The Ninth Circuit Court of Appeals has issued a split decision in a California life insurance lapse dispute, affirming that Foresters Life Insurance and Annuity Company failed to meet statutory notice requirements but reversing a district court’s ruling that reinstated the lapsed policy.
In Pamela Siino v. Foresters Life Insurance and Annuity Company, the court found that while the insurer violated mandatory notice provisions under California Insurance Code §§ 10113.71 and 10113.72, the policyholder could not show that those violations caused the lapse of her coverage. The decision offers critical guidance for insurers on balancing statutory compliance with evidentiary requirements in lapse-related litigation.
Pamela Siino and her husband purchased separate term life insurance policies from Foresters in 2010. Siino’s policy was a twenty-year level term product with a $100,000 face value. Annual premiums were due each January 26. The policy included a 31-day grace period provision stating that coverage would terminate if premiums were not paid before the end of the grace period.
In 2014, Siino moved and attempted to update her address with Foresters, but the request was rejected because she failed to sign the change-of-address form. Her husband, however, successfully updated his address and continued to receive policy notices. As a result, Siino stopped receiving annual premium notices after her move.
When Siino failed to pay the January 2018 premium, Foresters sent a letter dated February 26, 2018, informing her that her policy had lapsed. The letter also stated that she had 30 days to reinstate the policy by paying the overdue premium. However, because her address had not been updated, she never received the letter and made no payment.
In 2019, Siino’s husband contacted their agent, who confirmed the lapse. Although Siino was informed that she could apply for reinstatement or submit the missed premiums, she declined. She instead purchased a new life insurance policy from another carrier and later filed a class action lawsuit against Foresters in April 2020.
Siino’s claims were based on alleged violations of California Insurance Code §§ 10113.71 and 10113.72, which apply to all life insurance policies in force as of January 1, 2013, as confirmed by the California Supreme Court in McHugh v. Protective Life Ins. Co., 12 Cal. 5th 213 (2021).
The statutes impose three primary obligations:
Siino alleged that Foresters violated both the designee notice requirement and the pretermination notice requirement. She sought a declaratory judgment that her policy remained valid and that she was not obligated to repay missed premiums. Her remaining claims for breach of contract and under California’s Unfair Competition Law were later dismissed with prejudice.
The Northern District of California granted Siino partial summary judgment. The court found that Foresters had failed to provide the statutory notices and declared that the termination of her policy was invalid. However, it conditioned reinstatement on Siino paying all overdue premiums. She later submitted $978 to Foresters, covering the premiums due from 2018 to 2023 with interest. The court denied her remaining claims and entered final judgment.
On appeal, the Ninth Circuit affirmed that Foresters violated the statutory notice requirements but reversed the portion of the judgment that reinstated Siino’s policy. The court concluded that although the declaratory relief regarding the statutory violations was valid, the declaration that the policy remained enforceable was improper without proof of causation.
Applying its recent decision in Small v. Allianz Life Insurance Co. of North America, 122 F.4th 1182 (9th Cir. 2024), the panel held that policyholders seeking relief that effectively reinstates a lapsed policy must establish all elements of a breach of contract claim, including causation. The court found that even if Foresters had sent the required notices, they would not have reached Siino because she failed to properly update her address.
Judge Milan D. Smith, Jr., writing for the panel, emphasized that the lapse occurred because Siino did not pay her premium or complete a valid address change. The court concluded that “the only action with a causal effect on the termination of the policy is Siino’s own: her unresolved failure to pay her annual premium in 2018.”
The court affirmed the portion of the declaratory judgment holding that Foresters violated the Pretermination Notice and Designee Notice Requirements but reversed the declaration that the policy remained valid. The case was remanded to the district court for the limited purpose of entering final judgment.
The Siino decision offers two important takeaways for insurers. First, California’s Insurance Code requirements on lapse procedures remain enforceable and must be followed precisely, even for policies issued before 2013. Foresters was found to have violated both key notice provisions by failing to notify Siino of her right to designate a third-party recipient and by sending a retroactive lapse notice after the policy had already terminated.
Second, the decision clarifies that plaintiffs seeking policy reinstatement must do more than show procedural defects. Courts will require proof that the insurer’s failure directly caused the loss of coverage. In Siino’s case, her inability to demonstrate that she would have received the notices—due to her own failure to maintain current contact information—was fatal to her claim for continuing coverage.
The ruling reinforces the need for insurers to document compliance efforts and ensure that policyholders’ contact information is regularly verified and updated. It also illustrates that while statutory violations carry risk, they may not automatically translate to coverage reinstatement absent a causal connection.
Case Name: Pamela Siino v. Foresters Life Insurance and Annuity Company
Docket Number: No. 23-16176
Court: United States Court of Appeals for the Ninth Circuit
Filed: April 1, 2025
Opinion by: Judge Milan D. Smith, Jr.
