Kantor and Kantor does.
This is the story of how Kantor and Kantor got a Federal Judge to change his mind after five years of litigation.
In October 2021, a decision came out in the United States District Court for the Northern District of Georgia (Atlanta Division). After almost five years of litigation, the Federal Judge ruled that because an employee of Thyssenkrupp Elevator Corporation (“TKE”) had not provided evidence of insurability to Hartford Life and Accident Insurance Company when he elected supplemental life insurance coverage, his family was not entitled to $678,000 in supplemental life insurance benefits upon his death. The court made this ruling even though the employee had paid premiums from his monthly salary for the supplemental life insurance from 2013 and continuing until his death more than three years later.
Kantor and Kantor wrote about the decision in its weekly ERISA Watch. The morning ERISA Watch was published, one of the firm’s founding partners, Glenn Kantor, read the summary of the decision. He felt the court had come to the wrong conclusion. After all, justice is not served by letting an employee pay premiums from their paycheck for life insurance for more than three years, and then, once they are dead, let Hartford raise some technicality to avoid paying benefits on the policy.
Even though Kantor and Kantor’s legal practice is primarily located on the West Coast, Glenn felt he had to do something to try to bring justice for this Georgia family. He reached out to the attorneys for the family and started to inquire about what had happened. He quickly brought the focus on something called an incontestability clause.
After a set period of time—often two years—incontestability clauses preclude all defenses, inclusive of fraud unless the defense is clearly excepted in the provision or by statute. The purpose of an incontestability clause is to protect the expectations of the insured and to encourage insurers to be diligent in performing their duty to investigate. Incontestability clauses annul all warranties and conditions that might defeat the rights of the insured after the lapse of the stipulated time.
Glenn learned that the life insurance policy at issue, in this case, had the typical two-year incontestability provision. Since premiums had been paid for over three years, the incontestability clause should have prevented Hartford from asserting the failure to provide evidence of insurability as a defense to paying the claim.
But since the court had already ruled that Harford did not need to pay the claim, how could this be overcome? Glenn got the agreement of the family to attempt to use a disfavored mechanism in the law, a motion for reconsideration. This would take courage. The Federal Rules of Civil procedure and Georgia’s local rules allow for the filing of motions for reconsideration only when absolutely necessary. Reconsideration is only absolutely necessary where there is: (1) newly discovered evidence; (2) an intervening development or change in controlling law; or (3) a need to correct a clear error or prevent a manifest injustice.
A motion for reconsideration is not a vehicle to present new arguments or evidence that should have been raised earlier. Neither is it an opportunity for the moving party and their counsel to instruct the court on how the court could have done it better the first time. A motion for reconsideration most assuredly should not be used to repackage familiar arguments to test whether the court will change its mind.
With the help of one of Glenn’s law partners, Brent Dorian Brehm, he set out to convince the court that reconsideration was necessary to prevent manifest injustice. Glenn got himself admitted pro hac vice into the Federal Court in Georgia. Glenn and Brent then argued that allowing Hartford to rely on provisions from the policy that support their defense (the evidence of insurability requirement) and ignore others that are less favorable (the incontestability provision) constitutes manifest injustice.
The deck was stacked against them. A manifest injustice analysis requires a fact-specific analysis that resides in the discretionary authority of the reviewing court. They had to be able to demonstrate that the underlying judgment caused some type of injustice which could be avoided if the judgment were reconsidered. Essentially, they had to be able to show that altering or amending the underlying judgment will result in a change in the outcome in their favor.
Several months after the motion for reconsideration was filed, after Hartford filed a vigorous opposition, and Glenn and Brent pointed out the problems with Hartford’s position in an expertly crafted response, the court ruled. It found that Glenn and Brent had established the facts of this case justified ruling on the merits.
To illustrate, this case largely arose because TKE mistakenly led the insured and his family to believe that he successfully registered for increased benefits despite the lack of evidence of insurability. Moreover, the difference between the benefits the family thought they were entitled to versus those paid by Hartford was significant: Plaintiffs received only $170,000 of the $848,000 guaranteed under the upgraded Policy. Not only that, but TKE also deducted the increased premiums from the employee’s paycheck for years, withholding funds that he could have invested in other life insurance plans to support his family rather than forwarding those funds to Hartford.
While the court noted Plaintiffs could and should have raised their claim sooner, it agreed with Glenn and Brent that because the livelihood of the employee’s family may hang in the balance, justice required an examination of the incontestability clause found in the life insurance policy. When the court performed that examination, it determined that under both ERISA and Georgia case law, the incontestability clause barred Hartford’s defense that the failure to provide evidence of insurability allowed it to avoid paying life insurance benefits on the policy.
Very few law firms examine every ERISA decision in the nation, but Kantor and Kantor does just that. Even fewer do so and are willing to travel across the country to fight for justice, but that’s exactly what Kantor and Kantor does.
