An “outraged” Attorney General Andy Beshear said Thursday he will try to defend a consumer-protection law challenged by the life insurance industry.
On Monday, Gov. Matt Bevin’s Department of Insurance dropped the state’s legal defense of the Unclaimed Life Insurance Benefits Act, which was being challenged by three insurance carriers owned by Kemper Corp. of St. Louis, Mo. Oral arguments in the case were scheduled for Friday at the Kentucky Supreme Court.
The law requires insurance companies to make “good faith efforts,” using public death records, to determine if policyholders have died so their benefits can be paid. Under former Gov. Steve Beshear — the attorney general’s father — the state argued that the law should apply to policies in effect when the law passed in 2012. The insurance companies sued, calling that a retroactive rewriting of their contract terms.
A Franklin Circuit Court judge sided with the state, but the Kentucky Court of Appeals overturned that decision and backed the insurance companies. With Bevin’s unexpected legal retreat from the Supreme Court, the Court of Appeals’ ruling appears to be the final say in the case.
The attorney general’s office has not been a party to the suit. Staff lawyers for the Public Protection Cabinet, which includes the Insurance Department, represented the state. However, Andy Beshear said Thursday that he will try to intervene.
“I was outraged to learn yesterday that the Kentucky Department of Insurance had turned its back on thousands of Kentuckians and their families by refusing to defend the Kentucky Unclaimed Life Insurance Benefits Act,” Beshear said.
If the Department of Insurance is going to abandon its duty to protect Kentuckians, the Office of the Attorney General is going to step in.
Attorney General Andy Beshear
“Despite serving as the state’s chief lawyer, my office was not consulted by the department. Rather, the department acted in a highly unusual manner, dropping a fully briefed case at the last minute,” Beshear said. “Because of the department’s reckless actions, this may be an uphill battle. But if the Department of Insurance is going to abandon its duty to protect Kentuckians, the Office of the Attorney General is going to step in.”
Andy Beshear is a Democrat, like his father. Bevin, a Republican, took office in December.
At a news conference Thursday, Bevin defended his administration’s decision to reverse course.
The idea that we would use taxpayer money to fight something that is illegal was not determined to be a wise use of taxpayer money.
Gov. Matt Bevin
“In looking at all the legalities of this — I mean, basically the appeals court has ruled that what was being required, which was a retroactive application of the law, violated the law,” Bevin said. “And our thorough analysis of this from a legal perspective affirms that. So, the idea that we would use taxpayer money to fight something that is illegal was not determined to be a wise use of taxpayer money.”
Kemper holds more than 9,000 life insurance policies in Kentucky, mostly small “burial plans” with an average value of $4,800, nearly all of them sold door-to-door in poorer neighborhoods, according to legal briefs in the case.
Also on Thursday, House Banking and Insurance Chairman Jeff Greer stood on the House floor to withdraw a bill he filed Monday that would have written the insurance companies’ legal argument into statute, establishing that the consumer-protection law should not apply to policies issued prior to 2013.
Greer, D-Brandenburg, offered no reason for withdrawing the bill in the House. But earlier in the day, after Greer was criticized for the bill on the Kentucky Sports Radio show, Greer told host Matt Jones that he was mistaken to file it, and he apologized.
Greer, the bill’s sole sponsor, told the Herald-Leader earlier this week that he had not “really had a chance to read it yet,” though he refused to say who had written the bill if he had not. In a statement, Kemper Corp., the corporation suing the state over the law, acknowledged “indirect contact” with Greer prior to his filing the bill.