insurance policy

A Philadelphia trial judge has ruled that the same-sex former domestic partner of a deceased man is not entitled to life insurance benefits because he was not able to prove he was the designated beneficiary.

In Estate of Stephen Gallagher, Philadelphia Court of Common Pleas Judge John W. Herron denied Joseph Hallman’s motion for summary judgment and granted the summary judgment motion of Stephen Gallagher’s estate, finding that the lack of a clear designated beneficiary required that benefits be awarded to Gallagher’s parents as the default beneficiaries under the life insurance policy with Aetna Life Insurance Co.

The Gallagher case had echoes of Cozen O’Connor v. Tobits, in which a U.S. District Court for the Eastern District of Pennsylvania judge ruled last year that, in light of the U.S. Supreme Court’s decision in United States v. Windsor, the wife, and not the parents, of a deceased female Cozen O’Connor partner was entitled to her profit-sharing benefits. But Herron’s award of benefits did not require an analysis of the legal cognizability of a same-sex relationship.

Early in the case, Herron rejected an argument by the estate that when Hallman and Gallagher ended their relationship in 2008, it was tantamount to a divorce that would have voided a designation of Hallman as a beneficiary under 20 Pa.C.S. Section 6111.2.

Herron found that Section 6111.2 could not be applied to a dissolved same-sex partnership that was not recognized under Pennsylvania law, but he later vacated that ruling.

The U.S. Supreme Court has since found that the federal Employee Retirement Income Security Act preempts Section 6111.2.

Ultimately, however, Herron awarded benefits to Gallagher’s estate based simply on his finding that Hallman failed to offer any written or electronic evidence showing that Gallagher had selected him to be the beneficiary of his life insurance policy.

Herron said Hallman presented only a series of screenshots of computer records kept by Aetna and Gallagher’s former employer, the University of Pennsylvania, which listed Hallman as the beneficiary. But evidence suggested Hallman’s name was likely listed by default as the result of a function of the computer program that automatically populated the name field, according to Herron.

“This suggestion that Joseph Hallman’s name appears on the computer printouts by default contravenes the explicit terms of the insurance policy requiring a designation by the insured as to his life insurance beneficiary,” Herron said. “The lack of any evidence of beneficiary designation is fatal to Joseph Hallman’s claim. Although he counters that the Gallagher estate has never produced any documentation of a different beneficiary designation, to maintain its burden of proof, the estate does not have to do this.”

In Gallagher, according to Herron, Hallman and Gallagher lived together from 2005 until their relationship ended in late 2008.

Gallagher died from an illness in May 2011, Herron said.

In June 2011, Gallagher’s estate filed a petition seeking a citation against Hallman and Aetna to show cause why Gallagher’s life insurance benefits should not be awarded to the estate’s administrator, according to Herron.

Herron said Gallagher’s policy with Aetna, which was sponsored by Penn, required that the policyholder name a beneficiary.

If no beneficiary was named, Herron said, the policy dictated that the benefits would go to either the policyholder’s spouse, children or parents.

Because Gallagher did not have a spouse or children, Herron said, his default beneficiaries under the policy were his parents.

According to Herron, Hallman bore the burden of proving that Gallagher had specifically named him as the beneficiary, but he failed to meet it.

“Throughout the long pendency of this dispute, Joseph Hallman has failed to present any designation—written or electronic—of a beneficiary selected by Stephen Gallagher in compliance with the relevant procedures set forth in the Aetna policy,” Herron said.

Instead, according to Herron, Hallman relied on the printouts of computer screenshots.

But Herron said the printouts were “merely post-mortem records reflecting Penn and Aetna’s computer files,” which were dependent on information received from ADP, the vendor Penn used to administer the technical aspects of its benefits plan.

According to Herron, Geraldine Zima, the manager of benefits administration for the university, testified that she never received any written confirmation that Gallagher had designated Hallman as the beneficiary of his life insurance policy.

When asked how Hallman’s name came to be listed as the beneficiary in the computer records, Zima testified that the computer system likely filled in the field automatically, based on the fact that Gallagher had previously named Hallman as the beneficiary of his medical insurance, according to Herron.

Herron said “designation of a life insurance beneficiary by computer default is not an alternative to the personal selection of a life insurance beneficiary.”

“While it is conceivable—though far from certain—that such a personal designation might be found among ADP’s documents, Hallman failed to pursue that route,” Herron said. “In fact, he does not seek to raise that argument in the present summary judgment. Moreover, the period for discovery is over.”

Herron said that while Hallman failed to meet his burden of proof, the Gallagher estate met its burden to show that Gallagher never designated a beneficiary of his life insurance policy.

“Normally, the estate would have faced a daunting task in trying to establish this ‘negative,’” Herron said. “It was assisted, ironically, by the failure of Hallman to present any documentation—electronic or otherwise—that had been designated by Stephen as his life insurance beneficiary under the terms of the policy.”

Counsel for the Gallagher estate, Cletus P. Lyman of Lyman & Ash in Philadelphia, said there was “no hint that the Gallaghers in any way disapproved of [Stephen Gallagher's] same-sex relationship.”

“It was just a question of who the beneficiary should be,” Lyman said.

Counsel for Hallman, Frank E. Noyes II of Offit Kurman in Philadelphia, said he and his client were disappointed with the ruling but are “still studying the opinion.”

Zack Needles can be contacted at 215-557-2493 or Follow him on Twitter @ZNeedlesTLI. •