Opinion ID: 1849627
Heading Depth: 1
Heading Rank: 6

Heading: participants' interest

Text: As noted, the Act was intended to protect resident policyowners, insureds, including certificate holders under group insurance policies or contracts, beneficiaries, annuitants, payees, and assignees of life insurance policies, health insurance policies, [and] annuity contracts against an insurer's failure to meet contractual obligations due to insolvency. § 44-2701. The term [r]esident is defined by the Act to mean any person who resides in this state at the time a member insurer is determined to be an impaired or insolvent insurer and to whom a contractual obligation is owed. § 44-2702(11). The Association contends that because a nonresident corporate trustee was designated as the owner of the Executive Life contracts, the Unisys employees on whose behalf this action was brought have no enforceable claim under the Act. The district court rejected this argument, reasoning that while the trustee was the legal owner of the contracts, the employees were the beneficial owners and that their residence in Nebraska was determinative on the issue of coverage. The district court relied in part upon Unisys Corp. v. Pa. Life & Health Ins. Guar., 667 A.2d 1199 (Pa.Commw.1995). Construing statutory language substantially similar to §§ 44-2701 and 44-2702(11), the Pennsylvania court reasoned that because the trustee, as legal owner of the Executive Life contracts, held the proceeds of the contracts for the exclusive benefit of the resident Unisys employees who were participants under the contracts, the employees were equitable owners of the contracts entitled to the protection of Pennsylvania's guaranty act. The Arizona Supreme Court employed similar reasoning in Ariz. Life & Disability v. Honeywell, 190 Ariz. 84, 95, 945 P.2d 805, 816 (1997), interpreting statutory language which provided that Arizona's guaranty act applied to contracts `issued to residents of this state.' The court concluded that although the Executive Life contracts at issue were issued to the nonresident trustee, the Arizona resident participants were the equitable owners of the contracts and that thus the contracts were issued to them. Id. The court noted that the insurance fund's argument to the contrary would defeat the policy of Arizona's guaranty act to protect individual participants of annuity contracts, among others, from insurance company insolvency. Id. at 96, 945 P.2d at 817. In arguing that the district court erred in holding that the Unisys employees residing in Nebraska were beneficial owners of the contracts entitled to protection under the Act, the Association relies upon authority from other jurisdictions holding that persons situated similarly to the Unisys employees in this case are not entitled to the protection of state insurance guaranty acts. Some of these cases involve interpretation of statutes which are significantly different from the Act before us here. For example, in Bennet v. Va. Life, Acc. & Sickness Ins., 251 Va. 382, 385, 468 S.E.2d 910, 912 (1996), the court addressed statutory language granting coverage only to contracts `issued to and owned by an individual.' The court held that nothing in this express statutory language permitted an interpretation that a mere beneficial or equitable owner could satisfy the statutory requirements. In Georgia Life & Health v. Gilman Paper Co., 249 Ga.App. 767, 771, 549 S.E.2d 751, 755 (2001), the court held that an unallocated annuity contract owned by a nonresident trustee was excluded from coverage under Georgia's guaranty act which extended coverage only  `to the persons who are the contract holders and who ... [a]re residents.'  Unlike the guaranty acts in these states, however, the Act in Nebraska does not include language limiting protection to circumstances in which annuity contracts are issued to and owned by an individual, nor does it limit coverage to contract holders. Statutes relating to the same subject matter will be construed so as to maintain a sensible and consistent scheme and so that effect is given to every provision. Reiter v. Wimes, 263 Neb. 277, 640 N.W.2d 19 (2002); Becker v. Hobbs, 256 Neb. 432, 590 N.W.2d 360 (1999). Reading §§ 44-2701 and 44-2702(11) together, we conclude that the Act was intended to protect Nebraska residents who are the beneficiaries of a contractual obligation under an annuity contract issued by an insurer who subsequently becomes insolvent. Although the Executive Life contracts designate the Trustee as the legal owner who is authorized to exercise contractual rights, it is clear that the employee participants whose retirement contributions purchased the contracts are the persons entitled to the benefit of the contractual obligations undertaken by Executive Life. Stated another way, it is the resident employees, not the nonresident trustee, who are injured by the insolvency. We agree with the district court that such employees are entitled to protection under the Act.