Court Opinion

ID: 9473178
Source: CourtListenerOpinion
Date Created: 2023-08-05 04:21:47.755385+00
Date Added: 2024-06-11T17:43:22.117825
License: Public Domain

McMILLIAN, Circuit Judge,
dissenting.
I respectfully dissent. I agree that the critical question in this case is whether the life insurance policy was issued to Perkins or to TEC. The majority affirms the district court’s finding that the policy was issued to TEC, a Missouri citizen. I disagree and would hold that the policy was issued to Perkins, a Kansas resident, and that Mo.Rev.Stat. § 376.620 (1978) does not apply to the policy.
Section 376.620 applies to policies “issued ... to a citizen of this state.” Regulation No. 13.11, 4 C.S.R. 190-13.110, of the Missouri Division of Insurance, which implements the statute, requires insurance companies doing business in Missouri to state in their policiés that suicide is not a defense if the insured is a Missouri citizen. The regulation therefore bars suicide as a defense only in those instances where the policy is issued to an insured who is also a Missouri citizen.
Missouri courts have not decided the validity of this regulation nor construed § 376.620 in a case where the policy was issued to someone other than the insured. The Missouri Supreme Court has held that § 376.620 did not apply to an individual life insurance policy issued by a Missouri corporation to an insured who was an Illinois citizen. Lukens v. International Life Insurance Co., 296 Mo. 574, 191 S.W. 418 (1916) (Lukens), appeal dismissed, 248 U.S. 596, 39 S.Ct. 182, 63 L.Ed. 438 (1919). The Eighth Circuit, relying on Lukens, reached a similar result in Bowen v. New York Life Insurance Co., 117 F.2d 298 (8th Cir.1941) (Bowen).
Missouri courts have not decided the applicability of § 376.620 to policies issued to Missouri citizens who are not the insured under the policy. Lukens and Bowen involved individual policies issued to the insured. Lukens does not hold, as the majority opinion states, that § 376.620 is intended to protect the purchaser of the insurance and that the residence of the insured is irrelevant.
Miller v. Home Insurance Co., 605 S.W.2d 778 (Mo.1980) (banc) (Miller), involved facts similar to the present case.1 *636Miller held that the law of the state where the master policy is delivered controls choice of law questions. Miller did not decide, however, whether the citizenship of the Missouri employer (group policyholder) or the Alabama citizen (insured) governed the applicability of § 376.620. Id. at 780-81.
The district court in the present case therefore had to decide an issue which had not been decided by Missouri’s highest court. In such a situation, a federal court in a diversity case must determine how the state’s highest court would decide if it were faced with the same issue. West v. American Telephone & Telegraph Co., 311 U.S. 223, 236-37, 61 S.Ct. 179, 183-84, 85 L.Ed. 139 (1940); Finch v. Mississippi State Medical Ass’n, 585 F.2d 765, 777 (5th Cir. 1978). A federal court should proceed with caution in interpreting state law to avoid imposing a duty under state law that would not be imposed by the courts of that state. Rhynes v. Branick Manufacturing Corp., 629 F.2d 409, 410 (5th Cir.1980); MacLean v. Parkwood, 354 F.2d 770, 772 (1st Cir. 1966).
Although Missouri courts have not decided this issue, the Missouri Division of Insurance has promulgated Regulation 13.11, implementing the statute. The Division is charged with the interpretation and implementation of Missouri’s insurance laws. Regulation 13.11 requires the following statement or its equivalent on all life insurance policies sold in Missouri:
Suicide is no defense to payment of life insurance benefits nor is suicide while insane a defense to payment of accidental death benefits, if any, under this policy where the insured is a Missouri citizen unless the insurer can show that the insured intended suicide when he applied for the policy, regardless of any language to the contrary in the policy.
(Emphasis added.) “While an administrative interpretation may not be permitted to alter or overturn a prior judicial construction of a statute, administrative interpretations are utilized as ... tool[s] for determining legislative intent when construing an ambiguous statute.” Smith Beverage Co. v. Reiss, 568 S.W.2d 61, 67 (Mo.1978) (banc) (citations omitted). The Missouri Supreme Court also held that the failure of the Missouri legislature to alter the effect and language of an administrative regulation indicates the legislature’s approval of the regulation. Id. at 68.
Regulation 13.11 was promulgated in 1975. The legislature’s failure after nine years to modify the language and effect of the regulation indicates the legislature’s tacit approval of the regulation. Guided by Regulation 13.11 and the Missouri legislature’s action toward it, I would construe § 376.620 to apply only to policies issued in Missouri where the insured is a Missouri citizen at the time the policy is issued. TEC is not the insured. M. Rhodes, 19 Couch on Insurance 2d § 82:1 (rev. ed. 1982). The insured in the present case was Perkins, a Kansas citizen; therefore, § 376.620 does not apply to the policy.
I do not believe, however, that this case turns on whether § 376.620 applies only to insureds who are Missouri citizens. Even if § 376.620 applies to policies issued to Missouri citizens with no further qualification, I cannot agree that the policy was issued to TEC.
The authorities are in agreement in defining group life insurance. Group life insurance insures the individual lives of a number of persons by a single, comprehensive or master policy, e.g., Legler v. Meri-wether, 391 S.W.2d 599, 602 (Mo.Ct.App. 1965); McFarland v. Business Men’s Assurance Co., 105 Ga.App. 209, 124 S.E.2d 432, 433 (1962); 44 Am.Jur.2d Insurance § 1842 (1982). The master policy is issued to the group policyholder; certificates are issued to the insured individuals, Hofeld v. *637Nationwide Life Insurance Co., 59 Ill.2d 522, 322 N.E.2d 454 (1975); 44 Am.Jur.2d Insurance § 1842 (1982), to inform them that they are insured under the group policy. Crawford v. Metropolitan Life Insurance Co., 167 S.W.2d 915, 924 (Mo.Ct.App. 1943).
Group life insurance is normally offered by employers as a fringe benefit. Simpson v. Phoenix Mutual Life Insurance Co., 24 N.Y.2d 262, 299 N.Y.S.2d 835, 840, 247 N.E.2d 655, 658 (1969). Coverage continues for eligible employees as long as they remain employed. Legler v. Meriwether, 391 S.W.2d at 602; Holland v. Lincoln National Life Insurance, 45 N.J.Super. 66, 131 A.2d 428, 429 (1957); J. Appleman & J. Appleman, 1 Insurance Law and Practice §§ 121, 125 (1981). Premiums are paid wholly or partially by the employer. Holland v. Lincoln National Life Insurance Co., 131 A.2d at 429. The cost of group insurance is generally less than comparable individual insurance. Simpson v. Phoenix Mutual Life Insurance Co., 299 N.Y.S.2d at 840, 247 N.E.2d at 658.
Part of the difficulty in determining to whom this policy was issued stems from the method Philadelphia Life and TEC employed to secure insurance. Philadelphia Life did not issue a master policy to TEC covering its employees but rather entered into a plan for group life insurance with TEC and issued an individual policy to Perkins. The insurance covering Perkins’ life, therefore, had some features of group insurance and some features of individual insurance.
The majority opinion considers TEC’s plan for group insurance, TEC’s payment of the premiums, and TEC’s right to terminate the individual policy to be controlling in determining that the policy was part of a group insurance plan and that the policy was issued to TEC. In order to reach this conclusion, the majority opinion ignored or failed to give proper weight to other undisputed facts which require a contrary conclusion. Most importantly, Philadelphia Life did not insure a group of persons, Perkins was the only person in the class of “president” (the only class to be insured by Philadelphia Life). Further, Perkins would be the only person insured under the group insurance plan for at least ten years — from the issuance of the policy in 1980 to Perkins’ anticipated retirement in 1990. The contract between TEC and Philadelphia ^ife stated that an individual policy would ke issued> consistent with this statement, Philadelphia Life issued an individual poliCY The Missouri Division of Insurance approved the policy as an individual poli-
Several other facts indicate that the insurance covering Perkins was individual insurance and not group insurance. The policy in clear, unambiguous terms identified Perkins as the owner and insured. Perkins was required to take a physical examination as part of his application for insurance, which is not commonly required for group insurance. Further, Perkins’ insurance was to continue after his retirement from TEC at no cost to him; continuation of insurance after employment is also not common in group insurance. All these facts considered together indicate that the insurance on Perkins’ life was individual insurance.
The district court erred in concluding that the insurance was group insurance and that the insurance was issued to TEC. TEC was never issued an insurance policy. TEC was given a contract or plan for group life insurance; the contract contained no “insuring agreements.” There was no basis for TEC to receive the policy on Perkins’ life. TEC was neitherme owner nor the ™sure^- TEC was not the policyholder because the policy was not a master policy, Perkins, the owner and insured, was the onty one to whom the policy could have been issued. I would hold, therefore, that the policy was issued to Perkins, a Kansas citizen.
In my view the majority opinion has expanded the applicability of Missouri’s suicide exclusion statute beyond what the Missouri legislature intended. A corporation purchasing group insurance for its employees could secure the protection of § 376.-*638620 regardless of the employees’ citizenship by having the policy executed in and delivered to its corporate offices in Missouri. An extreme example of this is a Missouri corporation purchasing group life insurance for its employees who are citizens of other countries. Missouri law would seek to protect persons who have no connection whatsoever with the state. I do not believe that the Missouri legislature in enacting § 376.620 has clearly indicated an intention to provide such broad coverage. Neither have Missouri courts construed § 376.620 to be so broad in scope. A federal court should not take such a bold step.
Accordingly, I would reverse the decision of the district court and hold that the beneficiary under this policy was entitled only to the premium payments made on the policy-

. Appellee argues that the Missouri Supreme Court in Miller v. Home Ins. Co., 605 S.W.2d 778 (Mo.1980) (banc) (Miller), implicitly held that Mo.Rev.Stat. § 376.620 (1978) applied to the *636master policy issued to the Missouri employer and policyholder. I do not agree that this is the holding of Miller or that there is dicta in Miller to this effect. Further, Miller can be distinguished from the present case. The Missouri employer in Miller was issued a master policy. The employer in the present case was not issued an insurance policy of any kind. Miller does not therefore indicate how the Missouri Supreme Court would decide the present case.