Florida/Georgia Personal Injury & Workers Compensation

...7. This was no accident, in that it meant Imperial arrived on the scene and acquired the policies after the expiration of the contractual two-year period during which Sun Life could "contest" the policies. See SL SAC ¶¶ 53, 67; see also Fla. Stat. § 627.455 (requiring that all insurance contracts "provide that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of 2 years from its date of issue [with certain exceptions]")....

...and the second is found in a contractual term, a breach of which generally allows for a damages claim. And, unlike limitations periods, the Florida legislature mandates the inclusion of incontestability clauses in insurance contracts, see Fla. Stat. § 627.455 , which strongly *1221 indicates that the legislature intended for damages to be available upon their breach....

...other challenge? 3 Florida law does not definitively answer these questions, and federal district courts have disagreed when asked how to interpret the above Florida 1 Fla. Stat. § 627.404 (2008). 2 Fla. Stat. § 627.455 (1982). 3 If the answer to this question is that the Florida statute requiring an insurable interest in the insured trumps the statute requiring an insurer to challenge a policy’s validity within two years of issuance, a second question arises as to the Berger policy, discussed infra....

...sued. See Pruco Life Ins. Co. v. Brasner, No. 10-80804-CIV, 2011 WL 134056, at *3–6 (S.D. Fla. Jan. 7, 2011) (Cohn, J.). From this conclusion, the court reasoned that the policy was void ab initio and therefore the incontestability provision of § 627.455 did not bar Pruco’s claim, asserted more than two years after issuance of the policy. 5 The question whether the individual procuring the insurance for Mrs....

...“insurable interest,” Pruco waited too long to make that argument and therefore its request to invalidate the policies should be denied. Like Pruco, Wells Fargo and U.S. Bank have also found a law that supports their position: Florida Statute § 627.455 (“the incontestability statute”). Section 627.455 states that “[e]very insurance contract shall provide that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of 2 years from its date 6 Section 627.404...

...The insurable interest need not exist after the inception date of coverage under the contract. Fla. Stat. § 627.404(1). 9  Case: 13-12135 Date Filed: 02/27/2015 Page: 10 of 21 of issue[.]” Fla. Stat. § 627.455.7 Here, Pruco waited more than four years and seven years to challenge the Berger and Guild policies, respectively, based on the absence of an insurable interest at the time of the policies’ issuance: periods of time that put them well outside the two-year contestability period....

...the STOLI policy at issue was void ab initio because it violated § 627.404, the insured-interest statute. A contract that is void ab initio is a contract that never existed. The district court thus reasoned that the two-year incontestability provision required by § 627.455 never took effect because the incontestability period applies only to an insurance policy that has been “in force,” and, with no party having a valid insurable interest, the Berger insurance policy was never “in 7 Notably, § 627.455 does not itself impose an incontestability period, but rather mandates that every policy include a clause to that effect....

...he Guild policy (“the Guild court”) took a different view of the interplay between the two relevant statutes, concluding that Pruco’s tardy insurable-interest claim under § 627.404 was barred by the incontestability provision called for by § 627.455. See U.S. Bank, 2013 WL 4496506, at *2, *5. The Guild court likened § 627.455 to a statute of limitations that applies regardless of the basis of any challenge to the validity of the policy....

...2/27/2015 Page: 15 of 21 contract is subject to any valid challenges. U.S. Bank, 2013 WL 4496506, at *3 (citing Allstate Life Ins. Co. v. Miller, 424 F.3d 1113, 1115–16 (11th Cir. 2005) (because Florida courts have “uniformly held” that § 627.455 bars an insurer from belatedly contesting a policy based on alleged fraudulent misrepresentations in the insurance application, an insured’s use of an imposter to undergo the required medical examination constituted fraud that rendere...

...Berger Existed at the Inception of Her Life Insurance Policy If the Florida Supreme Court determines that Pruco’s challenge to the validity of the Berger and Guild policies is barred by the incontestability clause mandated by § 627.455, then we pose no additional question for their decision....

...Can a party challenge an insurance policy as being void ab initio for lack of the insurable interest required by Fla. Stat. § 627.404 if that challenge is made after expiration of the two-year contestability period mandated by Fla. Stat. § 627.455? 2....

...on September 20, 2000, insuring the life of John Miller. The policy stated that if the insured died while the policy was in force, Allstate would pay a death benefit to the policy beneficiaries upon receiving proof of death. As required by Fla. Stat. § 627.455, the policy further provided that it would become incontestable after remaining in force during the lifetime of the insured for a period of two years from its effective date.1 On October 4, 2002, John Miller requested that the beneficia...

...56(c). DISCUSSION Florida law requires that “[e]very insurance contract shall provide that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of 2 years from its date of issue. . . .” Fla. Stat. § 627.455. Excepted from this statutory incontestability period are challenges based upon “nonpayment of premiums and ....

...5 grant additional insurance specifically against death by accident or accidental means.” Id. The Florida Supreme Court has explained that incontestability clauses, such as the one contained in § 627.455, are “in the nature of, and serve[] a similar purpose as, a statute of limitations.” Prudential Ins....

...cal history because the policies became incontestable after they were in effect for two years); Great S. Life Ins. Co. v. Porcaro, 869 So. 2d 585, 587 (Fla. Dist. Ct. App. 2004), review denied 884 So. 2d 23 (Fla. 2004) (“Pursuant to [Fla. Stat. §627.455], a reinstatement [of an insurance policy] is incontestable on the ground of fraud after it has been in force, during the lifetime of the insured, for a period of two years.”); Allstate Life Ins....

...1953) (suggesting that Florida insurers lose the defense of fraud upon expiration of the statutory contestability period). Under these cases, while an insurer may assert an imposter claim (or any number of other grounds) to rescind or void an insurance policy before the incontestability clause goes into effect, § 627.455 prevents an insurer from doing so once the policy has been in effect for two years during the life of the insured, except on the three grounds enumerated in the statute.3 Accordingly, we find Allstate’s arguments to the contrary unpersuasive. First, Allstate argues that it is not contesting the policy in a manner prohibited by § 627.455 because its suit is based upon a claim that the policy is 3 While the decisions of Florida’s appellate courts compel this conclusion, we note that it is also supported by the canons of statutory construction....

...ndication that the Florida Supreme Court would decide the issue otherwise. Ernie Haire Ford, Inc. v. Ford Motor Co., 260 F.3d 1285, 1290 (11th Cir. 2001). As discussed above, the Florida appellate courts have uniformly and expressly held that the § 627.455 incontestability clause bars an insurer from rescinding or contesting the policy based on alleged fraudulent misrepresentations the insured made in the policy application....

...circumstances of the insured’s disappearance. See id. at 587. If claims of potential fraud as to the fact of an insured’s death -- a fact most central to a life insurance contract -- are subject to the statutory incontestability clause, Allstate’s imposter claims cannot obviate § 627.455 based on their importance in the contractual scheme....

...1 *1203 In this dispute over the validity of three stranger-originated life insurance (STOLI) policies, the certified questions involve two Florida statutes, namely section 627.404(1), requiring that an insurable interest exist at the inception of each life insurance policy, and section 627.455, providing that an insurance policy is incontestable two years after its issuance....

...Specifically, the Eleventh Circuit , certified the following, questions: 1. Can a party challenge an insurance policy as being void ab initio for lack of the insurable interest required by Fla. Stat. § 627.404 if that challenge is made after expiration of the two-year contest-ability period mandated by Fla. Stat. § 627.455 ?, 2, Assuming that a party can do so, does Fla....

...e policy in good faith? Pruco Life Ins. Co. v. Wells Fargo Bank, N.A., 780 F.3d 1327, 1336 (11th Cir.2015). As explained below, we decline to read the statutes at issue contrary to their plain language in order to create a STOLI-poli-cy exception to section 627.455’s two-year contestability period....

...is issued. See Pruco Life Ins. Co. v. Brasner, No. 10-80804-CIV, 2011 WL 134056 , at *3-6 (S.D.Fla. Jan. 7, 2011) (Cohn, J.). From this conclusion, the court reasoned that the policy was void ab initio and therefore the incontestability provision of § 627.455 did not bar Pruco’s claim, asserted more than two years after issuance of the policy....

...xcept for nonpayment of premiums and except, at the option of the insurer, as to provisions relative to benefits in event of disability and as to provisions which grant additional insurance specifically against death by accident or accidental means. § 627.455, Fla....

...Guild, at their inception, benefitted individuals with insurable interests. Specifically, Ms. Berger’s policy benefitted her hus *1206 band, and Ms. Guild’s policies benefitted her daughter. While the Berger and Guild policies were procured in furtherance of STOLI schemes, the incontestability statute, section 627.455, by its plain language does not authorize a belated challenge to a policy, which has the required insurable interest as the result of a STOLI- scheme....

...declare that a facially valid policy on which [the insurance company] collected substantial premiums for over four years was never ‘in force’ is simply a fiction,”) (emphasis added) (footnote omitted). Accordingly, under the plain language of section 627.455, a policy that has the required insurable interest at its inception, even where that interest is created as the result of a STOLI scheme, is incontestable after two years....

...itted). CONCLUSION Because STOLI policies like the Berger and Guild policies at issue have the insurable interest required by section 627.404(1) at their inception, they become incontestable two years after their issuance under the plain language of section 627.455. Accordingly, we rephrase the questions certified by the Eleventh Circuit into the following question: Can a party challenge the validity of a life insurance policy after the two-year contestability period established by sec *1207 tion 627.455 because of its creation through a STOLI scheme? We answer this rephrased question in the negative and return this case to the Eleventh Circuit....

...death. On April 23, 1994, the appellee found his wife unconscious in the jacuzzi of their hotel room. She died ten days later on May 3, 1994, without regaining consciousness. The decedent's policy contained an incontestability clause as required by section 627.455, Florida Statutes (1991)....

...The court, in addition, awarded $150,000 to appellee for attorney's fees. Both parties concede that the pivotal issue in this case is whether the clauses in Allstate's policy and policy rider have the same meaning as the incontestability statute in question. Section 627.455, Florida Statutes (1995), provides: Incontestability.—Every insurance contract shall provide that the policy shall be incontestable after it has been in force during the lifetime of the insured for a period of two years from its date of issue except for non-payment of premiums and except.......

...nonpayment of premiums and except, at the option of the insurer, as to provisions relative to benefits in event of disability and as to provisions which grant additional insurance specifically against death by accident or accidental means. Fla.Stat. § 627.455 (1984)....

...Such clauses are not the gratuitous act of insurance companies but, rather, the well-settled and accepted result of a legislative mandate which was determined only after years of debate. In Florida, the legislature has expressly required life insurance contracts to include two-year incontestability clauses, Fla.Stat. Section 627.455, and has similarly denied insurers the ability to exclude fraud from these provisions....

...or nonpayment of premiums and except, at the option of the insurer, as to provisions relative to benefits in event of disability as to provisions which grant additional insurance specifically against death by accident or accidental means. Fla. Stat. § 627.455 (2011)....

...Can a party challenge an insurance policy as being void ab initio for lack of the insurable interest required by Fla. Stat. § 627.404 if that challenge is made after expiration of the two-year contestability period mandated by Fla. Stat. § 627.455? 2....

...We indicated that the phrasing of the above questions should not restrict the Florida Supreme Court’s consideration of the issues presented in these appeals. In providing an answer, the Florida Supreme Court determined that with a STOLI 2 Fla. Stat. § 627.455. 3  Case: 13-12135 Date Filed: 01/25/2017 Page: 4 of 5 policy like the two policies at issue in this consolidated appeal, an insurable interest exists in the life of the insured at the inception of the policy, as required by Florida Statute § 627.404. That being so, the Florida Supreme Court indicated that these policies became incontestable within two years from their issuance, as provided in Florida Statute § 627.455....

...The court stated: Because STOLI policies like the Berger and Guild policies at issue have the insurable interest required by section 627.404(1) at their inception, they become incontestable two years after their issuance under the plain language of section 627.455....

...Accordingly, we rephrase the questions certified by the Eleventh Circuit into the following question: Can a party challenge the validity of a life insurance policy after the two-year contestability period established by section 627.455 because of its creation through a STOLI scheme? We answer this rephrased question in the negative and return this case to the Eleventh Circuit. Id....

...o show that the fraud was material to the issuance of the policy. DISCUSSION Essentially, appellants seek a court-created exception to the Florida rule that insurance policies are incontestable after they have been in effect for two years. Fla.Stat. § 627.455 (1984)....