Hawkins v. Globe Life Insurance 105 F.Supp.3d 430 (D. N.J. 2015)
FACTS: In late August 2011, Natasha Hawkins (plaintiff) applied for a second life insurance on her nineteen year-old son, Khalil Wallace, from Globe Life Insurance Company. After Globe received Ms. Hawkins’ enrollment form and premium payment, but before Globe formally approved the policy, Khalil was murdered. Globe refused to pay the policy proceeds, and Ms. Hawkins filed suit. Globe mailed plaintiff an advertisement for up to $50,000 in life insurance protection. The materials included two informational pamphlets, a letter, and an enrollment form. The following summary lists representations from these materials: Pamphlet 1 • First-day coverage • No waiting period • Buy direct by mail • Choose $5,000, $10,000, $20,000, $30,000 or $50,000 coverage • $1.00 for $50,000 • No medical exam − just answer a few health questions Pamphlet 2 • Start a Life Insurance Policy for Only $1 Letter No Waiting Period (2x) • Buy Direct by Mail (2x) • $1.00 Starts Up To $50,000 Life Insurance Coverage • Globe gives you life insurance coverage that costs only $1.00 to start! • There’s no medical exam … just answer a few Yes/No health questions • You buy directly through the mail • Answer A Few Yes/No Health Questions (2x) Enrollment Form/Application • No waiting period • $1 Buys Up to $50,000 • $1 Buys $50,000 − Direct by Mail • You can choose from $5,000, $10,000, $20,000, $30,000 or even $50,000 life insurance coverage • There is no medical exam − just a few Yes/No health questions Globe’s enrollment form contains Question 2.b. This question asks whether in the past three years Khalil “had or been treated for … drug or alcohol abuse.” [P]laintiff was aware her son was previously arrested and charged with multiple drug offenses. It is also undisputed that subsequent to one of Khalil’s arrests, plaintiff arranged for Khalil to attend a few counseling sessions with a general therapist. However, plaintiff denied any knowledge of what her son discussed with his therapist during these sessions. She also denied any knowledge that her son used drugs. Plaintiff testified that despite her son’s troubled past she did not believe he abused drugs. She noted that her son was an athlete and never showed symptoms of drug abuse. After plaintiff mailed the enrollment form, Khalil was charged on September 2, 2011, with possession of marijuana. Plaintiff learned about this arrest within a few days, but did not inform Globe. [P]laintiff’s application was subject to a “Quality Assurance” (“QA”) follow-up call. Globe attempted to telephone plaintiff 21 times and sent two letters to verify the truth of the statements on her enrollment form. On September 20, 2011, plaintiff’s son disappeared into a van with unidentified individuals. On September 22, 2011, plaintiff was informed that her son was last seen two days prior and that his cell phone was found in Philadelphia. The same day plaintiff filed a missing person report with the state police. Despite these events, plaintiff testified she was not concerned for her son’s safety following his disappearance because he would often be away from home for periods of more than two weeks at a time. Additionally, plaintiff testified that when she filed the missing person report the police believed her son had run off to avoid charges from his recent arrest. On September 28, 2011, plaintiff called Globe to complete the QA. During the call, . . . [t]he Globe representative asked plaintiff whether the proposed insured had a history of drug or alcohol abuse. Plaintiff again denied any knowledge that her son had a history of drug or alcohol abuse or treatment and affirmed that her answers were true to the best of her knowledge. Following the QA call, Globe formally approved plaintiff’s policy on October 1, 2011. On October 6, 2011, six days after the policy was issued, Khalil Wallace’s body was found. The cause of death was determined to be multiple gunshot wounds inflicted on September 20, 2011, the day Khalil went missing. Plaintiff called Globe to report her son’s death on October 24, 2011, and submitted her claim for payment on February 6, 2012. On February 21, 2012, Globe advised it was investigating the claim. Following an exchange of letters between Globe and plaintiff, on July 6, 2012, Globe advised that it was voiding its policy because plaintiff misrepresented material facts during the application process. Globe received plaintiff’s application materials on September 9, 2011, and deposited the premium check on September 12, 2011. For the reasons described above, this initiated interim coverage on Khalil’s life as of September 9 or 12, 2011. Accordingly, plaintiff had interim coverage when Khalil died on September 20, 2011. ISSUE: Was there a valid policy in place? DECISION: The court held that there was a policy in place. The plaintiff did nothing wrong because the questions were ambiguous and construed against the insurer. The fine print created ambiguities in what the insurer was doing. Ambiguities are construed against insurers.
Questions 1. What were the problems with Globe’s marketing materials? 2. Develop a timeline for the events from the time of the policy mailer. Why are Khalil’s arrest and previous counseling not required to be disclosed? 3. Describe how Globe should have asked its questions.