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*NEW* Court Says Proof of Death Not An Unreasonable Request

    A federal appeals court has affirmed that life insurance companies are within their rights to ask for a proof of death before paying a death claim – and such proof is also a prerequisite to money becoming payable under unclaimed property laws governing such policies.
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    The decision came in Feingold v. John Hancock Life Ins. Co., in which Richard Feingold sought to challenge the insurer’s alleged practice of holding policy proceeds until receiving proof of the insured’s death, according to a Sutherland Asbill & Brennan legal alert. Feingold had argued that the insurer acted unreasonably in failing to investigate whether his mother had died.
    He had based his class action lawsuit claims on state consumer protection issues, citing conversion, unjust enrichment and breach of fiduciary duty, and sought declaratory relief.
    Feingold pointed to John Hancock’s signing of a multistate global resolution agreement for handling unclaimed life insurance benefits. He said the carrier failed to check the Death Master File in 2006 when his mother died, and allegedly held those policy proceeds until it received proof of the insured’s death. Instead, Feingold said, John Hancock should have investigated whether his mother had died. 
    John Hancock paid the $1,349.71 death benefit to Feingold shortly after it had received the proof of death – a condition that was required under the policy’s terms, and which met the requirements of both Massachusetts and Illinois state law.
    Noting that, the district court dismissed Feingold’s lawsuit in its opinion.
    So did the U.S. Court of Appeals for the First Circuit. It also took notice that Illinois law permits insurers to get proof of death before paying a life insurance claim, and that John Hancock’s procedures also meet the standards of Illinois’ unclaimed property statute.
    It also wouldn’t allow Feingold to piggyback on John Hancock’s multistate global resolution agreement. That agreement, the appeals court said, stated explicitly that it was expressly for the purpose of “setting forth the terms and conditions intended to resolve [an] ongoing unclaimed property audit.” As part of the settlement, John Hancock denied violating any unclaimed property laws.
 Besides, the First Circuit ruled, the GRA was an agreement between the carrier and the participating states and, as Sutherland pointed out:
... [Feingold] only had authority to enforce the terms of the GRA if he were a third-party beneficiary of that contract, [and] the court noted the absence of language showing that “the GRA was intended directly to benefit anyone other than the signatory states negotiating Hancock’s obligations with respect to their unclaimed property programs.”
    Because of that determination, the First Circuit also said Feingold couldn’t argue that John Hancock had to consult the Death Master File to check whether life insurance policy holders were deceased.
    Absent the GRA, there is no requirement for John Hancock to do so.
Copyright 2014 ProBusiness Publishing LLC All Rights Reserved
June 2, 2014
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