STATE of West Virginia ex rel. John D. PERDUE, Plaintiff Below, Petitioner v. NATIONWIDE LIFE INSURANCE COMPANY, et al., Defendants Below, Respondents.
No. 14-0100.
Supreme Court of Appeals of West Virginia.
Submitted April 8, 2015. Decided June 16, 2015.
777 S.E.2d 11
BENJAMIN, Justice
Sandra B. Harrah, Esq., Hill, Peterson, Carper, Bee & Deitzler, PLLC, Charleston, WV, Robert P. Krenkowitz, Esq., Pro Hac Vice, Tucson, AZ, for Amicus Curiae Xerox State & Local Solutions, Inc., d/b/a Xerox Unclaimed Property Clearinghouse.
Jonathan R. Mani, Esq., Mani Ellis & Layne, PLLC, Charleston, WV, Lynden Lyman, Esq., Pro Hac Vice, Concord, MA, for Amicus Curiae National Association of Unclaimed Property Administrators.
John H. Tinney, Jr., Esq., James K. Tinney, Esq., John K. Cecil, Esq., The Tinney Law Firm, PLLC, Charleston, WV, for Respondents Nationwide Life Insurance Company and Nationwide Life and Annuity Insurance Company.
Alexander Macia, Esq., Spilman Thomas & Battle, PLLC, Charleston, WV, Phillip E. Stano, Esq., Pro Hac Vice, Wilson G. Barmeyer, Esq., Pro Hac Vice, Brendan Ballard, Esq., Pro Hac Vice, Sutherland Asbill & Brennan LLP, Washington, DC, for Respondents New York Life Insurance Company; Lincoln National Life Insurance Company; Erie Family Life Insurance Company; New York Life Insurance and Annuity Corporation; The Western and Southern Life Insurance Company; Western-Southern Life Assurance Company; Primerica Life Insurance Company; Ohio National Life Assurance Corporation; Provident Life & Accident Insurance Company; Pacific Life Insurance Company; Colonial Life & Accident Insurance Company; American Family Life Assurance Company of Columbus, GA; and Lafayette Life Insurance Company.
Terrence D. O‘Hare, Esq., Pro Hac Vice, J. Scott Paul, Esq., Pro Hac Vice, McGrath North Mullin & Kratz PC LLO, Omaha, NE, for Respondent Physicians Life Insurance Company.
Steuart H. Thomsen, Esq., Pro Hac Vice, Wilson G. Barmeyer, Esq., Pro Hac Vice, Sutherland Asbill & Brennan LLP, Washington, DC, for Respondents Farm Family Life Insurance Company; Reliastar Life Insurance Company; and Horace Mann Life Insurance Company.
John M. Aerni, Esq., Pro Hac Vice, Adam J. Kaiser, Esq., Pro Hac Vice, Winston & Strawn LLP, New York, NY, for Respondents Bankers Life & Casualty Company and Colonial Penn Life Insurance Company.
Loren E. Hayes, Esq., Spilman Thomas & Battle, PLLC, Charleston, WV, for Respondent United of Omaha Life Ins. Co.
Bruce M. Jacobs, Esq., Spilman Thomas & Battle, PLLC, Charleston, WV, Markham R. Leventhal, Esq., Pro Hac Vice, Irma Reboso Solares, Esq., Pro Hac Vice, Jorden Burt LLP, Miami, FL, for Respondents Monumental Life Insurance Company and Transamerica Life Insurance Company.
Angela D. Herdman, Esq., Mary Jane Pickens, Esq., Andrew S. Dornbos, Esq., Spilman Thomas & Battle, PLLC, Charleston, WV, Edwin G. Schallert, Esq., Pro Hac Vice, DeBevoise & Plimpton LLP, New York, NY, for Respondents Prudential Insurance
Maeve O‘Connor, Esq., Pro Hac Vice, DeBevoise & Plimpton LLP, New York, NY, for Respondents Teachers Insurance & Annuity Association of America and Principal Life Insurance Company.
Timothy J. O‘Driscoll, Esq., Pro Hac Vice, Drinker Biddle & Reath LLP, Philadelphia, PA, for Respondent Gerber Life Insurance Company.
Jason P. Gosselin, Esq., Pro Hac Vice, Laura M. Zulick, Esq., Pro Hac Vice, Drinker Biddle & Reath LLP, Philadelphia, PA, for Respondents Allstate Life Insurance Company; Lincoln Benefit Life Company; and Penn Mutual Life Insurance Company.
Douglas A. Scullion, Esq., Pro Hac Vice, Laura Leigh Geist, Esq., Pro Hac Vice, Dentons U.S. LLP, San Francisco, CA, for Respondent Lincoln Heritage Life Insurance Company.
Thomas F.A. Hetherington, Esq., Pro Hac Vice, Blaire Bruns Johnson, Esq., Pro Hac Vice, Edison, McDowell & Hetherington LLP, Houston, TX, for Respondent Boston Mutual Life Insurance Company.
Jeffrey M. Wakefield, Esq., Danielle Waltz Swann, Esq., Flaherty Sensabaugh Bonasso PLLC, Charleston, WV, for Protective Life Ins. Co., West Coast Life Ins. Co., Sun Life Assurance Co. of Canada, Riversource Life Ins. Co.
Thomas J. Butler, Esq., Pro Hac Vice, Jeffrey M. Grantham, Esq., Pro Hac Vice, Maynard Cooper & Gale PC, Birmingham, AL, for Respondent Riversource Life Insurance Co., American General Life & Accident Ins. Co.
Jeffrey M. Wakefield, Esq., Danielle Waltz Swann, Esq., Flaherty Sensabaugh Bonasso PLLC, Charleston, WV, Jeffrey M. Grantham, Esq., Pro Hac Vice, Maynard Cooper & Gale PC, Birmingham, AL, for Respondent Sun Life Assurance Company of Canada and Riversource Life Ins. Co.
Katharine A. Weber, Esq. Pro Hac Vice, Maynard Cooper & Gale PC, Birmingham, AL, for Respondents Protective Life Insurance Company and West Coast Life Insurance Company.
Jared M. Tully, Esq., Frost Brown Todd LLC, Charleston, WV, for Respondents Metropolitan Life Insurance Company; Metlife Investors USA Insurance Company; New England Life Insurance Company; Liberty Life Insurance Company; Metlife Insurance Company of Connecticut; General American Life Insurance Company; and The State Life Insurance Company.
Frank E. Simmerman, Jr., Esq., Chad L. Taylor, Esq., Simmerman Law Office, PLLC, Clarksburg, WV, for Respondents Genworth Life and Annuity Insurance Company; Combined Insurance Company of America; Genworth Life Insurance Company; and North American Company for Life and Health Insurance.
Thomas J. Hurney, Jr., Esq., Michael M. Fisher, Esq., Stephen M. LaCagnin, Esq., Seth P. Hayes, Esq., Charleston, WV, Ellen M. Dunn, Esq., Pro Hac Vice Sutherland Asbill & Brennan LLP, New York, NY, for Respondent AXA Equitable Life Insurance Company.
Lee Murray Hall, Esq., Jenkins Fenstermaker, PLLC, Huntington, WV, for Respondent Hartford Life and Annuity Insurance Company.
Ancil G. Ramey, Esq., Steptoe & Johnson, PLLC, Huntington, WV, William E. Galeota, Esq., Steptoe & Johnson, PLLC, Morgantown, WV, for Respondent Massachusetts Mutual Life Insurance Company.
Carrie Goodwin Fenwick, Esq., Goodwin & Goodwin, LLP, Charleston, WV, for Respondent Guardian Life Insurance Company of America.
Robert L. Massie, Esq., Nelson Mullins Riley & Scarborough LLP, Huntington, WV, for Respondent USAA Life Insurance Company.
BENJAMIN, Justice:
The West Virginia State Treasurer, John D. Perdue, appeals the order entered by the Circuit Court of Putnam County on December 27, 2013, that dismissed with prejudice sixty-three complaints he filed separately against insurance companies doing business in West Virginia. The complaints alleged, inter alia, that the insurers have unlawfully retained life insurance proceeds unclaimed by State residents, in contravention of the
I. FACTUAL AND PROCEDURAL BACKGROUND
The Act designates the Treasurer as its administrator. See
Whether specific property may be presumed abandoned is determined by resort to the Act. In the context of the dispute before us, section 2 of the Act provides:
(a) Property is presumed abandoned if it is unclaimed by the apparent owner during the time set forth below for the particular property:
. . . .
(8) Amount owed by an insurer on a life or endowment insurance policy or an annuity that has matured or terminated, three years after the obligation to pay arose or, in the case of a policy or annuity payable upon proof of death, three years after the insured has attained, or would have attained if living, the limiting age under the mortality table on which the reserve is based[.]
An insurer in possession of presumptively abandoned life insurance proceeds—like any holder of comparable property—must annually file a verified report with the Treasurer, which, inter alia, describes the property and provides the identity and last known address of the apparent owner. See
Between September 20, 2012, and December 28, 2012, the Treasurer filed sixty-nine substantially similar complaints in the circuit court against insurance companies, seeking to enforce the insurers’ obligations under the Act to file reports and transfer presumptively abandoned life insurance proceeds. In those complaints, the Treasurer pertinently alleged that the United States Department of Commerce maintains a computerized database, known as the Death Master File (“DMF“), compiled from social security records.2 Where the insurers have issued an
According to the Treasurer, because the insurance companies have declined to use the DMF to learn of the deaths of their insureds, they have “failed to truthfully report abandoned or unclaimed property,” and have “paid into the Unclaimed Property Fund amounts less than actually due the State under the Act.” The complaints thus demand a statutory audit, see
In sixty-three of the proceedings, the defendant insurance company moved for dismissal on the ground that the complaint failed to state a claim upon which relief could be granted. See
The circuit court thus reasoned that, until proof of an insured‘s death had been submitted to the insurer, no “obligation to pay” the proceeds of the insured‘s life insurance policy could arise within the meaning of the Act. Consequently, the insurer should be permitted to retain those proceeds until someone having a contractually derived interest makes a formal claim in accordance with the policy. On January 24, 2014, the Treasurer timely noticed his appeal of the circuit court‘s order.3
II. STANDARD OF REVIEW
We review de novo the circuit court‘s grant of the respondents’ motions to dismiss the complaints pursuant to
III. ANALYSIS
As a threshold matter, courts may not regard separate and distinct statutes in pari materia unless the Legislature‘s intent is ambiguous with respect to the statute in question. See State ex rel. Morrisey v. W. Va. Office of Disciplinary Counsel, 234 W. Va. 238, 764 S.E.2d 769, 780 (2014) (“[T]he rule that statutes which relate to the same subject should be read and construed together is a rule of statutory construction and does not apply to a statutory provision which is clear and unambiguous.” (quoting syl. pt. 1, State v. Epperly, 135 W. Va. 877, 65 S.E.2d 488 (1951))). Here, the circuit court believed the Act to be ambiguous, thereby permitting it to look to Article 13 of the Insurance Code to discern the Legislature‘s intent in enacting the former. See syl. pt. 6, Antenna Free Am., Inc. v. Charter Comm‘ns VI, LLC, 227 W. Va. 595, 712 S.E.2d 504 (2011) (instructing that separate and distinct statutes “relating to the same persons or things, or to the same class of persons or things, or statutes which have a common purpose will be regarded in pari materia to assure recognition and implementation of the legislative intent” (quoting syl. pt. 5, Fruehauf Corp. v. Huntington Moving & Storage Co., 159 W. Va. 14, 217 S.E.2d 907 (1975))). With respect to the insurers’ duties herein, the circuit court‘s construction of the Act in pari materia with the Insurance Code was appropriate only if the Act‘s relevant provisions are ambiguous. If, however, the Act‘s relevant provisions are not ambiguous, the circuit court‘s resort to the Insurance Code was unnecessary and improper.
To ensure that we interpret the Act to accurately ascertain the insurers’ duties in accordance with what the Legislature intended, we rely primarily on a crucial component of section 2—subsection (e)—that precisely sets forth the parameters of property presumed abandoned, confirming that such “[p]roperty is payable or distributable . . . notwithstanding the owner‘s failure to make demand or present an instrument or document otherwise required to obtain payment.”
Our reading of section 2(e)‘s provenance in Moore is consistent with that of the drafters of the model Uniform Unclaimed Property Act. In the official commentary to section 2(e) published in connection with the model statute‘s 1995 iteration, which was subsequently enacted in West Virginia, the drafters explained that
Subsection (e) [of section 2] is intended to make clear that property is reportable notwithstanding that the owner, who has lost or otherwise forgotten his or her entitlement to property, fails to present to the holder evidence of ownership or to make a demand for payment. See Connecticut Mutual Life Insurance Co. v. Moore, 333 U.S. 541 [68 S. Ct. 682, 92 L. Ed. 863] (1948).
National Conference of Commissioners on Uniform State Laws, Uniform Unclaimed Property Act, § 2 cmt. (1995). By this 1995 iteration, Moore‘s general application to the law of unclaimed property had already been firmly established for at least fourteen years, that is, from the immediately preceding 1981 version of the model statute. The 1995 version of section 2(e) and its attendant commentary regarding Moore were reproduced almost verbatim from the 1981 version. It is apparent that West Virginia‘s Legislature was fully aware of section 2(e)‘s genesis in the Moore decision. Moreover, we note that the first inclusion of section 2(e) in the model uniform statute in 1981 came just one year after DMF records became publicly available.
Section 2(e) also informs an accurate construction of the term “property,” defined by the Act as, inter alia, “a fixed and certain interest in intangible personal property that is held, issued or owed in the course of a holder‘s business.”
The insurers would have us limit Moore to its facts. Indeed, insofar as the Supreme Court‘s review was confined solely to the constitutional validity of the New York statute, the circuit court expressed doubt that the principles set forth in Moore apply with equal force to matters of statutory construction decided exclusively pursuant to state law. We harbor no similar doubt and conclude that Moore bears squarely on the state law question we decide today. Moore applies necessarily through section 2(e) to any sort of property that might be presumed abandoned, including beyond doubt the life insurance proceeds at issue herein.
The plain wording of section 2(e), particularly in view of its heritage in Moore, flatly rebuffs the insurers’ contention, accepted by the circuit court, that the “obligation to pay” the proceeds of a life insurance policy to the Treasurer cannot arise until a beneficiary perfects a claim thereupon. The insurers maintain that their “obligation to pay” under the Act can only be fully understood by considering it in pari materia with the Insurance Code‘s regulation of their contractual relationship with the policies’ insureds. Therefore, the argument goes, no beneficiary can enjoy the proceeds to which he or she is entitled without first filing a claim. The mere requirement of a claim in accordance with the Code, however, does not begin to address the wholly different question, decided in Moore and present here, regarding duties imposed on the insurers by a regulatory scheme separate and distinct from any obligation under an insurance contract.4
Our conclusion arises inexorably from the Legislature‘s purposeful bifurcation of the insurer‘s obligations under the Act from those pursuant to the Code in section 2(e) of the former, and it is the only plausible alternative to the claim-filing trigger urged by the insurers. Because the Act in this regard admits of only one interpretation, it is not ambiguous; it was therefore error for the circuit court to construe the Act in pari materia with the inapposite provisions of the Insurance Code directed solely at the contractual relationship between insurer and insured, and not purporting in any manner to govern the conduct of the Treasurer in his role as conservator for the citizenry. The circuit court‘s ruling treating the provisions of the Insurance Code as controlling deprived the Act of its full force and effect, contrary to our precedent.
The circuit court referred to recent unpublished decisions in three other states as consistent with its interpretation of West Virginia law. We do not find them persuasive. In two of those cases, the court merely ruled that, in the absence of a claim as required by contract, the defendant insurer had no independent duty to its insured or the insured‘s beneficiary to search the DMF. See Feingold v. John Hancock Life Ins. Co. (USA), No. 13-10185, 2013 WL 4495126 (D. Mass. Aug. 19, 2013); Andrews v. Nationwide Mut. Ins. Co., No. 97891, 2012 WL 5289946 (Ohio Ct. App. Oct. 25, 2012), review denied 135 Ohio St. 3d 1415, 986 N.E.2d 31 (Ohio 2013). Neither opinion addressed the broader obligation to state governments acting as conservators, established in Moore and codified in the Act.
The third case, Total Asset Recovery Services, LLC v. Metlife, Inc., No. 2010-CA-3719, 2013 WL 4586450 (Fla. Cir. Ct. Aug. 20, 2013), was a qui tam action alleging fraud on the part of several defendant insurers, based primarily on their retention of unclaimed policy proceeds that might have been payable had they cross-referenced their insureds against the DMF. The court determined that it had no jurisdiction over the dispute with respect to at least one insurer, as its liability had previously been compromised through settlement with the state‘s Department of Financial Services (“DFS“). The court therefore dismissed the complaint with prejudice.
The court held in the alternative that dismissal was warranted inasmuch as the insurer had not knowingly avoided any legal obligation, such obligation being a prerequisite to liability under the Florida False Claims Act. No obligation had arisen, according to the court, because the state‘s unclaimed property law imposes no duty on insurers to search the DMF or other external databases. The pronouncement of the Circuit Court of Florida on that point was confirmed last year in Thrivent Financial for Lutherans v. Department of Financial Services, 145 So. 3d 178 (Fla. Dist. Ct. App. 2014). In Thrivent, the court of appeals reversed the declaration of the DFS that the state‘s Disposition of Unclaimed Property Act rendered the proceeds of life insurance policies due and payable on the death of the insured. Although the statute required that proceeds be established “due and payable” exclusively by resort to the insurer‘s records, the DFS determined that the law imposed upon insurers the duty to supplement its records by consulting sources such as the DMF. The Thrivent
Likewise, the West Virginia Uniform Unclaimed Property Act imposes no specific duty on insurers to search the Department of Commerce‘s Death Master File or any comparable data source. Rather, the Act simply requires insurers generally, as holders of property presumed abandoned, to account for and turn over that property to the Treasurer. We have determined that, in the case of life insurance policy proceeds, the three-year dormancy period leading to the presumption of abandonment commences with the death of the insured. Each insurer is free to determine how it will investigate and discover whether its insureds are yet living. Depending on the insurer‘s resources and the volume of business done in West Virginia, it may find, for instance, that contacting its insureds directly or farming the task out to its agents may produce the desired results in the most economical and reliable fashion. On the other hand, an insurer may well choose to review the DMF as the best or most efficient way to perform its duties under the Act.5
It is thus largely irrelevant that, as asserted by the insurers, “[f]ive of the 15 states adopting the 1995 Model UPA in some form have also recently enacted DMF legislation,” explicitly imposing a duty to search that database. A similar enactment in West Virginia, as made evident by our holding today, would unnecessarily tread upon the insurers’ prerogative to decide how they will comply with the Act. The insurers, however, persuaded the circuit court to surmise that “[s]uch legislation would be redundant or unnecessary if a duty to search already existed in the UPAs adopted by these states.” Cf. United Ins. Co. of Am. v. Commw., Dep‘t of Ins., No. 2013-CA-000612-MR, 2014 WL 3973160 (Ky. Ct. App. Aug. 15, 2014) (holding that duty to search DMF imposed by new model legislation applied only to policies issued after statute‘s effective date of January 1, 2013). Were we to assume, however, that the specific, nonexistent “duty to search” could stand as a proxy for the general “duty to comply” unquestionably extant in the Act, the circuit court‘s rationale is faulty. See, e.g., Childers v. Parker‘s, Inc., 274 N.C. 256, 162 S.E.2d 481, 484 (1968) (“Whereas it is logical to conclude that an amendment to an unambiguous statute indicates the intent to change the law, no such inference arises when the legislature amends an ambiguous provision.” (citing 1 Sutherland, Statutory Construction § 1930 (1968 Cum. Supp.))). It is apparent from the nationwide legislative reaction to the proliferation of settlements emanating from the insurers’ conduct, see infra note 9, that our sister states have perceived an ambiguity in their own statutory schemes that they wish to clarify.
In the event that the insurer‘s chosen methodology proves lacking, the Act sets forth a comprehensive remedial scheme to encourage improvement. To begin with, “[a] holder who fails to report, pay or deliver property within the time prescribed” is liable to the Treasurer for interest on the property at twelve percent annually.
The insurers’ alleged failure to report, pay, and deliver property is at the heart of the Treasurer‘s complaints in this matter. On remand, after the insurers have been afforded the opportunity to answer the complaints, the circuit court shall permit the Treasurer to exercise his statutory right to examine the insurers’ records for compliance with the Act. See
IV. CONCLUSION
Pursuant to the foregoing, we reverse the circuit court‘s dismissal order of December
Reversed and Remanded.
Justice KETCHUM concurs and reserves the right to file a concurring opinion.
Justice KETCHUM, concurring:
I agree that life insurance companies must take affirmative steps to locate and pay beneficiaries of life insurance policies and pay abandoned life insurance proceeds to the unclaimed property fund. I would have, however, gone further and required the life insurance companies to regularly search for deceased insured‘s by using the Social Security Administration Death Master File (DMF).
It is estimated that there is over one billion dollars in death benefits held by insurance companies that are unclaimed by the beneficiaries of deceased policy holders.9 The insurance companies hold onto the policy proceeds without attempting to use technology to determine if the insured has died and track down beneficiaries.
Insurance companies regularly search the DMF to determine if an annuitant has died allowing it to terminate annuity payments. Conversely, most have not used the DMF to determine if a life insured has died resulting in the payment of life insurance benefits. Life insurance companies have used the DMF when it is to their benefit and ignored the DMF when it may cause them to pay money.
I would require the insurance companies to use the DMF. They should be required to use this publicly available information to determine if their insured has died. Ignoring the DMF enriches the life insurance industry to the detriment of their policyholder‘s beneficiaries and allows them to keep money that should be paid to the unclaimed property fund.