Last month I wrote about litigation initiated by Wal-Mart against several insurance companies regarding “dead peasant,” or corporate-owned, life insurance policies purchased by Wal-Mart on 350,000 of its employees.

But a story in Tuesday’s Insurance Law 360 (subscription required) alerted me to a recent decision from the Eleventh Circuit Court of Appeals that could affect similar litigation pending against Wal-Mart in Florida. (Incidentally, although a subscription is required for the full text of stories from Insurance Law 360, if you don’t want to subscribe, I highly recommend the free daily digest of top stories, which is emailed every morning, and is available for several practice areas. You can sign up at Law 360,)

In Atkinson v. Wal-Mart Stores, Inc., 2009 WL 3320322 (October 16, 2009), the court certified to the Florida Supreme Court the following question:

Whether the amendments to Fla. Stat. § 627.404 apply retroactively and enable the representative of an insured to sue for COLI benefits received by a party lacking an insurable interest or whether the amendments create a new cause of action such that a family would lack standing to sue for benefits obtained prior to the enactment of the amendments.

The background is that in 2008, the Florida legislature amended the statute as described in the proposed certified question. Under the prior version of the statute, a cause of action did not exist for an insured’s representative to sue for COLI benefits received by a party lacking an insurable interest, which typically would be the insured’s employer.

Based on the following facts provided by the Eleventh Circuit, the amount of money at stake is significant, perhaps even to Wal-Mart:

        In 1993, Wal-Mart adopted a corporate owned life insurance (“COLI”) program through which the company would purchase life insurance policies for its employees. Wal-Mart funded the policies, at no cost to the employees. The policies provided benefits of $5,000 to $10,000 to the decedents’ beneficiaries, with the remainder of the policy amount paid to Wal-Mart. By 2000, as the result of new regulations, Wal-Mart had discontinued the COLI program.

        Rita Atkinson and Karen Armatrout worked as a rank-and-file Wal-Mart employees paid hourly wages. Neither opted out of the COLI program and Wal-Mart obtained life insurance policies upon both. Atkinson died in 1996. After payment under her policy to her estate, Wal-Mart received the remainder of the benefits totaling $66,048.70. Armatrout died in 1997 and Wal-Mart received $72,820.30 in benefits under her policy.

A footnote indicated that employees were notified that they could opt out of the program, but the court does not indicate how large the putative class is or the amount at issue. But the opinion notes that Wal-Mart made over $135,000 from the policies on Atkinson and Armatrout, two “rank-and-file” employees, while each employee’s beneficiaries received, at most, $10,000. So there’s a lot of money at stake in COLI policies.

The plaintiffs filed a putative class action in Florida state court against Wal-Mart last year, and Wal-Mart removed the action. The United States District Court for the Middle District of Florida denied certification and dismissed the complaint on the grounds that, based on the law in effect in 2000, the plaintiffs’ cause of action did not exist and the legislature gave no indication when it amended the statute that the amendment was to be applied retroactively.

The plaintiffs have appealed the dismissal of their action, and although the Eleventh Circuit’s opinion doesn’t say one way or the other, it appears that it is certifying the question to the Florida Supreme Court on its own motion.

Jeff Kuntz at The Florida Legal Blog, which focuses on appellate litigation in Florida state and federal courts, wrote about the Eleventh Circuit’s opinion in this post. And from Tales of a Fictional Pirate Captain,here’s an extensive list of companies that may have purchased COLI policies. I don’t know how accurate or up to date the list is, but the sheer number of companies listed gives you an idea of how extensive the practice has been.