Two Ohio life insurers are facing a federal lawsuit that accuses them of failing to regularly compare the list of policies they have sold against the Social Security Administration’s Death Master File, which lists the name of every Social Security number holder who has died.

Regulators are launching investigations into whether life insurance companies are using the Death Master File to stop making payments to annuity recipients who have died but aren’t using the same database to make payments to life insurance beneficiaries who are owed money.

The suit was filed against Western & Southern Mutual Holding Co. and Columbus Life Insurance Co. The lead plaintiff in the case, Rita Koenig, 85, has requested her case be granted class status because while she is still alive, actuarial tables predict that her mortality is greater than 91 per cent and there are many other similarly aged policyholders who have died and have beneficiaries who are owed money.

Koenig alleges Western & Southern and Columbus Life have breached their contracts with an undisclosed number of policyholders by not paying their beneficiaries. The complaint seeks an injunction ordering the two companies to scan the Death Master File annually for the names of all policyholders who have a mortality probability of 70 per cent or higher to ensure that there aren’t benefits that ought to have been paid.

Koenig’s case has become bogged down over a jurisdictional question. Koenig’s attorneys want the case moved into state court, while the two insurance companies argue it should remain in federal court. Judge Dan Polster has not issued a decision on that question yet.

Hunter Shkolnik, who represents Koenig, said the lawsuit filed against Western & Southern and Columbus Life is one of many he expects to be filed soon that involve questions of how life insurers are using the Death Master File.

“This is a huge issue. There are literally hundreds of policy beneficiaries across the country who aren’t being paid what they are owed,” Shkolnik said. “But what’s even more outrageous is that these companies are conducting annual or quarterly reviews of the Death Master File to ensure they aren’t paying out annuities that they shouldn’t be.”

Adam Sherman, a lawyer with Vorys, Sater, Seymour & Pease, who is leading the defense for Western & Southern and Columbus Life, declined to comment. Sherman is also representing Western & Southern in a separate lawsuit making similar allegations about the company’s Death Master File practices.