Wiseman issues ruling in life insurance dispute

Superior Court associate judge David A. Wiseman has ruled in favor of an insurance company and its general agent who are being sued by a woman on Rota on various claims related to a life insurance policy purchased in 1995 for her mother.

Wiseman ruled that plaintiff Adelia R. San Nicolas has failed to provide proof in her claims against NetCare Life and Health Insurance Co. and Moylan’s Insurance Underwriters (Int’l) Inc. for breach of contract, fraud, unfair claims practices, and violation of the Consumer Protection Act.

San Nicolas, however, is entitled to the statutory rate of interest on the $2,957.43 that was withheld from her from January 2010 until December 2010, Wiseman said.

According to court records, Occidental Life Insurance Company sold a universal life insurance policy to San Nicolas on her own life and on that of her mother, Maria M. Rase, then age 70, in March 1995 for a premium of $80.17 per month.

In 1998, Occidental sold its life policies to NetCare.

By September 2006, all accumulated value on the policy had been used to keep the policy at the $25,000 level. In October 2006, the $80.17 could not keep the policy in force at $25,000.

Thereafter, the accumulated value and cash value of the policy became negative. The policy had no positive value; the premium payments continued automatically at a level that would not support a $25,000 policy.

In May 2009, a new manager for NetCare’s life business, Jovette Alcantara, organized a computer generated mailing for all policies that had lapsed. The program generated a form letter addressed to Rase informing her that the “plan had lapsed effective Feb. 14, 2008.” NetCare also gave Rase an option to reinstate the policy.

San Nicolas told Alcantara that the premium had been paid consistently but Alcantara said that the policy had indeed lapsed. NetCare offered three options to San Nicolas; (1) a partial refund of premiums; (2) reinstatement of the policy with evidence of insurability by payment of the earned premiums; or (3) a policy with a reduced benefit at $80.17 per month.

San Nicolas rejected all three options and demanded that NetCare return all the premiums she had paid.

Rase died on Oct. 29, 2010, after San Nicolas filed the lawsuit.

In December 2010, NetCare subsequently refunded $2,957.43 to San Nicolas, representing the premiums she had paid after the policy had lapsed. San Nicolas did not cash the check because she claimed her policy did not lapse.

In his order, Wiseman said that Moylan’s had no duty toward San Nicolas with respect to the administration of the policy. To keep the policy in force until Rase’s death, San Nicolas would have had to pay approximately $10,000 (inclusive of the money refunded), he said.

“There is no evidence that NetCare or Moylan’s undertook any act to cause, intentionally or even negligently, the policy to lapse,” he noted, adding that the plaintiff’s breach of contract claim is uncertain.

He said San Nicolas testified that when she filed the lawsuit, the only damages she suffered were the costs of two visits to meet her lawyer, Ramon K. Quichocho. The expenses of the lawsuits are not consequential damages, he pointed out.

Additionally, Wiseman said, the plaintiff never filed a claim under the policy with proof of loss. The evidence shows, the judge said, that plaintiff was unwilling to pay the amount of money to keep the policy in force.

“NetCare did not keep her from paying that amount nor did it prevent her from having an extended payment plan,” Wiseman said.

Attorney Richard W. Pierce represented defendants NetCare and Moylan’s in the lawsuit.