Life insurance beneficiary files putative class action lawsuit against life insurer targeting unclaimed property practices, Edwards Wildman Pamer LLP USA
The putative class action alleges that John Hancock Life Insurance Company (USA) and John Hancock Life & Health Insurance Company (collectively, “John Hancock” or “the company”) did not utilize the Social Security Death Master File (“DMF”)1 and various court subscription services to identify deceased life insurance policyholders. The complaint, however, also alleges that John Hancock utilized the DMF and court subscription services to identify deceased annuity payment beneficiaries. As a result of this alleged “industry wide practice”, plaintiff argues that the company was able to “collect interest on unclaimed benefits, charge against policy benefits and otherwise benefit from holding unclaimed benefits” to the detriment of thousands of policyholders and beneficiaries nationwide.
The complaint alleges that the proposed class representative’s mother (the “policyholder”) purchased a life insurance policy from the company in 1945. When the policyholder passed away in 2006 the policy beneficiary was unaware of the life insurance policy. Following an investigation with the State of Illinois unclaimed property unit, the beneficiary discovered the existence of the policy and sought payment from the company. The complaint asserts that the policy proceeds were never escheated to the State of Illinois pursuant to its unclaimed property laws.
Following payment of the $1,349.71 policy proceeds to the beneficiary, this complaint followed.
The complaint asserts five causes of action and asserts application of Massachusetts law. First, the complaint alleges that John Hancock violated the Massachusetts Protection Act or, alternatively, various State consumer protection laws when the company allegedly: (a) failed in a timely fashion either to notify owners or beneficiaries of unclaimed property or return the unclaimed property; (b) used funds from unclaimed property to generate income for the company’s own benefit; and (c) deducted administrative fees for retaining unclaimed property while making no effort to return the unclaimed property. Second, the complaint alleges that the company has been unjustly enriched by its use of the unclaimed property to generate income and by charging administrative fees for holding the unclaimed property. Third, the complaint alleges that the company engaged in conversion as it exercised dominion and control over the unclaimed property and failed to take reasonable steps either to return the unclaimed property or notify its owners. Fourth, the complaint alleges that the company breached its fiduciary duty to the plaintiff and the class. Fifth and finally, the plaintiff and class seek a declaratory judgment. Specifically, the complaint seeks a declaratory judgment that: (a) the company is prohibited from holding the unclaimed property; (b) the class is declared the true owners of the monies generated from both the use of the unclaimed property and the administrative fees; (c) the company is required to disgorge the unclaimed property to the true owners within thirty days of final judgment, plus pre-judgment interest; (d) the company is required within thirty days of final judgment to return to the class funds previously escheated to any State or jurisdiction; (e) the company is required going forward to use address updating and person locating, web-based lists and other reasonably available systems to ensure accurate notifications of unclaimed property; (f) the company’s practices breach its fiduciary duty and create a constructive trust for the benefit of the class; (g) the company is required to disgorge any fees it has charged class members for possessing, notifying or escheating unclaimed property; and (h) the company is required to disgorge all income earned from unclaimed property funds.
The complaint fails to acknowledge that much of its requested declaratory relief was covered in the Global Resolution Agreement attached to the complaint.
The company entered this Global Resolution Agreement in 2011 following an investigation and audit by approximately thirty States and the District of Columbia. This Global Resolution Agreement manifested with settlements subsequently reached with numerous individual States, including Massachusetts and Illinois, the State from which the proposed class representative hails. The complaint does not explain how Massachusetts law can be applied to consider alleged violations of Illinois unclaimed property laws.
The complaint further argues that John Hancock is not shielded from liability by the 2011 Global Resolution Agreement. According to the complaint, neither plaintiff nor the class were parties or signatories either to the Global Resolution Agreement or the settlements and, thus, did not receive any compensation. However, the complaint does not discuss what duties the policyholder or beneficiary had under the contract to advise the company of their whereabouts or of the death of the policyholder. The life insurance contract itself is not appended to the complaint. The plain language of the life insurance contract could prove significant in determining the company’s duties to the alleged class members. At least one appellate court has found that the plain language of the insurance contract established a life insurer’s “passive role in establishing an insured party’s proof of death.” The same court found that Ohio law provides that the burden of furnishing the life insurer with proof of death lies with beneficiaries or claimants.
This lawsuit follows other private suits asserting unfair claims settlement practices and trade practices as well as violations of state unclaimed/abandoned property laws. To date, other suits in relation to this issue have been brought by still living policyholders, alleged whistle blowers and shareholders.
This suit appears to be the first one brought by a policy beneficiary as a class representative.
As an expert witness Lance Wallach side has never lost a lawsuit. If you have been harmed by an insurance company do something. Do not let your adviser or atty learn on the job at your expense. We have had success with writing a letter and then following up. This is quick and easy, as opposed to a lawsuit. If you are part of a class action you usually get very little. I am not opposed to lawsuits. I am in favor of being made whole.