PHL Variable Ins. Co. v. Lucille E. Morello 2007 Irrevocable Trust, et al., No. 10-1696 (8th Cir. 2011)
Annotate this CaseThis case involved a type of insurance fraud known as "Stranger Originated Life Insurance" (STOLI), "whereby," as plaintiff described, "high face amount insurance polices insuring senior citizens are obtained for the benefit of investors with no insurable interest in the life of the insured." At issue was whether the district court erred in applying the procured-by-fraud exception to the general rule that "rescission required the return of unearned premiums." The court held that, based on Minnesota Supreme Court precedents, the court affirmed the district court's decision recognizing plaintiff's right under the Minnesota law to retain the premiums paid on a fraudulently procured insurance policy. Accordingly, the judgment of the district court was affirmed.
Court Description: Civil case - Insurance. The district court did not err in determining that under Minnesota law the insurer is not required to return premiums paid where the insurer is induced to enter a contract for insurance by the actual fraud of the insured.
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