Substantial Compliance with Life Insurance Beneficiary Designations in New Jersey
Courts in New Jersey recognize the doctrine of substantial compliance with life insurance beneficiary designations. This means that even if the beneficiary designation is not perfect or technically correct, as long as it is clear and unambiguous in its intent, it will be considered valid. The court will look at the language used in the designation to determine the intended beneficiary. However, if the designation is unclear or ambiguous, the court will look at extrinsic evidence to determine the intended beneficiary. It's important to note that substantial compliance does not apply in cases of fraud, duress, or undue influence.
In Metlife v. Kubichek, the third circuit applied New Jersey law to a life insurance beneficiary dispute. That case involved a dispute over the beneficiary designation for two life insurance policies held by William Kubichek, who was a participant in a group life insurance plan provided by his employer, General Motors Corporation (GM). The policies were carried by Metropolitan Life Insurance Company (MetLife). In 1977, Kubichek enrolled in the basic group life insurance policy and named his mother as the beneficiary. Later that year, he enrolled in the optional group life insurance policy and again named his mother as the beneficiary. In 1984, Kubichek married Patricia Brennan, and in the same year, he used the proper form to designate Brennan as the sole beneficiary of his basic life insurance policy. However, the optional policy was not among those listed that he could have checked off or circled.
In 1990, Kubichek was laid off by GM and was required to resubmit documentation to reinstate his group life insurance benefits. In 1991, he sent a letter to the Regional Personnel Administration Center, requesting a copy of his beneficiary designation to ensure that his wife was the sole beneficiary on all policies. However, MetLife claimed that GM was unable to locate its copy of this letter. In 1991, Kubichek again signed up for the basic and optional policies, but the letter does not indicate who the beneficiaries of these policies are.
Kubichek passed away in 2000, and Brennan and Kubichek submitted competing claims to MetLife for the proceeds from the optional policy. Brennan alleged that Kubichek changed the beneficiary designation for the optional policy from her to Brennan in 1991, as evidenced by the correspondence produced in this litigation. Unable to resolve this dispute, MetLife filed an interpleader action, deposited the proceeds with the court, and sought an injunction restraining Brennan and Kubichek from instituting any action related to the policies against it, GM, or the plan.
The case was regulated by the Employee Retirement Income Security Act (ERISA), and the District Court granted summary judgment to Kubichek, awarding her the proceeds from the optional policy and enjoining Brennan from suing MetLife or GM. Brennan appealed the decision, arguing that genuine questions of material fact exist precluding summary judgment in Kubichek’s favor, that she is entitled to summary judgment in her favor because the decedent substantially complied with MetLife’s policy when designating her as the beneficiary of the optional policy, and that the Court should not have enjoined her from suing either MetLife or GM since both breached their fiduciary duties by allegedly losing the decedent’s 1990 enrollment form.
The court held that in New Jersey, an insured cannot change the beneficiary of a life insurance policy except by substantial compliance with the method provided in the contract between the insured and the insurer. The court found that the strongest evidence presented by Brennan, a letter from the decedent to MetLife, did not demonstrate that the decedent substantially complied with MetLife's change of beneficiary policy to name her as the beneficiary of the optional policy. The letter was of questionable authenticity and did not show that the decedent completed and submitted the proper forms or even tried to do so. The court also noted that the letter did not approach the certainty of examples cited in previous cases that showed substantial compliance with an insurer's change of beneficiary policy. Therefore, the court affirmed the District Court's granting of Kubichek's motion for summary judgment.
If you are involved in a life insurance beneficiary dispute, contact attorney J.Michael Young at (800) 323-1857.
