[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]
More On Reggie Lewis
[The Boston Globe Online][Boston.com]
[Boston Globe Online / Sports]
Testimony revealing in case?
Ruling in Lewis suit may benefit insurance
company
By Benjamin Lipson, Globe Correspondent,
04/23/99
Did Reggie Lewis have heart
problems that were overlooked
before he collapsed and died playing
basketball in 1993? And will the ruling of
Superior Court Judge Thayer Fremont-Smith
earlier this week open the door for The
Equitable Life Assurance Society of New
York to reclaim $5 million from the
Celtics?
These will be key questions when testimony
begins next week in the medical
malpractice suit taken by Donna
Harris-Lewis, reportedly to be played out
nationally on Court TV.
Fremont-Smith ruled Wednesday that
allegations of illegal drug use by Lewis,
the former Celtics star, may be considered
as evidence in the malpractice suit
resulting from his death in April 1993.
Sources within the industry say there
appears to be evidence that when Lewis
underwent prior electrocardiograms, there
were irregularities in the tests. This
would corroborate a Globe story shortly
after Lewis's death that said that EKGs
given to Lewis every October from 1990 to
1992 raised enough concern that follow-up
tests were performed, which proved normal.
A few years before Lewis died, the team
purchased $12 million in several policies
and $5 million in another to protect his
contract. The EKG tracings submitted for
the $5 million policy concerned
underwriters who debated how much, if any,
of the $5 million they would take.
According to Douglas G. Moxham, a partner
in the law firm of Lane Altman and Owens
who has more than 20 years experience
litigating claims for insurance companies,
if it is shown in court that prior drug
use led to Lewis's death, then the
Equitable should consider proceeding
against the Celtics for the $5 million.
Twelve millions of the coverage cannot be
contested even if fraud is proven, because
Lewis's death came after the two-year
contestable period had expired.
On the policy, Lewis answered that he had
never used drugs. Moxham says that if the
question on the life insurance application
for the policy signed by Lewis and the
Celtics was answered incorrectly as to
drug use prior to the date of the
application, that action significantly
affected the risk assumed by the
Equitable, which then would have been
justified in refusing to pay the amount.
After Lewis died, there was an
investigation by the Equitable.
Apparently, the Equitable couldn't uncover
information to indicate any material
misrepresentation or false statements made
on the policy application that would have
been justification to invalidate the
policy. Evidently, everyone contacted
provided the same information concerning
lifestyle habits to investigators given
during the investigation, the kind usually
undertaken by insurers when multimillion
dollar policies are involved as part of
the underwriting process before it is
approved. The claim for the $5 million was
paid.
Possible stonewalling by all parties to
questions raised by the Equitable in a
second claims investigation, which was
conducted more than a year after the $5
million was paid in 1994, may have allowed
the statute of limitations to run and
ultimately could prevent recovery of these
funds by the insurance company even if
cocaine usage information is
unimpeachable.
Under Massachusetts law, a
misrepresentation in the application that
increases the insurer's risk of loss may
be used by the insurer to void a policy if
death occurred within two years from the
date of the application.
Moxham believes that if the Equitable was
prevented from discovering pertinent
information about Lewis's medical history
and only recently was able to discover
facts allegedly disclosing drug use, the
Celtics' defense of the statute of
limitations might not be successful.
Speculation concerning the impact of
Lewis's alleged cocaine usage might not
have been the only issue of concern to
insurance company investigators.
There was a gap of more than nine months
between the placing of the $12 million of
coverage on Lewis's life with the
Equitable and the $5 million of additional
coverage, and with the gap come some
questions:
Were there underwriting concerns at the
Equitable because of Lewis's medical
history that may have developed from the
time the $12 million was placed that
caused delays in the company making its
final underwriting decision?
Did the Equitable initially limit its
exposure to the $12 million and succumb to
business pressures to issue the additional
$5 million?
Why did the Celtics want to insure Lewis
for more than their after-tax position
after potential payment to his estate? If
Lewis died on the last day of his
contract, the Celtic obligation would only
be any deferred payments remaining under
his contract, a sum significantly less
than a $17 million recovery.
Unlike disability coverage that usually
expires at the end of a professional
athlete's contract, life insurance can be
continued indefinitely even if there is no
insurable interest so long as the annual
premiums are paid.
Aspects of the second claims investigation
of the $5 million claim the Equitable paid
the Celtics for a life insurance policy on
Lewis less than two years old on the date
of his death, continuing to raise a
question.
Would the disclosure of alleged cocaine
use have been justification to deny paying
the $5 million, but also, had that
information been available earlier, would
it have been the justification not to
issue the other policies totaling $12
million? That situation could be
embarrassing to The Equitable.
Benjamin Lipson is an insurance consultant
and editor of Just for Seniors Newsletter.
His columns on insurance have appeared in
the Globe's business section for many
years.
This story ran on page D09 of the Boston
Globe on 04/23/99.
© Copyright 1999 Globe Newspaper Company.