What You Need to Know
- A woman died less than two years after she bought life insurance.
- The case involves how courts, and juries, apply contestability period rules, which limit when insurers can challenge policy applications.
- United of Omaha says it will file an appeal.
A state court jury in Harrison County, Texas, awarded $113.85 million to the plaintiff Friday in a case involving a dispute over payment of life insurance death benefits.
The plaintiff, Johnny Costello, has been trying to collect death benefits under a $500,000 life insurance policy that United of Omaha Life Insurance Company issued to his late wife, Fatima Costello.
United of Omaha is a subsidiary of Mutual of Omaha.
Daly & Black, the law firm that led Johnny Costello’s legal team, said in an announcement of the verdict that the jury award sends a message to insurance companies on behalf of all wronged policyholders. “In fact, the jury here was only one vote short of a $1 billion punitive damages award,” the firm said.
United of Omaha said in a statement that it will appeal the verdict.
“The vast majority of the jury’s damage award was in the form of bad faith damages, despite no evidence of any wrongdoing by United of Omaha to support such damages,” the company said in the statement. “United of Omaha believes its actions were proper and fully compliant with Texas law, and that the decision will be reversed by the Texas Court of Appeals.”
The Claim Dispute
Fatima Costello had a United of Omaha life policy that was issued Oct. 1, 2002, according to a state appeals court opinion that was issued in connection with the case in February 2014 and is available behind a paywall.
She died from a heart attack July 2, 2003.
United of Omaha sent a letter seeking information about Fatima Costello’s death July 15, 2003. The company then denied the claim and rescinded the policy in a letter sent to Johnny Costello Nov. 10, 2003.