Beasley Allen has written on a practice existing in Corporate America known as "dead peasant" insurance. This is the label put on a practice where an employee takes out life insurance policies on their employees without approval of the employees.
In fact, neither the employees nor their families even know about the practice. Wal-Mart is now asking a federal judge to dismiss a lawsuit brought by a Tampa man who accuses the company of benefiting from life insurance policies it took out on his late wife and thousands of other rank-and-file employees.
The court will decide whether to dismiss the suit by Richard Armatrout, whose lawyer wants to make the case a class action on behalf of survivors of all Florida Wal-Mart employees who died while insured under the policies.
Armatrout was one of about 350,000 employees Wal-Mart secretly insured nationwide. It’s estimated Wal-Mart collected on 75 to 100 policies involving Florida employees who died. The policy payouts ranged from $50,000 to $80,000, depending on the person’s age and gender.
These policies were taken out on all full-time Wal-Mart employees who in December 1993 were ages 18 to 70 and participated in the medical benefits plan. Karen Armatrout, who was 50 when she died of cancer, had worked several years in the pharmacy of a Wal-Mart store in Tampa. Wal-Mart is said to have collected $73,200 on the Armatrout policy.
At press time, Wal-Mart was trying to get the lawsuit dismissed on technical grounds. I don’t believe that approach will be successful. Wal-Mart settled two similar lawsuits with employees in Texas and Oklahoma – one for about $10 million, and the other for about $5 million. Wal-Mart says it stopped taking out these policies in 1995.
However, the giant retailer continued to receive payouts on employees who died, even those who had left their employment at Wal-Mart. Michael Myers, a Texas lawyer, is representing Mr. Armatrout in this case. He has handled other cases, including those mentioned above, dealing with the "dead peasant insurance."