance policy. Based on these alleged misrepresentations, KILICO denied payment of any benefits on the policy.

The beneficiaries then filed this lawsuit. KILCO filed a motion for summary judgment saying stating Kirk misrepresented her medical conditions.

Misrepresentation – Knowledge of Agent

April 2, 2015 | Mark S. Humphreys

Dallas and Fort Worth Life insurance attorneys need to read this 2006, opinion from the United States District Court, Southern District of Texas, Houston Division. The style of the case is, Kirk v. Kemper Investors Life Insurance Company.

This case arises from a life insurance policy issued by Defendant Kemper Investors Life Insurance Company (“KILICO”) to Walta Kirk. Ms. Kirk passed away while the policy was in effect. Because her death occurred within two years of the policy’s issuance, KILICO conducted a routine investigation, which revealed that Ms. Kirk had been treated for chest pain, respiratory disorder, mental disorder, and uncontrolled high blood pressure. Ms. Kirk had denied that she had ever had or been treated for any of these conditions in her application for the KILICO life insurance policy. Based on these alleged misrepresentations, KILICO denied payment of any benefits on the policy.

An insurer’s actual knowledge of a misrepresentation by an insured will defeat a defense based upon misrepresentation. It is not enough, however, for a party seeking to collect insurance benefits to show that the insurer could have discovered the misrepresentations through due diligence or proper care. Rather, only actual knowledge on the part of the insurer will prevent the insurer from showing that it relied on a misrepresentation made by the insured.

Intent To Deceive

March 31, 2015 | Mark S. Humphreys

Life insurance attorneys in the Dallas and Fort Worth area need to know this 1991 case. It deals with how an insurance company must prove “intent to deceive” when asserting that an applicant for insurance has misrepresented their health in a life insurance policy. The case, from the Houston Court of Appeals [14th Dist.] is styled, Betty Flowers v. United Insurance Company of America.

This is an appeal from a summary judgment granted in favor of United.

The basic facts of the case are not in dispute. Betty and her husband, Edward Flowers, applied for and were issued a joint life insurance policy with United. In the application for the policy Mr. Flowers was asked a series of questions regarding his health history. In pertinent part, the question asked:

Misrepresentation In Life Insurance Application

March 29, 2015 | Mark S. Humphreys

Dallas life insurance lawyers want to know this case. It is from the San Antonio Court of Appeals and styled, Garcia v. John Hancock Variable Life Insurance Company.

This is an appeal of a summary judgment granted in favor of John Hancock.

In support of its motion for summary judgment, John Hancock submitted the following: in February and March of 1986, Garcia’s husband, Alfredo R. Garcia, applied for and was issued a life insurance policy with John Hancock. In two policy applications, Mr. Garcia was asked a series of questions regarding his health history. The first application, dated February 25, 1986, was signed by Mr. Garcia and an agent of the Insurance Company. On that application, Mr. Garcia represented that he had never been treated for or had any known indication of diabetes. He also represented that he (1) had not consulted a physician or been examined or treated at a hospital or other medical facility within the last five years; (2) was not being treated by a physician or taking any prescription drug; and (3) did not have a personal physician.

Life Insurance Beneficiary

January 25, 2015 | Mark S. Humphreys

Arlington insurance attorneys need to know when someone can collect on a life insurance policy as a beneficiary. A 1995, Eastland Court of Appeals opinion is worth reading. The style of the case is, Maris v. McCraw. Here is some information from the case.

The controlling issue in this circumstantial evidence case is whether there is sufficient evidence to show that the insured, a federal employee, filed before her death a signed beneficiary designation form with her employer. The policy provides that the life insurance proceeds are to be paid to the beneficiary designated by the employee in a signed and witnessed writing received before death “in the employing office.” If there is no designated beneficiary, the proceeds are to be paid to the widow or widower of the employee.

Donna Ann Maris died in 1987. Her personnel file did not contain a written beneficiary designation form signed by Maris designating any person as the beneficiary of her life insurance proceeds. Maris was survived by her husband, Jimmie Maris, and by her two children from a prior marriage, Tracy and Kristina. The children filed a declaratory judgment suit against the husband contending that they were entitled to the insurance proceeds because their mother signed and filed the appropriate form with the employing office designating them as beneficiaries and because the beneficiary designation form was subsequently lost. The husband counterclaimed asserting that he was entitled to the life insurance proceeds.

Life Insurance ERISA Plan

January 20, 2015 | Mark S. Humphreys

Life Insurance attorneys in the Dallas and Fort Worth area will see life insurance policies that are ERISA plans. They learn quickly that ERISA plans are different from other types of life insurance plans. This is illustrated in a 5th Circuit Court of Appeals case styled, Ellis v. Reliance Standard Life Insurance. Here is what that case says.

In this life insurance benefit dispute Patricia Ellis appeals the district court’s grant of summary judgment in favor of her deceased husband’s life insurance provider, Reliance Standard Life Insurance Company (“RSL”). The district court held that RSL did not abuse its discretion as a plan administrator when it calculated the death benefit paid to Mrs. Ellis following her husband’s death using his 2009, as opposed to his 2010, income.

The late Randolph Ellis was employed by Taylor Morrison Inc., a homebuilding company, as a commissioned real estate salesman starting in 2005. Taylor Morrison offered life insurance to its employees. The insurance was underwritten and administered through RSL. The policy is governed by the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq.

Life Insurance And Competing Claims

January 11, 2015 | Mark S. Humphreys

Life insurance attorneys in Dallas will run across situations where there are competing claims for policy benefits. Sometimes those claims are legitimate concerns and sometimes not. A 2014, opinion from the US Court of Appeals, 7th Circuit needs to be read. The style of the case is, State Farm Life Insurance Company v. Troy Jonas, et al. Here is relevant information from that case.

Troy Jonas and his wife Jennifer purchased reciprocal policies of life insurance: she owned the policy on her life, with him as beneficiary; he owned the policy on his life, with her as beneficiary. When they divorced in 2011, the court reassigned the policies’ ownership: after the divorce, Troy owned the policy on Jennifer’s life. Each policy provided that “a change of Owner or Successor Owner does not change the Beneficiary Desig-nation.” Troy therefore thought it unnecessary to redesignate himself as the beneficiary of the policy insuring Jennifer’s life.

Jennifer died on August 30, 2012. Troy promptly submitted a claim for the proceeds. State Farm did not pay. It expressed concern that the proceeds might belong to the couple’s children who had been named as secondary beneficiaries or to Jennifer’s estate as a result of Texas Family Code, Section 9.301, which provides that if a divorce occurs after one spouse has designated the other spouse as a beneficiary of an insurance policy, the designation lapses with some exceptions and, unless a new designation is made, the proceeds belong to any alternative beneficiary or the decedent’s estate. Jennifer was domiciled in Texas when she died, and the policy had been issued there; the parties agreed that Texas law applied to this litigation. Troy replied that this provision did not apply when the divorce decree reassigns the policy’s ownership to the named beneficiary.

Life Insurance In A State Other Than Texas

January 6, 2015 | Mark S. Humphreys

Texas life insurance attorneys need to have a basic working knowledge of how other states handle life insurance claims. Often times a Texas attorney will have a situation where the law of another state may apply to a life insurance claim. Here is a case to read. It is styled, Minnesota LIfe Ins. Co. v. Jones. It is a 2014, case from the United States Court of Appeals, Seventh Circuit.

Jones, who left no will, owned a life insurance policy that his employer had obtained for him from Minnesota Life. He did not designate a beneficiary, but the policy provided that the proceeds, which at his death amounted to nearly $307,000, would go first to a surviving spouse (there was none), second to any surviving child or children, third to any surviving parents, and fourth to Lenord’s estate.

An Illinois resident named Quincy Jones, claiming to be Lenord Jones’s son submitted a claim to the insurance company-as did another Illinois resident, Annie Moore, claiming to be Lenord’s daughter. The insurance company, being a nonresident of Illinois, was able to and did file an interpleader action in the federal court in Chicago. Fed.R.Civ.P. 22.