In 2007, New York Life Insurance and Annuity Corporation issued a life insurance policy to Mr. Linhart, who owned the policy and named his wife, Barbara Linhart, as sole beneficiary. The policy did not require fixed premium payments, but Mr. Linhart had to pay enough to keep the policy’s account value above the insurer’s monthly deduction charge, which covered the monthly cost of coverage plus fees.
In 2012, the Legislature enacted Insurance Code § 10113.71 and Insurance Code § 10113.72, effective January 1, 2013. Together they created a mandatory grace period and pre-termination notice rules for life policies. Subdivision (a) of § 10113.72 bars an individual life policy from being issued or delivered until the applicant has been given the right to designate a third person to receive lapse or termination notices, and requires the insurer to give each applicant a form for that purpose. Subdivision (b) requires the insurer to remind the policy owner annually of the right to make or change a designation, and subdivision (c) requires at least 30 days’ notice before a policy lapses for nonpayment.
Starting in August 2013, the insurer sent Mr. Linhart an annual policy summary that included notice of his right to designate a third party to receive lapse notices. It never sent a standalone designation form, and Mr. Linhart never named a designee. On June 1, 2021, the policy entered a grace period because the account value could not cover the monthly charges. The insurer mailed a notice telling Mr. Linhart he needed to make a sufficient payment by August 3, 2021. The policy lapsed on that date, and Mr. Linhart died four days later. When his estate asked about benefits, the insurer responded that the policy had lapsed and declined to pay.
Barbara Linhart filed a putative class action alleging that the insurer violated § 10113.72(a) by failing to send designation forms to owners of policies issued before 2013. According to the district court’s order, her amended complaint pleaded claims for breach of contract and breach of the implied covenant of good faith and fair dealing. The district court granted summary judgment to the insurer, concluding that under the plain language of § 10113.72(a) and the California Supreme Court’s decision in McHugh v. Protective Life Ins. Co. (2021) 12 Cal.5th 213, the insurer had no duty to send Mr. Linhart a designation form. The court then denied class certification. Ms. Linhart appealed under 28 U.S.C. § 1291.
In the published case of Linhart v. New York Life Insurance and Annuity Corporation, No. 25-490 (September 2026), a Ninth Circuit panel affirmed the summary judgment for the insurer. The panel held that life insurers are not required to send § 10113.72(a) designation forms to owners of policies issued before the statute took effect on January 1, 2013.
The panel treated the question as already answered by the California Supreme Court, whose interpretation of state law binds federal courts. In McHugh, the high court stated that § 10113.72(a) “unmistakably applies only to new policies.” McHugh reasoned that the subdivision repeatedly refers to the “applicant” rather than the “policy owner,” and that its command that a policy shall not be issued or delivered until the designation right is given signals forward-looking application. Because Mr. Linhart’s 2007 policy was not a new policy, the panel concluded that subdivision (a) never applied to it, and the insurer had no obligation to send him a form while he was alive.
Ms. Linhart relied on other language in McHugh holding that §§ 10113.71 and 10113.72 apply to all policies in force when they took effect, regardless of issue date. The panel found that argument unpersuasive. It explained that McHugh’s general statement about the sections as a whole does not answer whether one particular subdivision reaches existing policies. Subdivisions (b) and (c) impose ongoing notice obligations that can sensibly apply to every in-force policy, while subdivision (a) is tied to a single moment, the application process before a policy issues. Requiring pre-issuance forms for policies already issued, the panel wrote, would make nonsense of subdivision (a)’s text. The panel added that McHugh’s description of the provisions as a single, unified pre-termination notice scheme supports, rather than undercuts, reading the subdivisions to operate differently.
The opinion addressed only subdivision (a). It did not decide whether the insurer’s annual policy summaries satisfied subdivision (b) or whether its grace-period notice satisfied § 10113.71 or § 10113.72(c), as those issues were not the basis of the appeal. For insurers administering pre-2013 individual life policies in California, the ruling confirms that the pre-issuance designation form requirement does not apply retroactively, while McHugh’s holding that the ongoing notice and grace-period protections apply to all policies in force on January 1, 2013 remains in place.