Oklahoma Insurance Lawyer & Attorney : Stauffer & Nathan Law Firm

Milroy v. Allstate Insurance Company
.2007 OK CIV APP 6

The Oklahoma State Courts Record

Milroy rear-ended Lewis at a stop sign while talking on her cell phone. It was a minor fender bender, and neither Milroy nor Lewis sought medical attention at the scene. Later that day, after talking with an attorney, however, Lewis sought medical attention. She later ran up chiropractor bills and, after a demand for settlement was denied, sued Milroy in small claims court. The case was defended on behalf of Milroy by Allstate, through Horton, an attorney who was a salaried employee of Allstate. The case was taken into district court and a jury eventually awarded Lewis $2,600.

Allstate promptly paid the judgment and the later award of attorneys fees and costs. Milroy then sued Allstate, claiming it acted in bad faith by litigating the claim against her instead of settling it. Milroy sued Allstate in part because she thought Allstate mistreated the lady who sued her by disputing her claims for damages! She admitted she was never in danger of having an excess judgment against her but complained that Allstate dragged her through court in a total waste of time. Continue Reading...

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ERISA and long term disability benefits

In Meraou v. The Williams Companies, Case No. 06-5051, the Court was faced with the issue of whether an ERISA plan properly terminated long term disability (LTD) benefits.  The Plan provided that benefits could be terminated if the participant either ceased to be disabled, or failed to provide current medical information.  The claims administrator sought current medical information from the participant, Meraou, on February 27, 2002.  Some but not all of the requested information was supplied.  The administrator then asked Meraou to see a physician it had paid to get the requested information.  Meraou responded by stating she was seeing a different doctor, and that doctor would supply the information. No information was received by July 30, 2002, and Meraou was warned that her benefits would be terminated for failure to supply the information. Benefits were terminated effective August 1, 2002, for failure to provide the information. After an appeal was filed, additional information was provided.  The appeal was denied because it was determined that Meraou was no longer disabled. Another appeal resulted in an affirmance of the denial because Meraou was no longer totally disabled. 

The trial court found that the Plan’s decision was based on substantial evidence and was not arbitrary and capricious. It therefore upheld the decision terminating benefits.  The Tenth Circuit found the arbitrary and capricious standard of review applied, and reviewed the trial court’s determination de novo.  The court found that it was not unreasonable to require objective evidence of the disability; that the Plan had considered the combined effects of the claimed impairments to determine whether she was disabled; that the Plan was not estopped from contesting disability simply because she was receiving social security disability benefits; and the Plan was not estopped from terminating her benefits based on its prior determination of disability.  The grant of benefits did not foreclose subsequent review of her claims, and determination of disability under social security does not equate to disability under the Plan.  The denial was affirmed.

Read the case:
http://www.kscourts.org/ca10/cases/2007/02/06-5051.htm

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Notice not required when policy lapses for non-payment

In Bank of Oklahoma v. Monumental Life, Case No. 06-6137, the Tenth Circuit affirmed a summary judgment in favor of the insurance company.  The claim involved a mortgage life policy from Monumental that was supposed to pay off the mortgage in case the insured/homeowner died.  The insured never paid any premiums for the policy, and died three years later.  His widow sought coverage and brought claims against the bank and the insurance company.  The widow settled with the bank and assigned any right of recovery to the bank as against the insurance company.  The court held that because there were no premiums paid for the coverage, that there was simply no coverage in effect at the time the insured died. The court states, “The Policy's provision along these lines - allowing for the cessation of contractual obligations when payment is not forthcoming despite a reasonable grace period - is treated as valid, enforceable, and, indeed, essential under Oklahoma law for obvious and equitable reasons. See Gen. Am. Life Ins. Co. v. Brown, 56 P.2d 809, 812 (Okla. 1936).

"[I]t is quite generally held that the provisions of an insurance policy requiring prompt payment of the premiums, and the provision for lapse or cessation of the policy for nonprompt payment are valid, essential, and enforceable provisions of the contract." (internal quotation omitted)).”

There was nothing in the agreement between the Bank and Monumental which required Monumental to tell the Bank or the insured that it had not received any premiums or that the policy lapsed.  Thus, there could be no coverage by promissory estoppel.  While the insured may have been a third party beneficiary of the contract between the Bank and Monumental, the issue was waived on appeal.

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