A recent court case, “UNITED INSURANCE COMPANY OF AMERICA, THE RELIABLE LIFE INSURANCE COMPANY, and RESERVE NATIONAL INSURANCE COMPANY as Plaintiffs vs COMMONWEALTH OF KENTUCKY and THE KENTUCKY DEPARTMENT OF INSURANCE (Civil Action No 12-CI-1441)”, has reinforced the need for insurers to perform Social Security Death Matching.
On April 1st, the court granted Kentucky’s cross-motion for summary judgment. The Kentucky Order is available for download. Enforcement has been stayed for 10 days through close of business on April 11th, 2013 pending any post-judgment motions or requests for interlocutory relief. This is a particularly important case because some insurance companies and states have been waiting for this decision in order to decide how to proceed with either conducting searches, or in the case of the states, requiring or enforcing the failure to do so.
Interesting call outs:
- The “Statute Does Not Violate the Rule Against Retroactive Application”
- The “Statute Does Not Impair Any Vested Contractual Right”
- “Even if the statute impairs a contractual right, it is justified by a significant and legitimate public purpose”
Sending a strong message, the court also stated: “Many Kentucky citizens pay for insurance to help them plan for end of life costs. For insurance companies to attempt to keep the money, through willful ignorance of the death of the insured, amounts to unjust enrichment, at the expense of some of the least privileged citizens in this state.”
The court also found that the statute “does not require insurance companies to complete the claims process” and that the statute is “narrowly tailored to give notice to potential beneficiaries, but leaves intact the contractual burden of proving the death.” The court went on to state that “The requirement to consult the Death Master File and give notice to beneficiaries does not shift any burden under these policies because no burden of notice was ever assigned to these contracts.”
Of particular note is the Plaintiff’s statement that they “would spend probably about 20 hours per match to meet the requirements of the statute.” This is a common sentiment. That is why it is necessary to incorporate targeted death matching algorithms in an automated program that exceed the GRA/RSA settlement requirements. Cross Country Computer built our APEARS® product to exceed requirements and differentiate between strong and weak or false-positive determinations.