Court: Court of Appeals for the Ninth Circuit; August 10, 1999; Federal Appellate Court
A request has been made to the Montana Supreme Court to address three questions regarding the interpretation of Montana law related to accidental death coverage in insurance policies.
1. The first question seeks clarification on whether accidental death coverage, as part of a group accident insurance policy or a combined life and accident policy, is classified as life insurance under Montana law, particularly concerning an insured's conversion rights.
2. The second inquiry examines whether accidental death coverage remains valid if the insured dies within a 31-day grace period for converting a group policy to an individual policy, even if the conversion is not executed before death.
3. The third question addresses whether notifying the insured's employer of a claim constitutes notice to the insurer, given that the employer is deemed an agent for claims submission.
The answers to these questions are critical for resolving an appeal by Mary E. Golt against General American Life Insurance Co. and Aetna Life Insurance Co., following a summary judgment that denied her claim for accidental death benefits after her husband, John C. Golt, III, died from carbon monoxide poisoning shortly after losing his employment. Mr. Golt's insurance coverage was set to terminate on February 1, 1994, just days after his employment ended on January 26, 1994.
The General American group accident insurance policy allows for conversion to an individual policy within 31 days after an employee's discharge, contingent upon written application and payment of the first premium. Claims for losses must be reported to General American or its agents within 20 days, with proof of loss due within 90 days. Mr. Golt, employed by AAFES, was insured by Aetna under a 'Group Life and Accident and Health Insurance Policy' that provides a $32,000 life insurance benefit payable upon death from any cause while insured. The policy also includes Accidental Death and Dismemberment Coverage (AD&D) that pays an additional $32,000 if death results from an accident within 90 days. The Aetna policy allows for conversion to individual life insurance within 31 days post-discharge, and benefits are payable if the insured dies during this conversion period. However, coverage ceases upon employee discharge, and there is no conversion privilege for AD&D coverage. Mrs. Golt submitted claims for benefits to AAFES, which were forwarded to Aetna but not to General American. Aetna paid the life insurance benefit but denied the accidental death claim, stating coverage ended with Mr. Golt’s termination. AAFES later informed Mrs. Golt that Mr. Golt was not covered under either insurance policy. The General American policy stipulates that claims must be notified within 20 days after a loss. In December 1995, the National Accident Insurance Underwriters, Inc. (NAIU) notified Mrs. Golt that no accidental death benefit would be payable under the General American policy. Mrs. Golt initiated legal action on March 25, 1996, seeking $32,000 in accidental death benefits from Aetna and $200,000 from General American, alongside prejudgment interest.
All parties sought summary judgment, leading the district court to rule that there was no coverage under either policy, resulting in a final judgment favoring the Insurers. Mrs. Golt appealed, claiming the district court incorrectly determined, under Montana law, that the accidental death coverage did not necessitate a 31-day grace period. She argued that the death of an insured during the conversion period of a group accident policy should be seen as an election to convert, even if the conversion right was not exercised. Mrs. Golt asserted that notifying AAFES of the claim for accidental death benefits served as notice to General American's agent.
The parties disputed whether the accidental death coverages constituted life insurance policies under Montana law, which defines 'life insurance' and 'disability insurance' while allowing overlap between classes of insurance. Montana law mandates that group life insurance policies provide a 31-day grace period post-termination, while group disability policies have differing requirements. If the accidental death benefits are classified as life insurance, Mr. Golt was covered at the time of his death. The district court asserted that Montana law categorizes "accidental death" insurance under disability insurance provisions. No Montana case law definitively addresses whether accidental death coverage falls under life insurance conversion provisions.
Additionally, disagreements arose regarding the implications of Mr. Golt’s death occurring before the end of the 31-day conversion period. General American’s policy required written application and first premium payment within 31 days for conversion. If converted, coverage would take effect either at termination or upon application for the new policy. Precedent exists suggesting that a group insurance policy with a 31-day grace period remains effective during that period, even if employment terminates.
When an employee experiences a covered loss, such as death, during the conversion election period without making an election, it is typically assumed that the employee has elected coverage, obligating the insurer to pay benefits. However, prevailing authority indicates that the thirty-one-day grace period merely allows for the option to convert to an individual policy. Case law, particularly from Texas and other jurisdictions, asserts that an employer does not act as the insurance company's agent for group policies. Indiana law further stipulates that when an employer acts as an intermediary between an insurance company and employees, the employer is the employees' agent, not the insurer's. No Montana court has addressed the implications of an insured's death during the conversion period, and a ruling from the Montana Supreme Court on this matter would clarify the dispute.
Additionally, the General American policy necessitates written notice of claim within 20 days and proof of loss within 90 days. It is acknowledged that Mrs. Golt submitted claim documents to her husband’s employer, AAFES, 12 days post-death, and was informed that those documents were forwarded to General American, which claims it did not receive them. The crux of the disagreement centers on whether an employer acts as an agent of the insurance company for processing employee claims under a group policy. While some jurisdictions support the view that employers can act as agents for insurers in this context, others dispute this interpretation. The request for certification to the Montana Supreme Court aims to resolve these legal ambiguities, with the clerk of the court instructed to forward relevant documents to the Supreme Court and the parties required to notify the clerk of any decisions regarding certification and subsequent opinions issued by the Supreme Court.
Counsel for the parties involved in this matter are as follows: Mary Golt is represented by William D. Jacobsen from Great Falls, MT. Aetna Life Insurance Company is represented by Robert J. Sullivan from Missoula, MT. General American Life Insurance Company is represented by Robert C. von Ohlen, Jr. and John B. Austin, both from Chicago, IL. The judges presiding over this case are Thomas M. Reavley, Arthur L. Alarcon, and M. Margaret McKeown, with McKeown as the presiding judge.
Key statutory references include:
- MCA 33-1-208 defines life insurance as coverage for human lives, including benefits for death or dismemberment from accidents.
- MCA 33-1-207 describes disability insurance as coverage for bodily injury or death resulting from accidents or sickness.
- MCA 33-1-205 clarifies that certain insurance coverages may fall under multiple definitions without exclusion.
- MCA 33-20-1209 stipulates that group life insurance policies must allow individuals to obtain an individual life insurance policy without proof of insurability after employment termination, provided application and premium payment occur within 31 days.
- MCA 33-20-1211 mandates that if an insured individual dies during the application period for an individual policy, the corresponding life insurance amount must be payable under the group policy regardless of application status.
- MCA 33-22-508 requires group disability insurance policies to provide a similar provision for hospital or medical service insurance following employment termination.
Finally, it is noted that no application or premium tender was made by Mr. Golt prior to his death.
