716 F.3d 1151
8th Cir.2013Background
- Linda Williamson received accidental death benefits under Hartford policy ADD-10900 after her spouse’s 2007 death; payment occurred about 14 months after claim, and Hartford paid no interest.
- The policy contained no express interest provision and stated benefits would be paid “as soon as possible after we receive proof of loss and other forms…necessary to adjudicate the claim.”
- Williamson sued on behalf of herself and ~13,000 similarly situated beneficiaries, seeking a declaration that statutory interest (prejudgment interest) is owed under state law. Jurisdiction was diversity.
- The district court granted Hartford summary judgment, applying Tennessee law and concluding interest was not owed because payment was made within the policy’s designated payment time (the insurer’s investigation period delayed payment). Williamson’s motion to amend the judgment was denied.
- The Eighth Circuit affirmed the district court’s judgment but reached the outcome on different reasoning: it held Williamson was not entitled to interest under either Missouri or Tennessee statutory frameworks.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether statutory interest is owed on the ADD benefit | Williamson: statutory interest applies; insurer must pay interest for delayed benefit payments | Hartford: policy controls timing; benefits paid when payable under policy, so no interest due | No interest owed under either Missouri or Tennessee statutes |
| Choice of law (Missouri v. Tennessee) | Williamson: dispute over which state law governs | Hartford: policy is predominantly a Tennessee group policy; Tennessee law applies | Court avoided resolving choice-of-law because result is same under either state’s statute |
| Meaning of when a debt is "due" or "payable" under state interest statutes | Williamson: “due” could mean earlier (e.g., date of loss), entitling beneficiaries to interest | Hartford: “due” means the date the contract makes the debt payable; policy’s payment timing governs | Court: under Missouri and Tennessee law, debt is payable at the time designated by the contract; policy payment timing controls, so no interest |
| Whether insurer’s investigation period delays accrual of interest | Williamson: investigation does not negate obligation to pay interest from date of loss | Hartford: insurer’s right to investigate and policy language make payment date the operative date for interest | Court: insurer paid within the policy’s designated time to pay after proof; interest does not accrue earlier |
Key Cases Cited
- Reuter v. Jax Ltd., Inc., 711 F.3d 918 (8th Cir. 2013) (standard of review for summary judgment)
- Preston v. City of Pleasant Hill, 642 F.3d 646 (8th Cir. 2011) (summary judgment standard)
- Orion Fin. Corp. of S.D. v. Am. Foods Group, Inc., 281 F.3d 733 (8th Cir. 2002) (federal court must predict state supreme court on unsettled state-law issues)
- Fuller v. Hartford Life Ins. Co., 281 F.3d 704 (8th Cir. 2002) (interpretation of insurance policy provisions reviewed de novo)
- Smith v. Chem. Leaman Tank Lines, Inc., 285 F.3d 750 (8th Cir. 2002) (predictive approach for state law in diversity cases)
- Performance Sys., Inc. v. First Am. Nat’l Bank, 554 S.W.2d 616 (Tenn. 1977) (Tennessee Supreme Court interpretation that written instruments bear interest from designated payment date)
- Jaffe v. Bolton, 817 S.W.2d 19 (Tenn. Ct. App. 1991) (Tennessee Court of Appeals applying Performance Systems to interpret interest statute)