## Facts

- Bankers Life issued a group accident and sickness policy to an employers’ association; employees of member employers and their dependents were intended beneficiaries.
- Fred G. Norby became an employee of Hoffman Brothers, Inc., a member employer, and submitted an enrollment application to Hoffman in September 1970.
- Under the policy’s operation, timely forwarding of the application would have made Norby’s coverage effective so the later claim would have been payable.
- Hoffman failed, through oversight, to transmit the September application to Bankers Life.
- After the error was discovered, Norby completed a second application on December 31, 1970, and Hoffman promptly forwarded it.
- Due to a temporary layoff and the policy terms, Bankers Life treated coverage as effective January 20, 1971.
- Norby’s child was injured on January 19, 1971, and medical expenses of $3,460.49 were incurred.
- Bankers Life denied the claim, asserting Norby was not covered until January 20, 1971.
- Norby sued Bankers Life for benefits; Bankers Life filed a third-party claim against Hoffman seeking indemnity or contribution.

## Issues

1. Whether an employee eligible for benefits under a group policy may sue the insurer directly as the real party in interest when the policy is issued to an employer association as policyholder.
2. Whether an employer receiving employee enrollment applications may be treated as the insurer’s agent for that function, binding the insurer when the employee delivers the application to the employer.
3. Whether the insurer, if required to pay benefits, is entitled to indemnity from the employer whose failure to transmit the application contributed to the coverage dispute.

## Decision

- The Minnesota Supreme Court affirmed judgment for Norby on the policy benefits.
- The court held Norby had standing as a real party in interest because he was a direct beneficiary of the group policy and the policyholder employer was brought into the case and ratified the suit.
- The court upheld the finding that Hoffman could be treated as Bankers Life’s agent for the delegated function of receiving and transmitting enrollment applications; delivery of the first application to Hoffman bound the insurer.
- The court affirmed dismissal of Bankers Life’s third-party indemnity claim because paying benefits did not constitute a compensable loss beyond the insurer’s original contractual obligation (and no separate premium loss was proved).

## Legal Principles

- An employee or dependent intended to receive benefits under a group insurance policy may sue the insurer as a real party in interest, particularly where the employer policyholder is joined and ratifies the action.
- When an insurer delegates to an employer the administrative task of receiving and forwarding enrollment applications, the employer may be deemed the insurer’s agent for that task, and the insurer may be bound as of the employee’s delivery of the application to the employer.
- An insurer has no right to indemnity from an employer for benefits paid under coverage that would have existed had the delegated enrollment task been performed properly, absent proof of distinct, compensable damages.

## Conclusion

The court enforced coverage based on the employee’s timely delivery of an enrollment application to the employer acting as the insurer’s agent for enrollment administration, allowed the employee to sue as the real party in interest, and denied the insurer indemnity because payment merely satisfied the insurer’s own policy obligation.


Norby v. Bankers Life Co. of Des Moines, Iowa, 231 N.W.2d 665 (Minn. 1975)