Facts

Plaintiff Rick Alvarez, was the sole beneficiary of his father's $88,000 life insurance policy. When his father died and plaintiff made a claim on the policy, OM Financial denied the claim and rescinded the policy owing to alleged misrepresentations made on the insurance application.

PLAINTIFF'S CONTENTIONS:
Plaintiff alleged that the OM Financial engaged in improper postclaim underwriting, triggered by the submission of a claim, in order to rescind the insurance policy and deny the claim in bad faith. Plaintiff also alleged that the broker committed fraud in completing the application after twisting his father out of a pre-existing insurance policy, which could not have been contested.

DEFENDANT'S CONTENTIONS:
Defendants contended that postclaim underwriting is not forbidden on life insurance policies during their first two years, that its rescission was proper and that its investigation was reasonable. Defendants also argued that the application it received included misrepresentations owing to the broker's negligence and/or fraud.

Result

After a full day mediation with Miriam Zadeh of First Mediation, Plaintiff and OM Financial settled for $125,000. As part of the same mediation, the other two defendants paid $75,000.