A New York and New Jersey Lawyer Who Represents Policyholders and Beneficiaries in Life Insurance Denial Cases

A New York federal court was recently faced with a life insurance dispute of the type that you might see in a Hollywood movie or television show, and well, it’s the type that I have litigated in the past. In Metropolitan Life Insurance v. Bradway, the adult children of a deceased Bronx VA Hospital employee litigated against his new wife who was thirty years his junior over the proceeds of a $300,000 life insurance policy.

The decedent had in 1998 designated his children as beneficiaries under the policy, and then in 2007 began dating Felecia Bradway, who was thirty years younger than him, and they moved in together in April of that year and became engaged. Shortly thereafter, the decedent designated her as the sole beneficiary, and did so again late in 2008 following his diagnosis with terminal liver cancer.

Notably, Bradway filed a death claim the day after her husband died (at age 58), but she claimed that it was part of the paperwork process at the funeral home.

In the litigation, the children asserted that Bradway used undue influence over their father to make the beneficiary change and that he was mentally incompetent to make the change. Either argument, under New York life insurance law, would be sufficient to overturn the life insurance beneficiary designation. Both arguments failed.

The court pointed out that the children failed to set forth sufficient evidence to support either contention. For example, the decedent’s physician submitted a letter attesting to his mental competency. A daughter also claimed that her father had several relationships with other women and never named them as beneficiaries and that she did not believe he would have disinherited her of his free will. Further, it was alleged that the decedent took Oxycodone for back pain, but there was no evidence it affected his mental competency. Accordingly, the judge stated that there was not enough evidence to so lead a reasonable finder of fact to conclude that the decedent was either incompetent or subject to undue influence.

The children also asked the court to impose a constructive trust on the life insurance policy proceeds for their benefit. The court declined to do so, holding that the federal law that governed the distribution of the policy proceeds–the Federal Employees’ Group Life Insurance Act–preempted the constructive trust doctrine, a state remedy.

The fact that the decedent worked at the VA and the case was governed by the Federal Employees’ Group Life Insurance Act puts an interesting twist on this case. Same goes for other life insurance cases where the life insurance policy was an employment benefit triggering the protections of ERISA. In both cases, federal law is implicated which can lead to a different result than state law when there is a contest for the policy.

In addition, of course, in this case there was the family drama of children of the decedent fighting against his new wife for the policy. The case is therefore a reminder that it is important for an insured to make all of his or her heirs aware of his estate planning desires.

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