Western & Southern Mutual Holding Co. and Columbus Life Insurance Co., both based in Ohio, have been named in a lawsuit accusing them of failing to use a U.S. Social Security Administration database to make sure <"https://www.yourlawyer.com/topics/overview/Unclaimed-Life-Insurance-Death-Benefits-Lawsuit">unclaimed death benefits are paid. According to the lawsuit filed by Rita Koenig, 85, both insurance companies do use the database, known as the “Death Master File,†to stop making payments to annuity recipients who have died.
As we’ve reported previously, the Death Master File lists all Americans who die. Earlier this year, dozens of states, including Florida, New York and California, began investigating the way insurers use this database. It is estimated that hundreds of millions of dollars in life insurance go unclaimed because beneficiaries don’t know they are entitled to a death benefit. But many state regulators contend insurers should regularly crosscheck Death Master against a list of policies they have sold to ensure beneficiaries are paid.
In July, it was learned that the New York Attorney General’s office had subpoenaed nine large insurance companies, including AXA SA, Genworth Financial Inc, Guardian Life Insurance Co of America, Manulife Financial Corp, Massachusetts Mutual Life Insurance Co, MetLife Inc, New York Life Insurance Co, Prudential Financial Inc, and TIAA-CREF. The National Association of Insurance Commissioners, an alliance of the states’ top insurance officials, has also formed a task force to look into such practices.
Some state investigations have already yielded results. In May, the John Hancock Life Insurance Company agreed to pay $3 million to the Florida Office of Insurance Regulation and other state agencies to cover investigative costs and attorney fees stemming from one such investigation, and to establish a $10 million fund for paying beneficiaries who can’t be contacted.
Koenig’s lawsuit alleges Western & Southern and Columbus Life have breached their contracts with an undisclosed number of policyholders by not paying their beneficiaries, according to Insurancenewsnet.com. She is seeking an injunction ordering the two companies to scan the Death Master File annually for the names of all policyholders who have a mortality probability of 70% or higher to ensure that there aren’t benefits that ought to have been paid. Koenig’s attorney told Insurancenewsnet.com that her lawsuit is one of many he expects to be filed soon that involve questions of how life insurers are using the Death Master File.
Koenig’s lawsuit is currently pending before U.S. District Judge Dan Polster in the Northern District of Ohio. Koenig’s lawyers are seeking to have the complaint moved to state court, but the two insurance companies argue it should remain in federal court.
