Court Ruling Reinforces Death Matching Statute Obligation

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:

  1. The “Statute Does Not Violate the Rule Against Retroactive Application”
  2. The “Statute Does Not Impair Any Vested Contractual Right” 
  3. “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.

About Tom Berger

Thomas Berger is Chief Executive Officer of Cross Country Computer. Tom joined Cross Country in 1991 and acquired the company in 1996. During his tenure, Tom has overseen the debt-free growth of CCC and has been instrumental in strengthening the company’s infrastructure while simultaneously developing new services and diversifying into new business lines. Tom has personally developed the vision and design specifications for many of Cross Country’s systems, including TBeaut and CBeaut, our proprietary title and company name standardization products. In addition, Tom holds the patent for our Abandoned Property Escheat Assignment & Reporting System (APEARS™). Tom has served two terms as Treasurer of the Unclaimed Property Professionals Organization (UPPO) as well as two years as Secretary of the Unclaimed Property Committee within the Securities Transfer Association. He assisted in the creation of a white paper designed to educate the holder community about unclaimed property review and reporting practices. Tom has spoken frequently at Unclaimed Property conferences and was honored with the 2005 Unclaimed Property Holders Liaison Council’s (UPHLC) President’s Award. Tom is also an active member in numerous direct marketing related organizations including the Direct Marketing Association of Long Island, where, in 2012, he was selected as one of three inductees into the DMALI Hall of Fame. He is also a lifetime member of MENSA, the international High IQ society. Tom holds a BS degree in Management and Marketing from the Rochester Institute of Technology and has received military security clearance to oversee our government accounts.
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One Response to Court Ruling Reinforces Death Matching Statute Obligation

  1. Tom Berger says:

    AN UPDATE: On April 3rd the Kemper companies filed an appeal of the Franklin Circuit Court decision followed by an emergency motion for intermediate relief on April 5th. The Kentucky Court of Appeals granted the emergency motion on April 8th. As of now, the documents are not yet available online.

    On a related note, in an article available on LifeHealthPro.com, Carol Lynn Thompson, counsel for the insurance companies, said: “We strongly disagree with the Court’s decision to uphold the recently enacted Unclaimed Life Benefits Act and plan to vigorously appeal the decision.” Thompson explained that, “By effectively requiring the retroactive matching of life insurance policies to the Social Security Administration’s Death Master File—in a manner contrary to the clear and expressed language of the policies – the Act violates Kentucky law and the Kentucky and U.S. Constitutions.” Thompson added that, “Contrary to the Court’s ruling, the retroactive nature of the Act would have a significant impact on insurers and would undermine business confidence among insurers and policyholders and could ultimately negatively impact pricing and product availability for consumers.” http://m.lifehealthpro.com/2013/04/04/insurers-lose-unclaimed-property-case-in-kentucky

    The case is United Insurance Company of America v. Commonwealth of Kentucky (Department of Insurance), 2013-CA-000612.

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