Wednesday, September 02, 2015

Sequeira v. Lincoln National Life Ins. Co. (Cal. Ct. App. - Sept. 1, 2015)

There are plenty of people in this world who hate insurance companies.  Absolutely hate 'em.  Think they're abusive, sleazy, money-grubbing bastards.

I'm not one of those people.  As a whole, I think the industry's no worse -- and no better -- than other business lines.  Sure, companies want to constrain costs, so aren't looking to pay out money to others when they can avoid it.  But that's true for pretty much everyone.

Admittedly, insurance companies often deal with people in vulnerable situations; their spouse has just died, they're in the hospital, etc.  So we might want to them to be a bit more compassionate than your average business.  But I'm not in the "Insurers Are Evil" camp.  Far from it.

Except for here.

In my view, what the Lincoln National Life Insurance Company did here is classic example of why many people absolutely hate insurance companies.  Because their decision here was intolerable and unacceptable.

Donald Sequeira was a long-time employee with the City of Vacaville.  In the fall of 2009, the City changed its life insurance carrier to Lincoln National.  So in October 2009, Mr. Sequeria filled out an enrollment form for $275,000 of basic life insurance and submitted it to Lincoln National.  Lincoln National accepted the application and issued the policy.  Moreover, during 2009, Mr. Sequeria made two premium payments on the policy, and Lincoln National happily cashed his checks.

Then 2010 arrives.  January 1, 2010 was a holiday, so Mr. Sequeria didn't work that day.  The next day, January 2, 2010, he suddenly became ill, and died on January 6, without ever returning to work.

That's sad.  He leaves a widow, so the widow then seeks the $275,000 from the insurance policy that Mr. Sequeria purchased.

At which point Lincoln National tells her to go to hell.

It's not that Mr. Sequeria lied, or that his checks bounced, or anything like that.  And it's not even that there's a ton of money at stake.

But in language only a lawyer could love, with multiple subclauses and optional ("the latest of") dates, the policy technically says that Mr. Sequeria was only covered on the day he "resume[d] Active Work, if you are not Actively at Work on the day you become eligible."  And, in 2010, since Mr. Sequeria didn't work on January 1 -- since it was a holiday -- and didn't work on January 2 (since that's the day he became sick), and died promptly thereafter, ha!  No money.  The fact that the guy had worked two decades for the same company, was an active employee throughout the entire period, had paid multiple premiums for the policy, and didn't work in 2010 because the company wasn't open and then he was sick doesn't matter at all to Lincoln National.  They've got an excuse not to pay his widow the money she's due -- or at least they've got an argument not to pay -- so she's going to either get stiffed or have to pay a lawyer, and wait, and hope the courts decide her way in order get paid.  Oh, yeah, and in the meantime, she has to bury her dead husband.

Ultimately the Court of Appeal reverses the trial court and orders Lincoln National to pay.  Despite its hypertechnical argument -- which the trial court bought -- that ostensibly excused it from paying the proceeds of the insurance policy to the grieving widow.

So, ultimately, Mrs. Sequeria gets paid the money to which she's entitled.

But here's the thing.  She shouldn't have been forced to wait six years.  She shouldn't have had to fight an insurance company.  She shouldn't have been forced to pay a lawyer a healthy portion of the insurance proceeds at issue.

Lincoln National should have simply paid the $275,000.  It's a tiny amount of money, in the scheme of things, to the insurer.  It's for a long term employee who got sick on January 2, 2010, and died on January 6, 2010, for a life insurance policy designed to cover him in 2010.  Only the most heartless and/or ruthless insurer would try to screw a widow out of the life insurance for which she paid in a context like this one.

But that's nonetheless the course that Lincoln National elected.  From the claims adjuster at the bottom to the highest levels at Lincoln National at which this case was reviewed.

Okay.  Fine.  You can do that.

But when people hate you, and others like you, don't be surprised.  At all.

And they'll have a point.