John Hancock Life Insurance Company v. Wu

Background

John Hancock Life Insurance Company (U.S.A.) and John Hancock Variable Life Insurance Company, together referred to as “John Hancock,” sued Connie Mei Chuan Wu. John Hancock alleged that Wu fraudulently claimed and received $841,881 in long-term-care benefits under a rider to a life-insurance policy.

According to the allegations, the benefits concerned caregiver services provided at Wu’s home by Jane Yu. John Hancock alleged that Wu did not qualify for benefits during substantial periods, that Yu was Wu’s sister and therefore was not eligible under the policy for reimbursement, that Wu billed for eight hours of daily care despite Yu’s schedule, that Yu’s work did not qualify as assistance with the policy’s defined “activities of daily living,” and that Wu kept most of the payments.

Wu did not respond to the complaint, and the clerk entered her default. John Hancock then moved for default judgment, seeking $841,881, costs of $611.03, and a declaration that two life-insurance policies issued to Wu—Policy No. 93 028 454 and Policy No. 14 190 117—were terminated and entirely void.

Court’s Analysis

Under Federal Rule of Civil Procedure 55, entering default judgment is discretionary. The court considered the factors identified in Eitel v. McCool, including prejudice to the plaintiff, the merits and adequacy of the claim, the amount at stake, the likelihood of a dispute over material facts, whether the default resulted from an excusable reason, and the federal preference for decisions on the merits.

The court found that the factors supported default judgment. It concluded that denying relief would prevent John Hancock from recovering benefits allegedly paid under false pretenses. The court found the claim adequately pleaded and saw no reason to doubt its merit. Although the requested amount was substantial, the court found that it represented the benefits Wu allegedly obtained and was not speculative or excessive. The court also found little reason to expect a significant dispute over the central facts and no indication that Wu’s nonparticipation resulted from an excusable reason.

The court stated that, in deciding the motion, the complaint’s factual allegations were treated as true except those concerning damages. John Hancock also submitted admissible evidence showing that it paid $841,881 in benefits to Wu and incurred $611.03 in costs. In supplemental briefing, John Hancock established the basis for declaring both policies terminated and void.

Ruling

The court granted John Hancock’s motion for default judgment. Judgment entered for $841,881 in benefits and $611.03 in costs. The court also declared the two life-insurance policies issued to Wu terminated and void.