Just because you think someone is out to get you doesn't mean there ISN'T someone out to get you...on the other hand...
Posted on 07/03/2007 8:28:15 AM PDT by Excuse_My_Bellicosity
TAMPA - When Karen Armatrout died in 1997, her employer, Wal-Mart, collected thousands of dollars on a life insurance policy the retail giant had taken out without telling her, according to a lawsuit filed in U.S. District Court.
Armatrout was one of about 350,000 employees Wal-Mart secretly insured nationwide, said Texas attorney Michael D. Myers, who estimated the company collected on 75 to 100 policies involving Florida employees who died.
Myers is seeking to make the Armatrout lawsuit a class-action case on behalf of the estates of all the Florida employees who died while unwittingly insured by Wal-Mart.
"Creepy's a good word for it," Myers said. "If you ask the executives that decided to buy these policies and the insurance companies that sold them, they would say this was designed to create tax benefits for the company, which would use the benefits for benevolent purposes such as buying employee medical benefits.
"If you asked me, I would say they did it to make more money."
Wal-Mart spokesman John Simley said he could not comment because the company has not been served with the lawsuit.
The company settled two lawsuits with employees represented by Myers in Texas and Oklahoma, one for about $10 million and one for about $5 million. He said Karen Armatrout came to his attention when Wal-Mart mistakenly gave her husband's phone number to an Oklahoman who called the retailer inquiring about the settlement.
Myers said he also has filed a lawsuit against Wal-Mart in Louisiana.
Payouts Up To $80,000
Richard Armatrout, who is retired, does not want to speak publicly about his case, Myers said. Armatrout did not respond to a message left by the Tribune.
Karen Armatrout was 50 when she died of cancer, said Myers, who said she had worked several years in the pharmacy of the store on West Waters Avenue.
Myers said the policy payouts ranged from $50,000 to $80,000, depending on the person's age and gender. They were taken out on all full-time Wal-Mart employees who, in December 1993, were between ages 18 and 70 and participated in the medical benefits plan.
He said the company stopped taking out the policies in 1995 but continued to receive payouts on employees who died, even those who had left Wal-Mart.
Wal-Mart, which said it canceled its policies in early 2000 because it was losing money on the arrangement, says the program was intended to reduce its income taxes to help pay rising employee health care costs. Workers were notified and given the opportunity to opt out, the company said.
The Armatrout lawsuit says the policies were all written in Georgia, where the laws allowed such policies to be obtained.
The lawsuit says Wal-Mart used confidential information it received from employees for use in their employment, such as Social Security numbers and dates of birth, to obtain the life insurance policies.
Myers said this corporate practice is not uncommon. He estimates that up to 25 percent of Fortune 500 companies have taken out such policies on employees. The vast majority of the time, the employees didn't know, Myers said.
The practice evolved over time, Myers said. Corporations started by taking out large life insurance policies on key executives, getting tax breaks when they paid the premiums and collecting the payouts.
IRS Not Pleased, Attorney Says
The amounts of those policies grew to the point that Congress limited how much a company could insure an individual for, Myers said. Insurance companies then suggested buying lots of small policies on companies' work forces, the attorney said. He said the Internal Revenue Service has labeled the practice a sham and has successfully litigated the issue against several corporations.
Myers said his law firm has sued corporations for the practice, including Winn-Dixie and Fina Oil and Chemical. The latest case is its first in Florida.
The practice spread beyond top executives in the 1980s when the industry successfully lobbied states to allow employers to claim an "insurable interest" in the lives of rank-and-file workers.
Many employers seized on the practice because they could borrow against the policies, and the interest paid was tax-deductible. Congress closed that loophole in 1996, but COLI - corporate owned life insurance - remained a popular investment strategy.
The chief appeal was that interest accrues over time on the money in such policies. When a worker dies, the employer collects without paying taxes on the gain.
In 2001, premiums on such policies swelled to $2.8 billion from $1.5 billion the year before, according to a report by CAST Management Consultants of Los Angeles.
Information from The Associated Press was used in this report. Reporter Elaine Silvestrini can be reached at (813) 259-7837 or esilvestrini@tampatrib.com.
Because Wal-Mart did it. And Wal-Mart is evil because Democrats hate them. Just another cheap shot by the crooked media.
That's my opinion folks, and you're going to have to live with it.
No. You have to live with it. Anyone and everyone may chose to ignore you. You've made it easier for people to do that.
Oh please. Anyone can by a life insurance policy on anyone else. It is done all the time. We have them on all partners in our practice. It costs us money if they die. So what. What is the big deal. What do people think life insurance is for? They also have a policy they pay for for the family. Good Grief.
I save at least fifteen percent on groceries and more on other items. The quality is just fine.
§ 1103.056. PURCHASE OF OR APPLICATION FOR POLICY BY THIRD PARTY. An individual of legal age may in a single written document: (1) consent to the purchase of or application for an individual or group life insurance policy by a third party; and (2) designate or consent to the designation of any individual, partnership, association, corporation, or other legal entity as: (A) a beneficiary of the policy; (B) an absolute or partial owner of the policy; or (C) both a beneficiary and an absolute or partial owner of the policy. Added by Acts 2001, 77th Leg., ch. 1419, § 2, eff. June 1, 2003.
I would not care or be concerned unless I worked for an extermination company :)
Yes, Walmart has been secretly 'whacking' employees to collect the life insurance money. TOTAL UNADULTERED KOOK GIBBERISH.
Just because you think someone is out to get you doesn't mean there ISN'T someone out to get you...on the other hand...
“They were taken out on all full-time Wal-Mart employees who, in December 1993, were between ages 18 and 70 and participated in the medical benefits plan. “
“The lawsuit says Wal-Mart used confidential information it received from employees for use in their employment, such as Social Security numbers and dates of birth, to obtain the life insurance policies.”
It appears that Wal-Mart had more than just key employees.
The biggest problem I can see if they used their employees SSN without permission to obtain the insurance but this isn’t worth a million dollar lawsuit.
I could see a few hundred to a few thousand for misusing the employees SSN.
If they are using your SSN without your knowledge to get the insurance would be one reason I see.
I don’t the answer to this question but I will put it out there. If my company has insurance on me and I try to get more insurance on myself, would I pay a higher price for being overinsured?
So what? Unless you are accusing Wal Mart of killing their employees to collect the insurance payouts, why not?
Imagine hiring a guy with key technical skills and then having them run systems or data for years or decades. If that person died, what would it cost to replace, retrain and season their repacement?
It’s done everywhere and it’s common sense.
Hollywood does it with EVERY contract and EVERY movie for key players. You don’t want to be seven months and $120 million into “Mission Impossible 4” when Tom Cruise decides to finally meet Xenu in person ;)
Just like the life insurance I carry to protect my family.
I think once you give your employer your SSN as long as they aren’t actually taking out a line of credit in your name they can just use it.
I’m not sure what guidelines insurance companies use to decide you’re over insured. IMHO as long as you can afford it why should they even care.
Key employee insurance for employers is nothing new - can’t they find something else to complain about?? I know...it’s Walmart!
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This isn’t key man coverage ,, I have no problem with that ,,, this is an illegal tax dodge ... they know statistically how many employees are going to die in a year , they know what their corp tax rate is ... they buy policies on everyone , stockboys , cashiers and such at a cost of lets say $500,000,000 and collect $480,000,000 in death benefits ,, this reduces their taxable profits by half a billion and costs them only $20,000,000 ...
But why? What is the LOGICAL reason for you to be notified first? Forget feelings, give logic.
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Maybe because the employer is using confidential information such as your date of birth and SS number to commit a felony , a TAX avoidance scam based on insuring 350,000 personnel that ARE NOT key and are easily replaceable, I don’t want to be involved in any illegality they perpetrate. The insurers more than likely pull a credit report (or maybe just a score) on the insured as that is now used as a determinant of policy cost along with age and sex.. Don’t bring up KeyMan here as others have ,, we’re talking about abusing information from your personnel file to hide profits that in the end cost YOU AND ME , individual taxpayers, more on our taxes... There is a reason WMT is losing these lawsuits....
Tax avoidance isn’t illegal, in fact if you’re into small government tax avoidance is your duty, never give the government $1 more than you absolutely must. WalMart didn’t actually lose any of these suits, they settled.
Not to worry, it’s all about the weekly hit piece on Wal-Mart.
If they aren't knocking me off to collect on the policy, I'm not sure I'd care.
Ok, I'll bite: let's say your boss walks into your office today and says, "hey, by the way, Keith, we've got a $500,000 insurance policy on you."
How would this effect you at all?
I have no problem with key man ins. ,,, Walmart has no compelling interest in these employees , they are replaceable in a day or two ,,, by hiding profits as a non-taxable insurance event and collecting non-taxable insurance payments they are hiding real profits that are meant to be taxed... if you can’t see that you must be blind ...
P.S. Settling IS LOSING ...
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