Actor's Estate Sues Insurance Company for $10 Million Policy
Not even the rich and famous (or their beneficiaries) are immune from the decisions of insurance companies. John S. LaViolette, a Los Angeles attorney who was appointed by actor Heath Ledger as the custodian of a $10 million life insurance policy for the benefit of Ledger’s three-year-old daughter, Matilda, has sued ReliaStar Life Insurance Company on the grounds that the company is avoiding paying the policy proceeds by continuing to investigate whether Ledger’s death in January was suicide.
Laviolette filed the complaint in California state court on July 23, 2008, and Reliastar removed it on August 21, 2008. LaViolette v. ReliaStar Life Insurance Company, Civil Action No. 2:08-CV-05514 (C.D. Cal. 2008).
As reported by James Barron in The New York Times, the New York City Office of the Chief Medical Examiner ruled in early February that Ledger’s death was accidental and resulted from the “abuse of prescription medications.”
LaViolette contends that by waiting until after Ledger’s death to request information about his medical history, ReliaStar has engaged in post-claim underwriting, which means that an insurance company denies benefits or rescinds a policy after discovering alleged misrepresentations or inaccuracies in an insured’s application that would have affected the insurer’s decision to issue the policy.
In its answer, ReliaStar claims that two provisions entitle it to investigate the circumstances of Ledger’s death:
- the “incontestability” clause, which gives ReliaStar the right to contest the validity of the policy “based on material misrepresentations made in the initial application” for a period of two years from the date the policy was issued, which was June 2007; and
- the suicide provision, which requires ReliaStar only to refund the premiums paid if the insured commits suicide within two years from the date the policy was issued.
The complaint seeks a declaratory judgment regarding ReliaStar’s alleged post-claims underwriting and alleges bad faith by ReliaStar in failing to pay the policy proceeds.
TMZ.com reports that ReliaStar is focusing on Ledger's answers to questions about his use of prescription medications when he applied for the policy and his use of illegal drugs.
