From September 30, 2012 to December 28, 2012, the plaintiff, John D. Perdue, Treasurer of the State of West Virginia filed sixty-nine (69) individual civil lawsuits against life insurance companies doing business in the State of West Virginia alleging that the insurers have failed to comply with the requirements of the West Virginia Uniform Unclaimed Property Act (UPA), i.e., that they have failed to turn over unclaimed property to the State Treasurer. The complaints further alleged that the Insurers had breached their statutory duties of good faith and fair dealing by failing to conduct annual examinations of life insurance policy holders to determine if they are deceased or three years past the applicable limiting age that would make benefits payable under the UPA.
The court held that the provisions of the UPA and the Insurance Code were unambiguous and consistent with one another. Based upon the plain meaning of those statutes, the court found that the insurers have no obligation to surrender the life insurance proceeds under the UPA until the obligation to pay arises, which is either upon receipt of due proof of death or once the insured reaches the statutorily imposed limiting age. The court noted that five of the states that have already enacted the NCOIL’s Model Unclaimed Life Insurance Benefits Act, the new Death Master File (DMF) legislation currently operate under the 1995 Uniform Unclaimed Property Act. As such, this new DMF legislation would be redundant or unnecessary if a duty to search the DMF already existed in the UPA’s adopted by these states.
The court held that “Insurance death benefits, however, are inherently different from other types of unclaimed property. The threshold question of whether the insurer has any liability is contingent upon the happening of an event, the occurrence of which must be proven. Instead, a claimant must show that the insured has died while the policy is in force arising from a cause that is not excluded from coverage.”
Further, the court stated that the duty of good faith and fair dealing cannot be used to impose an obligation on the insurance companies to search the DMF. The court concluded its inquiry by stating that “Although the Court expresses no opinion on the social utility of a duty to search the DMF, the remedy sought lies with the Legislature, not with this Court.” Accordingly, the insurers’ motions to dismiss the lawsuits were granted.
Perdue v. Nationwide Life Ins. Co., et al.
Cir. Ct., W. Va, Dec. 27, 2013