Florida's First District Court of Appeal has handed Thrivent Financial a victory this week in the ongoing battle between life insurers and state unclaimed property administrators. As we noted in Update on Social Security Death Master File Requirements, Florida Department of Financial Services issued a declaratory ruling requiring life insurers to search the Social Security Death Master File. Specifically, DFS found that life insurance funds were due and payable upon the death of the insured; the dormancy period is triggered upon the death of the insured. Furthermore, DFS said that insurers had an affirmative duty to use due diligence by searching databases, such as the SSDMF, to determine if any insureds had died.
The Court of Appeal found that nothing in the statutory language supported DFS' interpretation. The Court rejected DFS' contention that the general applicability subsection that states “[p]roperty is payable or distributable for the purpose of this chapter notwithstanding the owner’s failure to make demand or to present any instrument or document required to receive payment” does not apply when there is a more specific provision addressing the same topic. The Court refused to insert the affirmative duty to search the SSDMF, instead leaving that to the legislature.
The Court's opinion can be found at www.1dca.org.
Thrivent and Unclaimed Property
Thrivent has been active in litigation relating to unclaimed property, audits and the SSDMF. California joined a Kelmar Associates led audit and eventually filed a lawsuit against the insurer. The lawsuit was filed in Sacramento, while Thrivent filed a similar lawsuit against California in San Francisco. For more on the California lawsuits, see California Sues Another Life Insurer.
Duty to Search SSDMF
Thrivent's win is probably only temporary. Florida will most likely pursue appeal options in the coming weeks. Florida may also pursue legislative options to change the statutory language to make these court battles moot. Many states have already gone the legislative route and amended their statutes to provide for the affirmative duty to search the SSDMF.