Lieff Cabraser Civil Justice Blog
Life Insurance Fraud

The Tennessean Reports on Newly-Filed North Carolina Mutual Insurance Fraud Lawsuit

The Tennessean reports on Lieff Cabraser’s lawsuit against North Carolina Mutual Life Insurance Company filed Wednesday in federal court in Tennessee on behalf of Marietta McClendon. The Brentwood resident’s suit alleges North Carolina Mutual took her family’s money by way of a fraud that halved the benefits she obtained after the death of her brother. “My mother and brother worked hard to protect our family,” said Ms. McClendon. “Losing them was hard on our family. We expected the life insurance company to stand behind their policy and to pay what they owed.”

The suit contends that when North Carolina Mutual assumed the McClendon’s policy, along with 52,000 other similar policies from a number of different Alabama insurance companies, it began charging higher interest rates on loans taken against the insurance policies than had been contracted in the original agreements. As noted by The Tennessean, the suit also alleges that “payments made on the loan amount by McDaniel’s son after her death — from 2009 to 2016 — were pocketed by the company, which then reduced the amount of life insurance payment to McClendon after her brother died last year.”

Bessie Mae McDaniel and Willie Charles McDaniel, Jr.

Pictured above are Bessie Mae McDaniel and her son, Willie Charles McDaniel, Jr. Ms. McDaniel purchased a life insurance policy on her son, Willie, in the 1980s in Central Alabama. She later took a loan on the policy, and made ongoing payments on the loan. The family later learned that Ms. McDaniel’s repayments on the loan were allegedly not applied correctly by the insurance company, decreasing their benefit when Willie passed away. A surviving family member of the McDaniels is suing for breach of contract and fraud. Other families may have experienced similar alleged misconduct.

“In some respects, this is the perfect scheme,” said Lieff Cabraser partner Mark Chalos, one of the attorneys representing the McClendons. “In many instances, surviving family members will not have access to the information about interest rates or loan payments their deceased loved one made. So, the insurance company is the only one who knows that they are cheating the beneficiaries out of money they are owed.”

The lawsuit seeks class action status on behalf of all individuals whose policies were picked up by North Carolina Mutual and who may have taken out loans against the policies. The plaintiffs are also represented by Lieff Cabraser partner Annika K. Martin, and Luke Montgomery and Brad Ponder of Birmingham law firm Montgomery Ponder.

Policyholders or beneficiaries of life insurance policies originally sold by Booker T. Washington Insurance Company, Inc., Protective Industrial Insurance Company, or Universal Life Insurance Company in Alabama or elsewhere, who believe they may have been cheated, are urged to contact us about their experiences.

You can also read the full article on The Tennessean website.