Attorney general asks to intervene in defense of consumer-protection law that Bevin dropped

Attorney General Andy Beshear filed a motion Wednesday at the Kentucky Supreme Court asking to intervene in a consumer-protection case that Gov. Matt Bevin abandoned last week.

At issue is the Unclaimed Life Insurance Benefits Act of 2012, which requires insurance companies to make “good faith efforts,” using public death records, to determine if policyholders have died so their benefits can be paid.

Three insurance companies owned by Kemper Corp. of St. Louis sued the Kentucky Department of Insurance in 2012 to prevent the law from being applied retroactively to more than 9,000 policies they had issued in Kentucky. State lawyers defended the law under then-Gov. Steve Beshear. But on Feb. 8, a few days before oral arguments in the case were set at the Supreme Court, Bevin’s insurance commissioner instructed the lawyers to drop the case. The high court dismissed the case the next day.

“To completely abandon the defense of a statute this late in the proceedings may be unprecedented in the commonwealth,” Assistant Deputy Attorney General Mitchel Denham wrote for Andy Beshear in Wednesday’s motion. “The last-minute actions by the (Insurance) Department have placed the rights of Kentuckians in jeopardy. Nearly 10,000 people are affected by its decision to abandon its nearly four-year defense of (the law) and dismiss this appeal.”

In the motion, Beshear argues that he has the right to intervene on behalf of the state and its people as attorney general, although his office was not a party to the original lawsuit. He is asking the Supreme Court to reopen the case and let him replace the Bevin administration in opposition to the insurance companies. The governor and the insurers will have a chance to formally respond to Beshear’s request before the court acts.

At a news conference last week, Bevin defended his administration’s decision to drop the case.

A Franklin Circuit Court judge sided with the state on whether the law could be applied retroactively. But the Kentucky Court of Appeals disagreed, ruling for the insurance companies and faulting the legislature for not stating explicitly that the law was meant to be retroactive.

“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.

Apart from the court case, the General Assembly might get involved as well. Nearly a dozen House members, including some in Democratic leadership, have filed a bill to clarify the 2012 law and unequivocally state that it should apply retroactively to all life insurance policies in Kentucky.

House Bill 408 is assigned to the House Banking and Insurance Committee for consideration. No hearing date has been announced.

This story was originally published February 17, 2016 at 5:59 PM with the headline "Attorney general asks to intervene in defense of consumer-protection law that Bevin dropped."