skip to content
Group Policies Issued to Out-of-State Corporations Valid and Enforceable without Prior DOI Approval

Group Policies Issued to Out-of-State Corporations Valid and Enforceable without Prior DOI Approval

ERISA and Life Insurance News
(February 6, 2012)

Youngblood was a participant in an ERISA plan that provided life and accidental death insurance benefits to employees and their dependents. Youngblood's dependent husband died from injuries sustained while piloting an aircraft that crashed.

MetLife paid Youngblood's life insurance claim but denied her claim for accidental death benefits, based on the plan's exclusion "for any loss caused or contributed to by … any incident related to … travel in an aircraft as a pilot …."

Although the facts surrounding the death of Youngblood's husband were not in dispute, Youngblood filed suit in federal court, alleging that the exclusion was void and unenforceable.

Youngblood claimed that the exclusion was not in effect, and thus could not exclude coverage, because it was on a form that had not been approved by the North Carolina Department of Insurance at the time of the fatal plane crash.

In support of her claim, Youngblood relied on a North Carolina statute that provides in pertinent part:

(a) It is unlawful for any insurance company licensed and admitted to do business in this State to issue … any policy, contract, or certificate … until the forms of the same have been submitted to and approved by the Commissioner, and copies filed in the Department ….

 (b) With respect to group and blanket accident and health insurance, group life insurance, and group annuity policies issued and delivered to a trust or to an association outside of this State and covering persons resident in this State, the group certificates to be delivered or issued for delivery in this State shall be filed with and approved by the Commissioner pursuant to subsection (a) of this section.

N.C. Gen. Stat. § 58-3-150 (emphasis added).

Citing subsection (b) of this statute, Youngblood argued that the exclusion was required to be approved in North Carolina before the group certificate could be issued to participants and beneficiaries in the state.

The court disagreed, noting "that by its terms subsection (b) applies only to ‘a trust or … association outside of this State,'" and the employer here was neither. Rather, the employer was an Ohio corporation, and the group policy was issued in Ohio.

Plaintiff also argued that the language of subsection (a) required North Carolina DOI approval whenever an insurance certificate is issued to a North Carolina resident. "The problem with this argument," according to the court, "is that MetLife issued its policy . . . in Ohio, not to Plaintiff in North Carolina."

Youngblood's broad interpretation would apply to all certificates issued to a North Carolina resident for all group policies. Construing the statute so broadly, however, "would completely swallow [subsection (b)] and thus make [it] a useless nullity," the court said. "[I]f the General Assembly had intended that subsection (b) apply to corporations, it would have included the word ‘corporations' in the language thereof."

The court granted MetLife's motion for summary judgment, holding that "MetLife fully complied with all procedural and substantive requirements of ERISA in reaching the decision to deny accidental death [benefits]."


Click Here to view the full February 2012 Edition of the ERISA and Life Insurance News. 

H. Sanders Carter
T (404) 962-1015
F (404) 962-1220
Kenton J. Coppage
T (404) 962-1065
F (404) 962-1256
Associated Attorneys
Associated Industries

Each of our lawyer's e-mail address is provided with his or her biography. If you are not a current client of our firm, you should not e-mail our lawyers with any confidential information or any information about a specific legal matter, given that our firm may presently represent persons or companies who have interests that are adverse to you. If you are not a current client and you e-mail any lawyer in our firm, you do so without any expectation of confidentiality. We will not establish a professional relationship with you via e-mail. Instead, you should contact our firm by telephone so that we can determine whether we are in a position to consult with you about any legal matters before you share any confidential or sensitive information with us.