LEXINGTON, N.C. (AP) - A life insurance company cheated the widow of late race car driver Dale Earnhardt out of millions of dollars by refusing to pay up when he died, a lawyer for Richard Childress Racing said in the opening statements of a civil trial Wednesday.
The insurer, United of Omaha, argued the $3.7 million policy was never in effect because Earnhardt had not taken the required physical before he died in a crash at the Daytona 500 in 2001.
"We made a fair decision. We made a reasonable decision. There's no question we made an unpopular decision, but we did what we're supposed to do based on what occurred," company lawyer Stephen Coles told the jury.

But Richard Childress Racing - Earnhardt's car owner, which is pursuing the matter on behalf of the family - has accused the insurer of failing to properly investigate before denying payment just days after the driver's death.

An insurance company has "a duty to find out why a claim should've been paid," said attorney John Morrow.

He said in his opening statement that Earnhardt had passed a physical for NASCAR shortly before his death.

Richard Childress Racing took out the policy on Earnhardt's behalf and made a $5,000 payment in January 2001.

Earnhardt died in the last-lap crash that Feb. 18. The next day, the race team received a second invoice - dated two days before the crash - for another $5,000 payment toward the annual $21,645 premium. Childress Racing made the payment believing the policy was active, according to the complaint.

The $3.7 million was part of a $7.2 million benefits package, according to the driver's contract. A $3.5 million policy with a second insurer, set up in 1996, was paid to Childress and signed over to Earnhardt's widow, Teresa.

But United of Omaha sent a letter dated Feb. 21 to Childress Racing saying it would not pay the $3.7 million because the application was incomplete "and now cannot be completed," according to the complaint.

Coles said that, despite the payments, the policy hadn't attached to the 49-year-old Earnhardt, one of the most popular drivers in the history of stock-car racing, because he had put off requests to undergo a physical.

Just because somebody files an application doesn't mean they get a policy," Coles said. "It's not automatic. It's especially not automatic when it's the amount of money in this case."

Childress Racing's lawsuit alleges that the insurer operated in bad faith by not investigating completely, and that the denial of benefits without a "reasonable" investigation amounted to unfair and deceptive trade practices. Childress' attorneys indicated earlier this week that they should receive the full $3.7 million payment, along with compensatory and punitive damages.

Aside from its claim that Earnhardt never took the required physical, United of Omaha also denied responsibility for the actions of the two contractors who set up the policy. Childress has reached a partial settlement with the two, though the agreement is sealed. Davidson County Superior Court Judge Kimberly Taylor has issued a gag order in the case.

Childress and Bill Patterson, executive vice president of Childress Racing, both testified about the payments made to the Shuford Insurance Agency of Concord, which helped arrange the policy.

Childress testified that he was "pretty upset" when the letter arrived denying the claim.

"All I know is we had the checks where we paid for insurance," he said.