A lawsuit has been filed and is seeking class action status against the retail chain for allegedly taking out secret life insurance policies on its employees and cashing them in when employees pass away. The lawsuit was filed in US District Court and claims Wal-Mart took out 350,000 insurance policies on employees nationwide and have collected on nearly 100 policies involving Florida employees who have died.
The lawsuit is seeking class action status on behalf of the estates of all the Florida employees who died while unwittingly insured by Wal-Mart. According to the lawsuit, the policies were for $50,000 - $80,000 and were taken out on any employee aged 18-70 who participated in Wal-Mart's health plan. Wal-Mart stopped taking out the policies in 1995, but continued collecting the money on employees and ex-employees who passed away. Wal-Mart canceled the policies altogether in 2000.
As of October, 2007 we have asked the court to certify the case as a class action which would include the estates of deceased Florida employees of Wal-Mart whose deaths resulted in payments of death benefits to Wal-Mart," says lawyer Michael Myers.
This isn't the first time Wal-Mart has been accused of this practice. The giant retailer was sued in 2001 and settled cases in Texas and Oklahoma for the very same accusations. Two class actions were settled in favor of the plaintiffs: $10.3 million in Texas and $5 million in Oklahoma.
Again in Florida, Wal-Mart bought the life insurance policies and designated itself as the beneficiary. "If you ask Wal-Mart, they say the entire plan was to reduce their tax liability," says Myers. "The legality of this 'business practice' is governed by state law and illegal almost everywhere. The issue is whether the deceased estates have a claim to the policy benefits. Once they learn about the policy, you still may not have a claim but in certain states, once relatives learn about the policies, they do have a claim.
Depending upon where you reside, the families of the deceased employee have a right to recover the employee benefits, but it doesn't apply in every state. You may want to check with a lawyer.