EMH Obtains Significant Victory

Home > News > EMH Obtains Significant Eighth Circuit Victory

ST. LOUIS, MO. (July 14, 2011) — The Eighth Circuit Court of Appeals issued a significant opinion today in favor of an EMH insurance client in a case involving a fraudulent Stranger Originated Life Insurance ("STOLI") policy.  The underlying case involved a claim for death benefits on a $10 million life insurance policy.  EMH's client sought to deny the claim, rescind the policy and retain over $500,000 in premiums paid on the policy.  In a significant victory for life insurers combating STOLI fraud, Chief Judge Michael J. Davis of the United States District Court for the District of Minnesota entered an order rescinding the policy and permitting EMH's client to retain the premiums it had received. The investor that had funded the premiums vigorously opposed entry of judgment in EMH's client's favor and appealed the District Court’s decision to the Eighth Circuit Court of Appeals.  Following oral argument by EMH partner David McDowell, the Eighth Circuit reviewed the District Court’s opinion de novo and concluded that, under Minnesota law, an insurer is not required to return premiums where a policy was obtained through actual fraud.  The Eighth Circuit becomes the highest court to opine on this issue, which remains one of the hottest topics in insurance and financial services litigation today.