TAMPA - Wal-Mart received more than $9 million from life insurance it took out on 132 rank-and-file employees in Florida, the company says in a federal court filing.
The company has been sued by the husbands of two deceased former Wal-Mart employees in Tampa and Pasco County who alleged the company profited from the policies it secretly took out on store employees.
Last month, U.S. District Judge James Moody granted a motion by Wal-Mart and dismissed a federal lawsuit by Richard Armatrout, of Tampa, because the value of the life insurance policy on his late wife, Karen, was $72,820, below the $75,000 threshold for a matter to be heard in federal court.
Anticipating Moody's ruling, Armatrout's attorney, Michael Myers of Texas, filed a suit in state court in Pasco County with Armatrout and another plaintiff, Wayne Atkinson, whose late wife, Rita, worked for Wal-Mart.
Now, Wal-Mart is asking that the new lawsuit be moved to federal court. Noting that the plaintiffs want the lawsuit to be a class action, the company is now arguing that the total value of the suit is actually more than $9 milllion.
Wal-Mart included in its court filing a settlement demand from the plaintiffs, seeking to settle the case for about $7.2 million, 75 percent of the $9.6 million life insurance policy proceeds they claimed Wal-Mart received.
The settlement demand included a list of deceased former Wal-Mart employees whose policies the plaintiffs said the company collected.
Wal-Mart says in its new court filing that it was able to confirm most of what the plaintiffs said in the settlement demand. The amounts of the payouts on each policy ranged from about $55,000 to about $90,000. The company's retired vice president of benefits, Thomas G. Emerick, says in a sworn affidavit that the company collected on policies for all but three of the 135 names on the plaintiff's demand list.
Myers said the move by Wal-Mart to move the case back to federal court after successfully having it thrown out was "blatant forum shopping." He said he wasn't sure how he will respond, but that he would research the legality of what the company did.
Wal-Mart's motion became public today, and company attorneys in Miami were unavailable for comment.
Myers, who has successfully sued the corporation in other states, says Wal-Mart secretly insured about 350,000 employees nationwide. The policies were taken out on all full-time Wal-Mart employees who, in December 1993, were between ages 18 and 70 and participated in the medical benefits plan.
Myers said if the company paid a settlement, the money would go to the estates of the deceased former Wal-Mart employees or to the state of Florida if the estates could not be located. Myers said his firm would collect about a third of the payment for costs and its fee.
He said the company stopped taking out the policies in 1995 but continued to receive payouts on employees who died, even those who had left Wal-Mart.
Wal-Mart, which said it canceled its policies in early 2000 because it was losing money on the arrangement, says the program was intended to reduce its income taxes to help pay rising employee health care costs. Workers were notified and given the opportunity to opt out, the company said.
The lawsuit says Wal-Mart used confidential information it received from employees for use in their employment, such as Social Security numbers and dates of birth, to obtain the life insurance policies.
Myers said this corporate practice is not uncommon. He estimates that up to 25 percent of Fortune 500 companies have taken out such policies on employees. The vast majority of the time, the employees didn't know, Myers said.