McHugh v. Protective Life Ins. Co., 494 P.3d 24

In 2005 Protective Life issued a $1 million 60‑year term life policy to William McHugh that included a 31‑day contractual grace period; McHugh paid through January 2012.
The Legislature enacted Insurance Code §§ 10113.71–10113.72, effective January 1, 2013, requiring a 60‑day grace period, 30‑day mailed pretermination notice, and a right for owners to designate a third‑party notice recipient.
McHugh missed the January 9, 2013 premium; Protective Life sent notices, the policy lapsed, and was later terminated; McHugh died in June 2013 and beneficiaries sued for wrongful termination.
The trial court permitted the jury to decide compliance; the Court of Appeal affirmed judgment for Protective Life on the alternative ground that the new statutes do not apply to policies issued before Jan. 1, 2013, citing DOI staff correspondence and SERFF instructions.
The California Supreme Court reversed: it held §§ 10113.71–10113.72 apply to all life policies in force on Jan. 1, 2013 (regardless of issue date) and declined to give deference to DOI form‑filing instructions and ad hoc correspondence.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Scope: Do §§ 10113.71–10113.72 apply to policies issued before Jan. 1, 2013?	Apply to all policies in force on the effective date; language and purpose protect existing owners (esp. seniors) from inadvertent lapse.	Statutes operate only prospectively to policies issued/delivered after Jan. 1, 2013; preexisting contracts governed by law at issuance.	The statutes apply to all life policies in force on Jan. 1, 2013, regardless of original issue date.
Retroactivity: Does the presumption against retroactivity bar application to pre‑2013 policies?	Statutes are prospective in effect (they govern post‑enactment terminations) or, if retroactive, the presumption is overcome by legislative purpose.	Applying the statutes would be retroactive and would materially alter contractual expectations; presumption favors prospective application.	The court treated the presumption as inapplicable or not dispositive here: the changes are procedural/forward‑looking and, in any event, legislative purpose supports application to existing policies.
Agency deference: Should DOI SERFF instructions and staff correspondence be afforded deference?	N/A	DOI communications indicated prospective‑only application; Court of Appeal relied on that guidance.	SERFF instructions and ad hoc staff correspondence are not entitled to deference as agency law or formal interpretations; they do not reflect a considered, quasi‑legislative DOI position.

Myers v. Philip Morris Companies, Inc., 28 Cal.4th 828 (Cal. 2002) (presumption against retroactivity and when it may be rebutted)
Interinsurance Exchange of the Auto. Club v. Ohio Cas. Ins. Co., 58 Cal.2d 142 (Cal. 1962) (policies governed by law in effect at issuance; limits on retroactive application)
Calfarm Ins. Co. v. Deukmejian, 48 Cal.3d 805 (Cal. 1989) (insurance as industry affected with public interest and subject to police‑power regulation)
Landgraf v. USI Film Prods., 511 U.S. 244 (U.S. 1994) (framework for assessing retroactivity of statutes)
Californians for Disability Rights v. Mervyn’s, LLC, 39 Cal.4th 223 (Cal. 2006) (distinguishing prospective vs. retroactive application where obligations relate to future conduct)
Yamaha Corp. of America v. State Bd. of Equalization, 19 Cal.4th 1 (Cal. 1998) (standards for deference to administrative interpretations)
Aetna Casualty & Surety Co. v. Industrial Acc. Com., 30 Cal.2d 388 (Cal. 1947) (discussion of retroactivity affecting past conduct)
Quarry v. Doe I, 53 Cal.4th 945 (Cal. 2012) (factors for distinguishing retroactive from prospective statutes)