Cohen v Companion Life Ins. Co.

[*1] Cohen v Companion Life Ins. Co. 2017 NY Slip Op 50832(U) Decided on June 13, 2017 Supreme Court, Nassau County Brown, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on June 13, 2017
Supreme Court, Nassau County

Jean Cohen, Plaintiff(s),

against

Companion Life Insurance Company and Mutual of Omaha, Defendant(s).



891/16



Attorney for Plaintiff:

Hal Winter, Esq.

600 Old Country Road, Ste. 302

Garden City, NY 11530

212-729-1620

Attorneys for Defendants:

Locke & Herbert, LLP

1114 Avenue of the Americas, 40th Fl

New York, NY 10036

212-935-8787
Jeffrey S. Brown, J.

The following papers were read on this motion: E File Docs Numbered MS 1, MS 2

Notice of Motion, Affidavits (Affirmations), Exhibits Annexed 21, 24

Answering Affidavit 24, 66

Reply Affidavit 66, 68

In this action to collect the proceeds of a life insurance policy both plaintiff and defendants move for summary judgment. Plaintiff, Jean Cohen, was the wife of insured Stanley [*2]H. Cohen and was the beneficiary of his life insurance policy issued by defendant Companion Life Insurance Policy (Companion). Stanley Cohen passed away on October 29, 2014 and on November 8, 2014, plaintiff made a claim for the death benefit. Plaintiff alleges that her claim was wrongfully denied because no notice of termination was sent to the insured and, thus, defendants did not properly cancel, terminate, or otherwise provide notice pursuant to New York Insurance Law § 3211. Defendants dispute plaintiff's contentions and assert that the policy in question was a term policy that ended in May 2014, at which point the term could have been extended but the premium would have increased some 800%. According to the defendants, a premium notice was sent to the insured on April 17, 2014, which met the statutory requirements of Insurance Law § 3211. In addition, defendants assert that on June 6, 2014, the insured called the company to notify it that he would not be extending the term of the policy at the higher premium rate.

The plaintiff does not contend or offer evidence to show that the May 2014 premium amount was paid. Thus, these motions raise two primary issues: (1) whether the insured was sent a premium notice on April 17, 2014 and whether that notice met the statutory requirements of New York Insurance Law § 3211; and (2) whether Companion can introduce evidence of the telephone call between the insured and a company representative despite the prohibition of New York's Dead Man Statute CPLR 4519.

It is well settled that a the proponent of a motion for summary judgment must make a prima facie showing of entitlement to judgment as a matter of law by providing sufficient evidence to demonstrate the absence of material issues of fact (Sillman v Twentieth Century Fox, 3 NY2d 395 [1957]; Alvarez v Prospect Hospital, 68 NY2d 320 [1986]; Zuckerman v City of New York, 49 NY2d 557 [1980]; Bhatti v Roche, 140 AD2d 660 [2d Dept 1998]). To obtain summary judgment, the moving party must establish its claim or defense by tendering sufficient evidentiary proof, in admissible form, sufficient to warrant the Court, as a matter of law, to direct judgment in the movant's favor (Friends of Animals, Inc. v Associated Fur Mfrs., Inc., 46 NY2d 1065 [1979]). Such evidence may include deposition transcripts, as well as other proof annexed to an attorney's affirmation (CPLR § 3212 [b]; Olan v Farrell Lines, 64 NY2d 1092[1985]).

If a sufficient prima facie showing is demonstrated, the burden then shifts to the non-moving party to come forward with competent evidence to demonstrate the existence of a material issue of fact, the existence of which necessarily precludes the granting of summary judgment and necessitates a trial (Zuckerman v City of New York, 49 NY2d 557 [1980], supra). It is incumbent upon the non-moving party to lay bare all of the facts which bear on the issues raised in the motion (Mgrditchian v Donato, 141 AD2d 513 [2d Dept 1998]). Conclusory allegations are insufficient to defeat the application and the opposing party must provide more than a mere reiteration of those facts contained in the pleadings (Toth v Carver Street Associates, 191 AD2d 631 [2d Dept 1993]). When considering a motion for summary judgment, the function of the court is not to resolve issues but rather to determine if any such material issues of fact exist (Sillman v Twentieth Century Fox, 3 NY2d 395 [1957], supra).

(Recine v. Margolis, 24 Misc 3d 1244A; 901 N.Y.S.2d 902 [Sup. Ct. Nassau County 2009]).

The life insurance policy at issue, dated May 15, 2004, stated both on its face and on page 3 that it was "term insurance annually renewable to age 80, current premiums are level for the [*3]first ten years and increase each year thereafter. Premiums may be adjusted after the tenth policy year, but will not exceed the guaranteed maximum premiums." (Companion Exh. G, at 1, 3). The policy further provided that the initial annual premium was $5,930.00, which was payable for 10 years and "after the tenth policy year premiums are subject to change annually but will never exceed the guaranteed maximum premium shown . . . Companion will notify you before the beginning of the policy year if the premiums applicable to future policy years will differ from the current renewal premiums shown below." (Companion Exh. G, at 3). The policy indicated that as of May 15, 2014, under the prevailing premium schedule, the annual premium would increase to $55,430.00 and would increase annually thereafter. (Companion Exh. G, at 4). The method of premium payment selected by the insured was indicated as quarterly. Finally, the policy allowed for a grace period, stating that "we will allow a grace period of 31 days for the payment of each premium except the first. This policy will remain in force during the grace period. . . . if any premium is not paid by the end of the grace period, this policy will terminate as of the due date. You may reinstate this policy to a premium-paying basis by meeting the requirements of provision 13."

Companion contends that on April 17, 2014, prior to the end of the term, it sent a premium notice to the insured, which advised him that the policy would lapse if the premium was not paid prior to the expiration of the grace period. The notice that Companion submits on the motion is addressed to the insured, lists the policy number and states that the amount due on May 15, 2014 is $15,243.25 for a three-month period. In addition, the notice expressly states that "[u]nless each premium billed on this Notice is paid on or before the due date or within the grace period, each policy on which the premium is not paid will lapse and all payments thereon will become forfeit except as otherwise stated in the contract." (Companion Exh. K). As evidence of mailing of this notice, Companion provides that affidavits of Frank Thiesen, Pat Gottsch, James Murphy, Kevin Ziska, and Lawrence Morlan.

Frank Thiesen states that has been a Process Specialist in the Life Claims Department of defendant Mutual of Omaha Insurance Company (Mutual) since 2015, but has been employed with Mutual since 1983. Mr. Thiesen states that Mutual performs various underwriting, policy issuance, administrative, claims, and other "back office" functions for Companion, as well as for Mutual's other insurance company affiliates. Mr. Thiesen has responsibility for death claims of the Mutual affiliates, including Companion. Mr. Thiesen states that after receiving the claim for the insured's death benefit, he reviewed the file and determined that payment should be denied as the policy was not in force on the date of death because "[d]espite receiving a premium notice and a reminder notice from Companion," the insured failed to pay the premium due May 15, 2014.

Pat Gottsch states that he has been a Business Systems Analyst in the Business Service Department of defendant Mutual of Omaha Insurance Company ("Mutual") since February 1, 2010. Mr. Gottsch likewise states that Mutual performs various underwriting, policy issuance, administrative, claims and other "back office" functions for Companion, as well as for Mutual's other insurance company affiliates. Mr. Gottsch provides the following details regarding notices processed by Mutual.

According to Mr. Gottsch, at all relevant times Companion utilized Mutual's integrated computer systems for processing, producing and mailing notices to policy holders, including [*4]premium notices and reminder notices. The CAPSIL system batch processes and issues a billing schedule to generate a billing notice thirty days (with exceptions for weekends and holidays) before each policy's premium due date. The policies which are due to receive a billing notice are identified by the system and automatically placed in a billing file layout which includes, among other things, the policy number, name, last known address, premium amount and due date. The system utilizes the last known address of the policyholder and it appears on the company records. The billing file layout is then automatically transmitted to the IBM Integration Bus software/process which translates the billing file data into an XML format (formatted to fit the billing notice) and sends the translated data to the Order Integrator system to create a job. This process also creates a "Premium Billing Activity" report. The Order Integrator is a scheduling and organizing system which sends the job to the NearStar queue to print. The Order Integrator also sends the job to the FileNet system to place an electronic copy of the bill in the Web Folder, a digital policy file folder. The NearStar system prints the notice which contains (i) certain policyholder-specific information and (ii) generic information that does not vary by policyholder. Once this process is completed, the Order Integrator system automatically generates an email entitled "Production - Order Integrator Mail Confirmation" (O I Mail Confirmation) setting forth an Order code, a count of the notices, an OI Order number, an IDF Name and the date the job was completed.

Mr. Gottsch states that he is, and at all relevant times has been, the recipient of the OI Mail Confirmation emails. Mr. Gottsch attaches a copy of the OI Mail Confirmation dated April 17, 2014 pertaining to the premium notice for the instant policy. He states that upon receipt of the OI Mail Confirmation email, he refers to the "Premium Billing Activity" report and (1) verifies that all notices within a particular Job Group have been processed and sent, and (2) reconciles any exceptions.

Mr. Gottsch attaches the "Companion Items Billed Report" as of April 15, 2014, which confirms that a premium notice for the instant policy was generated in the form of a VPN2 notice. Mr. Gottsch states that he received the "O I Mail Confirmation" indicating the premium notice for the Policy was successfully mailed by the Services Support Unit. Mr. Gottsch further states that upon receipt of the relevant reports, he reviewed them to reconcile the number of notices prepared in each batch or run with the number of notices in the batch which were successfully sent, and to manually review and resolve any exceptions. Mr. Gottsch notes that none of the exceptions on the date in question involved the instant policy. Accordingly, Mr. Gottsch attests that "the premium notice for Policy no. BC7008035 . . . was prepared on April 15, 2014, printed, and that [he] received an automated Order Integrator email confirming that such notice was mailed to the policyholder on April 17, 2014 advising him that his premium of $15,243.25 would be due on May 15, 2014." Finally, Mr. Gottsch states that these procedures were in effect and were utilized consistently during the ten-year period during which the policy was in effect.

James Murphy affirms that he is a supervisor in the Outbound Print and Mail Department (also referred to as the Services Support Unit) of defendant Mutual and was in this department in April of 2014. Mr. Murphy states that Mutual performs the printing and mailing of various policyholder communications, including premium notices, on behalf of Companion. Mr. Murphy states that he is personally familiar with Mutual and Companion's business practices and has [*5]reviewed the company records, which are maintained in the ordinary course of business.

Mr. Murphy states that Companion utilized Mutual's integrated computer systems and automated machines for printing, inserting notices into envelopes, sealing envelopes and affixing postage. The Order Integrator system, a scheduling and organizing system, sends a job comprised of numerous premium notices to the NearStar system. The NearStar system receives the order from the Order Integrator system and prints the notices in his department. According to Mr. Murphy, the NearStar system is integrated with the automated machine which (1) prints the notice, (2) folds the notice, (3) inserts the notice in an envelope, (4) inserts a return envelope in the envelope, (5) seals the envelope, and (6) affixes the metered postage to the envelope. The batch of envelopes are then picked up twice daily by Pitney Bowes Presort Services, Inc., which presorts the mail and delivers it to the U.S. Postal Service. Once a print and mail job lot has been processed, an email confirming the printing and mailing is automatically generated by the Order Integrator system and sent to the "Billing.Translation.User.Support - Prod" group. This confirmation sets forth the order code, a count of the notices which were mailed and O I order number, an IDF Name, and the date the job was completed and mailed.

Mr. Murphy states that in the instant case, the O I Mail Confirmation dated April 17, 2014 indicates that the premium notice for the policy at issue was part of a job group which was printed, passed through the inserter, had postage affixed and was ready for pickup by Pitney Bowes before 11:00 a.m. on April 17, 2014. Further, Mr. Murphy states that in accordance the companies' procedures in effect at the relevant times, Pitney Bowes delivered the job group to the U.S. Postal Service as indicated in the O I Mail Confirmation.

In addition, both Mr. Murphy and Mr. Gottsch attest that the same procedures were followed for a separate renewal notice for the policy that was printed, processed, metered and delivered to Pitney Bowes for mailing on May 29, 2014.

Kevin Ziska states that he is the General Manager of Pitney Bowes Presort Services, Inc. (PBPS) in Omaha, Nebraska, which is a wholly owned subsidiary of Pitney Bowes Inc. He states that he is personally familiar with the practices and procedures utilized by PBPS in regard to the mail it processes. Mr. Ziska states PBPS is a presort service provider that picks up the mail of Mutual of Omaha and its affiliates at 330 Mutual of Omaha Plaza, Omaha Nebraska, 68175 and transports the mail to PBPS's facility where it presorts the mail based upon zip code (and other factors) to earn bulk rate discounts meeting U.S. Postal Service rules and regulations for delivery to the Postal Service. Prior to PBPS picking up the mail, it is inserted into envelopes, metered with postage, sealed and placed into trays by Mutual of Omaha. Mr. Ziska states that PBPS picked up and received a load of First Class letter mail from Mutual of Omaha on April 17, 2014, in the ordinary course of business.

Mr. Ziska further explains that upon arrival at PBPS's facility, Mutual of Omaha's mail is taken to Receiving Quality control where the trays of mail are spot checked to ensure that the correct number of trays were received and that the mail has the proper postage, mail date, presort first class endorsement, and all requirements for first class mail are present. After completing the receiving quality control step, Mutual of Omaha's mail is placed in a queue for production. Processing occurs the same day as the mail is picked up at Mutual of Omaha. In addition, mail for certain zip codes are separated and transported to other PBPS facilities. For Florida destined mail, the partner PBPS facility is in Urbandale (a surburb of Des Moines), Iowa where it is [*6]received and processed using the same procedures as in Omaha.

Finally, Mr. Ziska states that he has checked the client care and operational records, and there is no record of any problems on April 17, 2014 which would have prevented the mail from being processed and delivered to PBPS in Des Moines on that day.

Lawrence Morlan, states that he is the Vice President/General Manager of the Pitney Bowes Presort Services (PBPS) facility near Des Moines, Iowa, currently located at 4350 NW 121st Street, Urbandale, Iowa (PBPS-DSM). Mr. Morlan has been an employee of PBPS since September 2001 and states that he is personally familiar with the practices and procedures utilized by PBPS at all relevant times in regard to the mail processed by PBPS-DSM. The procedures described below were in effect in April 2014 and are currently in effect. PBPS is a presort service provider that processes the mail of many customers, sorting the mail based upon zip code (and other factors). PBPS has multiple facilities and may move mail based upon the zip codes to another PBPS facility to receive further sorting in order to improve zip code density and submit the mail to the U.S. Postal Service at a closer point to its final destination ("Mail Exchange"). According to Mr. Morlan, Mutual of Omaha's mail postmarked April 17, 2014 and having Florida zip codes would have been transferred from PBPS in Omaha to PBPS-DSM. A spot-checking procedure similar to that described by Mr. Ziska is carried out at the PBPS-DSM facility. In addition, the mail is checked against the computer system to ensure that the mail arriving matches the volume of mail that PBPS in Omaha recorded as putting in the Mail Exchange. After completing the receiving quality control step, the mail is placed in a queue for production, sorted by bar code, and then sent to another quality control check to ensure that it has been properly sorted. At that point, the mail is sorted for final distribution to the U.S. Postal Service. Mr. Morlan states that he has checked the operational records, and there is no record of any problems on the evening of April 17 or early morning of April 18, 2014 that would have prevented the mail from being processed and delivered to the U.S. Postal Service in Des Moines.

Section 3211(c) of the New York Insurance Law provides that "the statement of any officer, employee or agent of such insurer, or of any one authorized to mail such notice, subscribed and affirmed by him as true under the penalties of perjury, stating facts which show that the notice required by this section has been duly addressed and mailed shall be presumptive evidence that such notice has been duly given." Indeed, "admissible evidence in the form of an affidavit of an employee with knowledge of the [insurance company's] standard office practices or procedures designed to ensure that items were properly addressed and mailed" can establish the mailing of documents and presumptive receipt thereof. (St. Vincent's Hosp. of Richmond v. Govt. Employees Ins. Co., 50 AD3d 1123, 1124 [2d Dept 2008] [citing New York & Presbyt. Hosp. v. Allstate Ins. Co., 29 AD3d 547 [2d Dept 2006]; Hospital for Joint Diseases v. Nationwide Mut. Ins. Co., 284 AD2d 374 [2d Dept 2001]; Residential Holding Corp. v. Scottsdale Ins. Co., 286 AD2d 679 [2d Dept 2001]; Delta Diagnostic Radiology, P.C. v. Chubb Group of Ins., 17 Misc 3d 16 [App Term 2007]; see also, Five Boro Psychological Services, P.C. v. Progressive Northeastern Ins. Co., 27 Misc 3d 141(A) [App Term 2010]). "To rebut this presumption, a litigant must show that 'routine office practice was not followed or was so careless that it would be unreasonable to assume that notice was mailed. . . . Mere denial of receipt is insufficient to rebut the presumption." (Stein v. Am. Gen. Life Ins. Co., 665 Fed. Appx. 73, 75—76 [2d Cir. 2016] [summary order]).

Here, Frank Thiesen, Pat Gottsch, James Murphy, Kevin Ziska, and Lawrence Morlan collectively attested to the procedures followed by Companion and Mutual to ensure proper mailing of premium notices to the intended recipient. Each affidavit sets forth the basis of the affiant's personal knowledge of the internal practices during the pertinent period and establishes that these procedures are designed to achieve proper notification to the recipient. (St. Vincent's Hosp. of Richmond, 50 AD3d at 1124; New York and Presbyterian Hosp. v. Countrywide Ins. Co., 44 AD3d 729, 730 [2d Dept 2007] ["[T]he affidavit and documentary evidence submitted by the defendant were in admissible form since the affiant stated her basis for knowledge of the facts and laid a proper foundation for introduction of the documents."]; cf. Hospital for Joint Diseases v. Nationwide Mutual Ins. Co., 284 AD2d 374 [2d Dept 2001]; Healthy Way Acupuncture, P.C. v. One Beacon Inc. Co., 47 Misc 3d 137 (A) [1st Dept 2015]). As a result, the defendants have met their prima facie burden of showing that the notice was mailed.

Turning to the sufficiency of the notice, New York Insurance Law § 3211(a)(1) provides, in pertinent part that "[n]o policy of life insurance . . . delivered or issued for delivery in this state . . . shall terminate or lapse by reason of default in payment of any premium . . . in less than one year after such default, unless, for scheduled premium policies, a notice shall have been duly mailed at least fifteen and not more than forty-five days prior to the day when such payment becomes due . . . ." In short, "an insurer may not terminate a policy for non-payment of premiums within a year of a default in the payment of premiums if the insurer has failed to comply with section 3211's notice requirements (see Salzman v. Prudential Ins. Co. of America, 296 NY 273, 277 [1947] [addressing former version of statute]; Pinkof v. Mutual Life Ins. Co. of NY, 49 AD2d 452, 454-455 [2d Dept 1975][addressing former version of statute], aff'd on the opinion below 40 NY2d 1003 [1976]; Liensny v. Metropolitan Life Ins. Co., 166 App.Div. 625, 629 [4th Dept 1915][addressing former version of statute])." (Zeligfeld v. Phoenix Life Ins. Co., 39 Misc 3d 1213(A) [Sup. Ct. NY County 2013]).

"Although 'forfeiture of life insurance coverage for late payment of premiums is not favored in the law,' Speziale v. Nat'l Life Ins. Co., 159 Fed. Appx. 253, 255 [2d Cir. 2005] [summary order] [quoting NY Life Ins. Co. v. Eggleston, 96 U.S. 572, 577, 24 L.Ed. 841 [1877]], these notice requirements should not be construed as creating a 'trap' for either the insurer or the insured, McCormack v. Sec. Mut. Life Ins. Co., 220 NY 447, 116 N.E. 74, 77 [1917]. Thus, minor variations from the statutory notice requirements of § 3211 will not automatically render a grace period notice noncompliant." (Stein, 665 Fed. Appx. at 76; see also Zeligfeld, 39 Misc 3d 1213(A) ["New York courts, in cases addressing the language of notices, have held that the notice need not follow the exact wording of the statute as long as the information intended to be provided is conveyed."]).

The requirements of the notice are set forth in § 3211(b), which states that the notice shall:

(1) be duly mailed to the last known address of the policy owner, or if any other person shall have been designated in writing to receive such notice, then to such other person;(2) state the amount of such payment, the date when due, the place where and the person to whom it is payable; and shall also state that unless such payment is made on or before the date when due or within the specified grace period thereafter, the policy shall terminate or lapse except as to the right to any cash surrender value or nonforfeiture [*7]benefit.

In this case, Companion has established that a premium notice meeting the requirements of Insurance Law § 3211 was mailed to the insured on April 17, 2014. The plaintiff has not adduced facts sufficient to rebut the defendants' prima facie showing.

Turning to the issue of whether the insured voluntarily terminated his life insurance policy via a telephone call on June 6, 2014, Companion provides affidavits from Frank Thiesen, Meliza Richter, and Jon Putjenter. Mr. Theisen and Ms. Richter each state that Companion's records reflect that on June 6, 2014, during the applicable grace period, the insured telephoned Companion and instructed the company to terminate the policy and to stop sending notices. Ms. Richter, a supervisor in Mutual's customer service unit further states that Companion's records, as maintained in the ordinary course of business by Mutual on behalf of Companion, show that Carmen E. Kilgore, a former employee of Mutual took the Insured's call and entered an electronic note, or a "Business Events Note," in the company records. Mr. Putjenter further explains the company procedures for making such records and states that he was responsible for terminating the policy in the company's system.

The Business Events Note states, in sum:[Policy owner] wants to cancel policy please dont send no more bill notices, [advised] we wont since he cancelled the policyRequestor Relationship: selfRequestor Name: Stanley H. CohenReason for Cancellation: Too expensive/Can't AffordRequest Effective Date: 06/06/2014Address Verified

Plaintiff contends that the Business Events Note is not competent proof as against her claim because it is inadmissible under New York's Dead Man's Statute, CPLR 4519. The statute provides, in relevant part:

Upon the trial of an action or the hearing upon the merits of a special proceeding, a party or a person interested in the event, or a person from, through or under whom such a party or interested person derives his interest or title by assignment or otherwise, shall not be examined as a witness in his own behalf or interest, or in behalf of the party succeeding to his title or interest against the executor, administrator or survivor of a deceased person . . . , or a person deriving his title or interest from, through or under a deceased person . . . , by assignment or otherwise, concerning a personal transaction or communication between the witness and the deceased person . . . .

"If a transaction with a decedent is described in an interested party's business records (CPLR 4518), it may be possible to prove the transaction through the records." (Vincent C. Alexander, Commentaries, CPLR 4519 [McKinney] [citing Trotti v. Estate of Buchanan, 272 AD2d 660 [3d Dept 2000] and William L. Mantha Co. v. DeGraff, 242 AD 666 [2d Dept 1934] for situations where testimony regarding the manner and method of making one's business records concerns an act independent of the transactions with the decedent]). Here, the Business Events Note may be admitted, provided that a proper foundation is laid, under the line of cases holding that a beneficiary to a life insurance policy does not derive their interest in the proceeds "through or under" a decedent because the decedent has no entitlement to the proceeds during his [*8]or her lifetime. (See Ward v. New York Life Ins. Co., 225 NY 314 [1919]; Wilson v. Northwestern Mut. Ins. co., 603 F. Supp. 2d 705, 713 [S.D.NY 2009] [relying on Ward]). Plaintiff does not advance a distinction in this case.

The parties have stipulated to the fact that the insured called the office of Companion Life Insurance Company and spoke to a company representative on June 6, 2014. (Companion Exh. Y). Accordingly, plaintiff's contention that the defendants had inadequate safeguards to verify caller identity is unavailing. Ms. Richter's and Mr. Putjenter's affidavits lay a proper foundation for the Business Events Note as a business record.

On this record, the plaintiff has failed to raise any triable issue of fact to counter defendants' prima facie showing of entitlement to summary judgment. Accordingly, the plaintiff's motion for summary judgement is hereby denied and defendants Companion Life Insurance Company's and Mutual of Omaha's motion for summary judgment is granted.

This constitutes the decision and order of this Court. All applications not specifically addressed herein are denied.

Dated: June 13, 2017

Mineola, New York

HON. JEFFREY S. BROWN

J.S.C.