One of Wal-Mart's long list of worker abuses--"dead peasants" insurance where it takes out life insurance policies on its low-level workers and collects the cash when they die--got a kick in the head in federal court.
That's because the estate of one dead worker, Douglas Sims, sued for damages, saying Wal-Mart robbed his heirs of money that was rightfully theirs. Lower federal courts agreed and, on Jan. 5, so did the Fifth U.S. Circuit Court of Appeals in New Orleans.
It sent the case back down to lower courts to determine how much money Sims' widow, Deborah, should get.
More than 100 companies, led by Wal-Mart, created the "dead peasants" policies. Legal changes in 1998 led Wal-Mart to halt the practice, but not before it had insured all but 3,500 of the 350,000 potential workers it covered, the suit says.
The Paper, Allied-Industrial, Chemical and Energy Workers (PACE) has campaigned against Wal-Mart's "dead peasants" insurance and brought the issue to Congress. Rep. Gene Green, D-Texas, introduced legislation last year outlawing the practice, but it has gone nowhere.
"By ruling against Wal-Mart, the appeals court is sending a message to other companies that it is unethical, at the very least, for them to take out life insurance on their employees and be the beneficiaries," said PACE spokeswoman Lynne Baker.
"PACE would like to see companies prevented from profiting at the expense of their workers? lives," she added.
The court was scathing in its comments about Wal-Mart. It noted that Texas state insurance law governs the case, though Wal-Mart tried to switch the relevant law to Georgia while staying in the Texas courts.
Georgia's insurance law favors companies and allows "dead peasants insurance." The federal judges tossed that out.
"Sims lived in Texas and was employed by Wal-Mart in Texas," the appellate judges pointed out, dryly. "The 'thing' related to (Wal-Mart's) alleged enrichment" from Sims' insurance, and the heart of the case, "was, if anything, Sims' life, which was also, of course, in Texas."
"The enrichment"--the insurance benefits--"was conferred and received in either Georgia or Texas, depending on how one characterizes the triggering event" for the benefits: Sims' death on Dec. 1, 1998, or the start of the money flow the next year.
By the time the appellate judges got done, they ruled Texas, not Georgia, law controlled the case. And Texas lets someone collect a dead person's life insurance policy proceeds only if they're a relative, a creditor, or have "a sufficient expectation of financial gain" from keeping the insured worker alive.
Texas law says that last qualification would be true only if Wal-Mart had a financial interest in Sims because he was an officer, stockholder or partner, the judges noted. He wasn't.
"An employer does not have a pecuniary interest in the continued life of its employee, unless that employee is crucial to the operation of the business," the judges noted, quoting a 1998 Texas appellate court ruling on the state's insurance law.
"Wal-Mart does not claim that Sims was of any special importance to the company, much less that Wal-Mart's success or failure was dependent upon him," the federal judges deadpanned.
Mark Gruenberg writes for Press Associates, Inc., news service. Used by permission.
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One of Wal-Mart’s long list of worker abuses–“dead peasants” insurance where it takes out life insurance policies on its low-level workers and collects the cash when they die–got a kick in the head in federal court.
That’s because the estate of one dead worker, Douglas Sims, sued for damages, saying Wal-Mart robbed his heirs of money that was rightfully theirs. Lower federal courts agreed and, on Jan. 5, so did the Fifth U.S. Circuit Court of Appeals in New Orleans.
It sent the case back down to lower courts to determine how much money Sims’ widow, Deborah, should get.
More than 100 companies, led by Wal-Mart, created the “dead peasants” policies. Legal changes in 1998 led Wal-Mart to halt the practice, but not before it had insured all but 3,500 of the 350,000 potential workers it covered, the suit says.
The Paper, Allied-Industrial, Chemical and Energy Workers (PACE) has campaigned against Wal-Mart’s “dead peasants” insurance and brought the issue to Congress. Rep. Gene Green, D-Texas, introduced legislation last year outlawing the practice, but it has gone nowhere.
“By ruling against Wal-Mart, the appeals court is sending a message to other companies that it is unethical, at the very least, for them to take out life insurance on their employees and be the beneficiaries,” said PACE spokeswoman Lynne Baker.
“PACE would like to see companies prevented from profiting at the expense of their workers? lives,” she added.
The court was scathing in its comments about Wal-Mart. It noted that Texas state insurance law governs the case, though Wal-Mart tried to switch the relevant law to Georgia while staying in the Texas courts.
Georgia’s insurance law favors companies and allows “dead peasants insurance.” The federal judges tossed that out.
“Sims lived in Texas and was employed by Wal-Mart in Texas,” the appellate judges pointed out, dryly. “The ‘thing’ related to (Wal-Mart’s) alleged enrichment” from Sims’ insurance, and the heart of the case, “was, if anything, Sims’ life, which was also, of course, in Texas.”
“The enrichment”–the insurance benefits–“was conferred and received in either Georgia or Texas, depending on how one characterizes the triggering event” for the benefits: Sims’ death on Dec. 1, 1998, or the start of the money flow the next year.
By the time the appellate judges got done, they ruled Texas, not Georgia, law controlled the case. And Texas lets someone collect a dead person’s life insurance policy proceeds only if they’re a relative, a creditor, or have “a sufficient expectation of financial gain” from keeping the insured worker alive.
Texas law says that last qualification would be true only if Wal-Mart had a financial interest in Sims because he was an officer, stockholder or partner, the judges noted. He wasn’t.
“An employer does not have a pecuniary interest in the continued life of its employee, unless that employee is crucial to the operation of the business,” the judges noted, quoting a 1998 Texas appellate court ruling on the state’s insurance law.
“Wal-Mart does not claim that Sims was of any special importance to the company, much less that Wal-Mart’s success or failure was dependent upon him,” the federal judges deadpanned.
Mark Gruenberg writes for Press Associates, Inc., news service. Used by permission.