CrimsonMoan
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Husband files 'dead peasant' suit against Wal-Mart for collecting insurance in spouse's death
By Emanuella Grinberg
Court TV When Karen Armatrout died of cancer in 1997, her husband, Richard, collected a modest amount in life insurance benefits from her employer, Wal-Mart.
But Armatrout claims that, unbeknownst to him, Wal-Mart also collected on a life insurance policy, one the company took out on Karen Armatrout years before without her knowledge.
This week, Armatrout filed a class-action complaint seeking what his lawyers estimate might be $80,000 in benefits that Wal-Mart supposedly collected "in bad faith" on a corporate-owned life insurance policy.
Armatrout's "dead peasant" suit, filed Wednesday in Tampa, Fla.'s U.S. District Court, accuses Wal-Mart ofmaking money off her death without having a valid claim to her estate.
Typically, such a stake, known as an "insurable interest," is reserved for individuals so closely connected to the person insured that he or she would suffer significant financial damage if the person died.
The complaint also charges that the Arkansas-based corporation misappropriated Karen Armatrout's name and personal information for the purposes of taking out the policy.
"Wal-Mart and the insurers used employees' private information to buy and sell policies," Armatrout's Texas attorney, Mike D. Myers, told CourtTVnews.com. "As matter of public policy, Wal-Mart should not be permitted to keep the policy's benefits because it did not have the necessary insurable interest in the lives of its rank-and-file employees to warrant being a beneficiary."
From 1993 to 1998, Wal-Mart was not alone in reaping the tax benefits associated with corporate-owned life insurance, which came to be known by critics as "dead peasant" insurance, based on a character in Nikolai Gogol's "Dead Souls" who buys up the contracts of recently deceased serfs.
Lawyers for Armatrout, who say that Wal-Mart took out such policies on 350,000 "rank and file" employees like Karen Armatrout during that time, have also participated in lawsuits against Golden Corral, Winn Dixie and Camelot Music.
The attorneys, who have brought three identical lawsuits against Wal-Mart in Texas, Oklahoma and Louisiana, say the company made use of favorable tax regulations in Georgia, which allowed the company to take out corporate-owned life insurance policies without the employees' knowledge.
Wal-Mart settled the suits in Texas and Oklahoma, where the company paid back 100 percent of the benefits, amounting to just over $5 million.Along with Armatrout's case in Florida, another suit is pending in Louisiana.
In the previous cases, Wal-Mart attempted to argue that Georgia law applied because that was where the policies were purchased and paid out. But the courts found that the proper venue for deciding whether Wal-Mart had an insurable interest was thedeceased's state of residence.
Only six states, Delaware, Georgia, New Jersey, North Carolina, Pennsylvania, Vermont, allow companies to take out life insurance policies on their employees without notifying them. Most states have laws requiring that companies advise their employees and seek their consent before purchasing the policies.
Myers says he is hopeful that the precedents set in the other cases bode well for the Florida case, where he is seeking class-action certification for an estimated 80 plaintiffs in addition to Armatrout.
"I'd rather be where we are now rather than after losing three in a row," Myers said.
Representatives for Wal-Mart did not return calls for comment.
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Another Reason Why NOT to work at Walmart - 
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