Her grieving parents accept his story, and even take him into their home to live with them for almost a year.
Investigators later discover that he obtained $1.6 million in life insurance on his wife shortly before her death. He's charged with murder and eventually pleads guilty.
But not for St. Louis attorney Jeffrey Lowe in this all-too-real case. Lowe represented Clayton and Lila Shelburne, the parents of Marthina Linhardt, who was murdered by her husband in April 1997 in Boone County.
Lowe believed that the insurance companies were responsible for "overinsuring" Marthina and giving her husband, Keith, a motive to kill her. He discovered a Missouri case, Williams v. John Hancock Mutual Life Insurance Company, 718 S.W.2d 611 (Mo. App. 1986), which allowed wrongful death claims against carriers that negligently insure a person and thereby create an incentive for murder. Lowe decided to use this theory against the six insurance companies that issued policies on Marthina's life, arguing that their underwriting procedures violated multiple laws and regulations.
should have consulted industry data-bases that would have disclosed other policies recently taken out on her life.
The carriers settled a wrongful death case filed by Lowe for a confidential amount after their summary judgment motions were denied in St. Louis City Circuit Court.
The most challenging aspect of the case, Lowe said, was that there were different theories of liability against each insurer, based on the facts in place when each policy was issued.
"We had to look at each defendant separately and determine exactly how the application was handled in order to develop our theories of liability," he said. "Each one did things a bit differently, but each one committed acts of negligence."
Murder
The case arose in the wake of Marthina Linhardt's death on April 13, 1997, during a camping trip with her husband, Keith Linhardt, near Harrisburg, Mo.
Marthina's body was found in a small body of water near the couple's campsite, Lowe said. Initially, Keith, a minister at Warrenton Christian Church, said that Marthina must have fallen into the pond and drowned after she got up in the middle of the night to go the bathroom.
But forensic analysis showed that she had no water in her lungs, suggesting that she died before she went into the water. Investigators also found urine in her sleeping bag, and a pair of track marks from the campsite to the pond, which they later concluded had been left by a two-wheeled dolly used by Keith Linhardt to transport her body.
Investigators also discovered that Keith had taken out the insurance policies on Marthina, that some of the applications were forged, and that each application stated that there was no other insurance in force.
Eventually, Keith was indicted for murder. He pleaded guilty and is now serving life in prison.
Marthina's parents sued Keith for wrongful death, ultimately obtaining a default judgment of $50 million. They also sued the insurers for wrongful death, breach of contract and vexatious refusal to pay — the parents were secondary beneficiaries on the policy.
The insurers denied coverage on the breach of contract claims, arguing that the policies were void due to Keith's fraud. The court granted summary judgment to the insurers on the breach of contract claims.
For the wrongful death case, Lowe said he relied heavily on his insurance industry expert, Bill Hager, a former insurance commissioner for the state of Iowa, in developing theories of negligence.
"Each insurer was different, and it really took an expert to identify the particular negligence committed in each case," he said. "For example, you weren't going to be able to make a case for over-insurance against the first company to issue a policy, or for failing to detect other policies. But the agent in that case falsely said he had witnessed her signature, and failed to meet with her. Each insurer did something wrong."
According to Lowe, one of the insurers, Franklin Life Insurance Co., argued that it did not breach a duty to Marthina because it did not have any knowledge when it sold a $100,000 policy on her life that Keith intended to kill her, and that it had no reason to suspect that Marthina did not know about or consent to the policy.
But in rejecting Franklin Life's request for summary judgment, the court noted that the Franklin Life agent did not actually witness Marthina's signature on the application and did not know whether it was hers. Her mother testified that it was not her daughter's signature.
The agent admitted in deposition that he met only with Keith — at the same time he was handling Keith's application for a policy with another company, American Franklin Life Insurance Co., for $400,000.
But despite the fact that the carriers' internal policies required agents to witness an insured's signature in person, the agent allowed Keith to take the application with him and get his wife to sign it outside of the agent's presence.
The court also noted that the agent violated this requirement even though Keith had originally sought a policy of $1 million on his wife's life, an amount, in the court's words, "which [the agent] recognized was grossly excessive and which, arguably, should have raised suspicions."
Last In Line
The liability analysis involving Pennsylvania Life Insurance Co. was somewhat different.
In rejecting Penn Life's summary judgment motion, the court noted that Penn Life was the last of the insurers to sell a policy on Marthina's life to Keith, and that its policy, in the amount of $100,000, enabled Keith to reach his target of $1.6 million in coverage, enough by his reckoning to generate an annual income of $70,000.
The sale of the Penn Life policy occurred serendipitously after a cold call to the Linhardt home by a Penn Life agent selling disability insurance. When Keith learned that the policy being offered included an accidental death benefit, he arranged for a meeting with the agent in the presence of Marthina.
During that meeting, the features of the disability policy, including the accidental death benefit, were explained to Marthina, the court said. But at no time did the agent ask if there were any existing life insurance policies on her.
When the application was submitted, the Penn Life underwriting department conducted a database search with the Medical Information Bureau to determine if Marthina had recently applied for disability insurance. But the underwriting department did not do a check with other MIB databases to see if she had applied for, or had in force, other life insurance policies.
Such a check, which would have cost Penn Life just 5 cents, Lowe said, would have revealed seven "hits" for recent months indicating the other life insurance policies on her life purchased by Keith, the court said.
A "reasonable underwriter" receiving such information would have insisted that the insured explain and reconcile all of the applications, in order to determine whether fraud or over-insurance existed, the court said, citing the affidavit of insurance expert Hager.
The initial death benefit on the Penn Life policy was $25,000, the court said. But later, at Keith's instigation, the amount was increased to $100,000, with Marthina's knowledge.
But once again, when the application was submitted, the Penn Life underwriting department conducted a database check on the MIB disability-accident insurance database only, rather than on the life insurance database. As a result, the company missed a chance to discover the other policies.
Penn Life contended that it did not violate a duty to Marthina because it took all possible steps to make sure that she was aware of and consented to the policy. But the court ruled that an issue of fact existed regarding whether Penn Life used reasonable care to determine if her life was grossly overinsured.
The parents also brought claims against Garden State Life Insurance, Prudential Insurance, Jackson National Life Insurance, and Investors Life/State Auto.
After the court denied the motions for summary judgment, the parties settled for a confidential amount.
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May 3, 2004
