Insurance Law

Dist. Ct. did not err in granting plaintiff-insurance company’s motion for summary judgment in action seeking to essentially void certain life insurance policies under circumstances where defendants: (1) recruited elderly third-parties to apply for and obtain life insurance policies; (2) directed said third-parties to shortly thereafter place said policies into life insurance trust controlled by one defendant; (3) paid premiums on said policies; and (4) misrepresented certain facts in policy applications to make it seem that third-parties were healthier/able to live longer lives than what they really were. Illinois common law prohibits purchase of insurance policy by persons who have no interest in survival of insured, and Dist. Ct. could properly find that defendants’ conduct constituted fraud on plaintiff and well as breach of contract on part of defendant-insurance agent who collected commissions on said policies, where defendants who had no insurable interest in insured either paid premiums on subject policies or sold policies knowing that other individuals who were paying premiums on said policies had no interest in continued life of insured. Plaintiff was also able to keep premiums that were paid by defendants on essentially void/illegal contracts.

In ERISA action by plaintiffs-chiropractors and others alleging that defendant-insurance company used wrong procedure when determining how much to pay plaintiffs for services rendered to patients under health plan, Dist. Ct. erred in finding that plaintiffs were “beneficiaries” of health plan so as to entitle them to bring instant action under ERISA. Section 1132(a)(1)(B) grants to plan participants or beneficiaries ability to enforce in federal court instant procedure sought by plaintiffs. However, plaintiffs conceded that they were not participants of plan as defined in section 29 USC section 1002(7), and record showed that plaintiffs were not “beneficiaries” of plan where they did not show either that they had been designated by any participant in terms of assignment of claim or had been designated as participant in any employee benefit plan. As such, plaintiffs could only bring instant action in state court.

Dist. Ct. did not err in dismissing plaintiff-insured’s action alleging that defendant-insurance company breached its commercial general liability policy by failing to defend or indemnify plaintiff in underlying lawsuit that alleged that plaintiff recorded clients’ phone calls that contained confidential information without their permission and without notifying them of said recording. Defendant had no duty to defend or indemnify plaintiff on underlying lawsuit, where: (1) language in policy provided plaintiff with coverage only if there was oral or written “publication” of material that violated person’s right of privacy; and (2) allegations of lawsuit did not accuse plaintiff of communicating contents of subject recordings to anyone or that plaintiff accessed or listened to recordings after they were made so as to qualify as “publication” for purposes of coverage under policy. Ct. rejected plaintiff’s argument that publication was achieved where clients’ confidential matters were transmitted to plaintiff’s recording devices.