Equitable Faces Return of Life Policy Reinstatement Claim
The Policy Terminations
Wiener has alleged that his advisor changed the address of record for his policies without his consent, that he failed to receive premium reminder notices at the correct address, and that he received notices about the policy terminations late. He said he was willing and able to provide the cash needed to keep the policies in force.
He also alleges that his advisor failed to give him good advice about how to keep the policies in force before he received the termination notices, and that, after he received the termination notice, he was told to respond by applying to have the policies reinstated, rather than simply sending in the missing payments. Millburn sent in a premium check with a request for policy reinstatements.
AXA Equitable ended up refunding the checks, saying that it does not send out premium reminder notices during policy late-payment grace periods, and saying that policy reinstatements were subject to Wiener providing evidence of medical insurability.
After Wiener had a physician send AXA Equitable medical records, AXA Equitable rejected the medical reinstatement requests based on the medical records.
The 2nd Circuit Reasoning
The 2nd Circuit panel found that the district court was right to side with AXA Equitable on the policy termination issue, because Wiener had received many premium notices at the address selected by his advisor without objecting and that there was no evidence that a breach of notice obligations had caused the policies to terminate.
“Even if AXA’s failure to send premium notices on or around November 1, 2013, amounted to a breach, on this record, no reasonable factfinder could find that the breach caused Wiener to suffer damages,” according to an opinion by U.S. Circuit Judge Beth Robinson.
When AXA Equitable had sent past notices recommending that Wiener make payments to keep the policies in force, the Millburn employees who received the notices had never sent in premium payments, Robinson writes.
The panel also found that the advisor had no duties to contact Wiener about the termination notices or Wiener’s and Millburn’s premium payment practices.
AXA Equitable said it based the reinstatement denials on reports of low serum albumin levels.
Wiener contends that AXA Equitable provided the serum albumin level justification after he fought the denials and that the actual reasons for the denials “bear many of the hallmarks of an arbitrary and capricious decision,” Robinson writes.
The 2nd Circuit panel suggested that the reinstatement claims are different from the policy termination procedure claims because, under New York state law, an insurer cannot deny reinstatement in an arbitrary and capricious manner.
“AXA stresses that insurance companies should be afforded significant deference when it comes to reinstatement denials,” but AXA Equitable’s letter explaining the denials was vague, Robinson writes.
Because a reasonable jury could conclude that AXA Equitable’s underwriter used an arbitrary reason to deny the reinstatement applications, the company is not entitled to summary judgment on that point, Robinson writes.
The 4th Circuit Litigation
Wiener alleged in a suit filed in 2018 in a federal court in North Carolina that AXA Equitable had caused him to become uninsurable by reporting false information about his health to an underwriting information clearinghouse.
A jury at the court ruled in Wiener’s favor in 2020 and awarded him $8 million. The judge, U.S. District Judge Robert Conrad Jr., dismissed the verdict, finding that Connecticut law governed the case and that the court lacked jurisdiction over the suit’s subject matter.
A three-judge panel at the 4th U.S. Circuit Court of Appeals reversed the dismissal and sent the case back to the North Carolina court.
Conrad issued an order in April that set aside the original $8 million jury damages award. He awarded Wiener $1 in damages. Wiener is appealing that ruling.
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