9th Circuit panel validates Foresters’ California lapse decision

A 9th Circuit Court of Appeals panel partially reversed a lower-court ruling last week in a California term policy lapse lawsuit.

The lawsuit is the latest challenge based on California’s 2012 insurance code update, which requires life insurers to give a 60-day grace period and notification of termination at least 30 days prior to any action. The law also gives consumers the right to designate a third party to receive notices of unpaid premiums or impending termination.

Plaintiff Pamela Siino sued Foresters Life Insurance and Annuity Co., claiming the insurer violated the insurance code when it lapsed her policy. The 9^th Circuit panel did not agree with the district court finding for Siino.

“Siino failed to provide” evidence that her policy was improperly lapsed, wrote Judge Milan D. Smith, Jr., writing for the three-judge panel. “Even if the insurer had sent Siino the requisite notices, they would not have reached her where the record makes clear that Siino moved and failed to successfully update her address on file.”

The panel upheld the rest of the district court ruling for Siino, agreeing that Foresters violated California’s lapse conditions.

“The district court did not err in finding that the insurer violated the Statutes’ Pretermination Notice Requirement and Designee Notice Requirement,” Smith wrote.

The lawsuit was returned to the district court "solely for the purpose of entering final judgment," Smith wrote.

20-year term policy

In 2010, Siino and her husband, Salvatore Siino, each purchased a life insurance policy from Foresters, court documents say. Siino purchased a $100,000 20-year level term policy, meaning that Siino could maintain coverage by paying a fixed annual premium.

From 2010 to 2018, Foresters sent Siino annual notices regarding her upcoming premium payments, court documents say. However, in 2014, Siino moved away from the address that the insurer had on file, and although she attempted to submit a change-of-address request, it was deemed invalid because she did not sign it.

Pamela Siino failed to make her 2018 premium payment, and Foresters sent a Feb. 26, 2018 letter notifying Siino that her policy had “lapsed” but she could reinstate it by making the payment within 30 days. Siino did not receive the letter, court documents say.

A year later, Salvatore Siino realized that his wife missed a payment  The couple’s insurance agent confirmed that the policy lapsed in 2018 and invited the Siinos to file a “reinstatement application,” which they declined, court documents say.

In April 2020, the agent followed up again, explaining that Siino could reinstate her policy by sending the three years' worth of missed premiums. The notice was too late, as Siino had already
purchased her new life insurance policy from another provider, court documents say.

That same month, Pamela Siino filed a class-action suit against Foresters in the U.S. District Court for the Northern District of California.

The California notification statutes, which took effect on Jan. 1, 2013, proved prime lawsuit material in the years since.

The insurance code changes were silent on the question of retroactive application of the lapse rules. Many insurers applied the lapse rules to new business only. In 2021, the California Supreme Court held that the statutes “apply to all life insurance policies in force when [the statutes] went into effect, regardless of when the policies were originally issued.”

© Entire contents copyright 2025 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.