Mehr Disability Law Group obtains ruling that Insurance Company of North America’s insurance contracts violate Kentucky law
Mehr Disability Law Group began representing Greg Queen in 1999, whose previous lawyer committed malpractice, missing a statute of limitation in a worker’s comp case. During discovery in the legal malpractice case, Mehr Disability Law Group discovered that Greg’s employer had received $150,000 under an insurance policy from Insurance Company of North America, d/b/a Cigna (“Cigna”), solely because Greg had been paralyzed on the job. Turning to Kentucky law, Mehr Disability Law Group filed suit and argued that such an insurance policy, that pays a large insurance payment to an employer, whenever the employee is seriously injured, is illegal. Mehr Disability Law Group argued this type of insurance policy would be against public policy and violate the “insurable interest” requirement for all disability and life policies. In summary, there is a strong public policy against allowing employers to benefit when their employees are injured. The employers control the daily movements of the employees. They put employees in coalmines and other dangerous places and employees have to follow the orders of their employers. The law wants employers to have a clear incentive not to benefit from injuries of its employees.
Contrary to this public policy, Cigna created an insurance product through a South Carolina trust and an Alabama trustee and marketed and sold its occupational accident insurance policies to employers, rather than employees. Normally, of course, these type of policies are sold to employers with the idea it provided an employee benefit to the employees if they were hurt. Cigna reversed the payee to the employer, (which, of course, makes it easier to get the employers to buy the product). The insurance product was never filed for approval with the Kentucky Department of Insurance. It was sold to Kentucky employers.
The Laurel Circuit Court agreed with Mehr Disability Law Group that this type of insurance contract, marketed to make payments to the employer, was indeed illegal. The judge of the Laurel Circuit Court held:
The Court finds that the insurance contract in question was a contract upon the life or body of Greg Queen and as such it violated the insurable interest statute. As such, the Plaintiff may properly maintain a cause of action... Read More
The contracts in question were issued to the Employer’s Insurance Trust and were described as master insurance policy SGA-131-717
