Sarah J. Delaney, a partner in Goldberg Segalla’s Global Insurance Services Practice Group, was interviewed by Law360 about the impact of a recent decision by the U.S. Court of Appeals for the First Circuit dismissing a putative class action against John Hancock Life Insurance Co. for not proactively paying death benefits. The dismissed lawsuit claimed that Hancock should have regularly checked the U.S. Social Security Administration’s Death Master File (DMF) database to track policyholder deaths and notify beneficiaries who were owed policy proceeds.
Noting that officials are now focusing their attention on smaller life insurance companies, since many giants have long since settled, Sarah pointed out that the First Circuit decision should boost the positions of smaller life insurance companies as they confront regulators. “That would be extremely helpful to them in protecting themselves and their assets,” Sarah told Law360.
Among other topics, Sarah’s analysis touched on the emergence of shareholder suits against life insurers over inadequate reserve estimates and potential misrepresentations tied to their failure to check the DMF, the potential for a new wave of putative class actions based on new state laws that explicitly require insurers to routinely check the DMF, and the likelihood that the First Circuit opinion could dissuade plaintiffs who wish to bring lawsuits similar to the one against John Hancock.
“They are, for the moment, going to be discouraged,” Sarah said. “There’s going to be a temporary lull until plaintiffs see which way the wind is blowing.”