Three years ago, Michael Rice, a 48-year-old assistant manager at the Wal-Mart in Tilton, N.H., helped a customer bring a large television out to her car.

On his way back to the store, he suffered a massive heart attack and collapsed. Seven days later, Rice died.

Wal-Mart collected at least $325,000 from a life insurance policy the company had taken out on him. His wife and two sons never saw a dime.

Now Rice’s wife, Vicki, is suing Wal-Mart. In court papers, she argues that the corporation did not have the right to insure her husband’s life, and that the benefits the company received from his death should rightfully go to her.

“They used Mike terribly,” Vicki Rice said from her new home in Bangor, Maine.

“They abused him, working him like that,” she said. “And then they go out and collect $300,000? It’s very immoral.”

Corporations commonly take out life insurance policies on key officers and directors, but during the 1990s, Wal-Mart and other companies bought life insurance policies on hundreds of thousands of lower echelon employees to take advantage of a tax loophole. Beyond the tax benefits, the insurance companies also collected a tax-free insurance payment when an employee died.

Between 1993 and 1996, Wal-Mart purchased what the industry calls “janitor” or “dead peasant” insurance on 354,600 employees across the country.

The arrangement was supposed to provide the company with substantial tax savings, according to a lawsuit Wal-Mart filed against the insurance companies earlier this year in Delaware. Wal-Mart borrowed money from the insurance companies to cover the cost of the premiums and deducted the interest payments on its federal tax returns. The policies themselves also were considered investments, as their value increased over the lifetime of an employee. And, when an employee died, Wal-Mart collected the benefits.

“It’s essentially a high-stakes gamble,” said David Slawsky, the Concord, N.H., attorney representing Rice. “They’re investing $16,000 with some tax benefits that might turn into $65,000 or $300,000. That’s a heck of a return, and it’s a tax-free $65,000.”

Wal-Mart spokesman Bill Wertz denied that the company was gambling on its employees’ lives.

“The way it was supposed to work, we would benefit more if the employees stayed alive,” Wertz said. “The benefits we received tax-wise offset the benefits that we received from a death.”

Ironically, Wal-Mart says it lost more than $150 million. In the Delaware lawsuits, Wal-Mart claims the insurance companies misled them about the financial benefits of buying the broad-based policies on their employees.

Mike Rice worked for Wal-Mart for more than 10 years. He had owned a convenience store in Aurora, Mo., but in the late 1980s he decided he needed a bigger challenge, Vicki Rice said.

He chose Wal-Mart because the company’s headquarters in Bentonville, Ark., were nearby, and Sam Walton, the company’s founder, was a local hero.

Rice applied to Wal-Mart, and the company trained him as an assistant manager. He started out at a store in southern Missouri, but the company moved him around, placing him at stores in six states, including Maine, over 10 years. Rice helped open the Palmyra, Maine, store in 1993, and was there for two years before being transferred to New York. In August 1998, Wal-Mart moved Rice to the Tilton, N.H., store. He was earning $46,000 a year.

By then, her husband had grown sick of the Wal-Mart life, Vicki Rice said.

He was hired to work 48 to 52 hours a week but often put in 80 or 90. The stores were continually short-staffed. In the five days before his heart attack, Rice had worked an average of 16 hours a day, she said. When he collapsed, Vicki Rice had not seen her husband in three days.

Rice now lives in an old Victorian house in Bangor with her 20-year-old son, James. She said her older son, Michael Jr., 29, who lives in Ozark, Mo., is a former Wal-Mart employee who was let go months after his mother won a workers’ compensation case against Wal-Mart and was awarded survivor’s benefits.

Rice said she and her husband always loved Maine, and after his death she decided to return because of its tranquil setting.

“After Mike died, I had very little family left,” Vicki Rice said. “I didn’t have any family after traveling around like a gypsy for 10 years.”

These days, Vicki Rice doesn’t have a job, but said she commits up to 40 hours a week advocating for changes in insurance laws. She plans to devote the next two years fighting for regulations that force companies to disclose to employees when they take out life insurance policies on them.

She spoke about Wal-Mart’s insurance practices at a November rally in Portland, where numerous unions and nonprofit groups protested the retailer’s labor practices. And she distributed fliers detailing her husband’s plight to early-bird shoppers standing in line outside Wal-Mart in Bangor at 5:30 a.m. the day after Thanksgiving.

Rice said she doesn’t want to see what happened to her husband happen to others.

At issue in the New Hampshire lawsuit is whether Wal-Mart had a substantial financial interest in the lives of its employees. The lawsuit was filed in U.S. District Court in Concord as a class action. So far the class includes Rice and Patricia Keenan of Dover. Keenan’s husband, Bob, worked in maintenance for the Somersworth Wal-Mart, earning little more than minimum wage. When he died in 1995, he left his blind widow with two children to care for. Wal-Mart collected $69,000 on his policy.

In all, Wal-Mart received death benefits on nine New Hampshire residents, a total of about $1 million, Slawsky said. Eventually, Slawsky wants to include in the lawsuit every employee for whom Wal-Mart purchased life insurance.

Under New Hampshire law, a person or corporation must have an “insurable interest” in someone to purchase a life-insurance policy on them, Slawsky said. Between a husband and a wife, that interest is clear, as it is between a corporation and its directors, Slawsky said.

In court, Wal-Mart will argue that it had an insurable interest in its New Hampshire employees, according to Wertz. When employees die, it costs the company to hire and train replacements, and the company loses the experience, Wertz said.

It is an argument Slawsky has a hard time believing, given the company’s high turnover rates. In one workers’ compensation case, a Wal-Mart supervisor testified that the company has a 106 percent annual turnover rate, Slawsky said.

“If they do lose more people than they hire in any given year, it’s hard to imagine they had any real substantial loss if any of these people died,” Slawsky said.

But Wal-Mart also will argue that Georgia law, not New Hampshire law, applied; the trust Wal-Mart set up to purchase the insurance was based in Georgia. Company officials chose Georgia because state law specifically allows corporations to buy insurance on all employees, according to the Delaware lawsuit.

So far that argument has not proved persuasive. Earlier this year, a U.S. District Court judge in Texas ruled in a similar lawsuit that Texas law, not Georgia law, applied there. In August, the judge ruled that Wal-Mart did not have an insurable interest in a distribution center employee who died in 1998.

A judge is not expected to rule in the New Hampshire case for at least a year.

In Maine, companies can hold life insurance policies on their employees but with certain conditions, according to Judy Chamberlain, deputy superintendent of the state Bureau of Insurance. If an employee dies, any money collected on those policies must be put into the company’s pre- or post-retirement benefits programs and cannot be used to better the companies’ bottom line through gains on investments.

This weekend, the National Association of Insurance Commissioners will be meeting to discuss changes to corporate-owned life insurance policies, Chamberlain said. The group will be looking to make it mandatory for corporations to not only inform employees, but also to ask them first for their permission to take out a life-insurance policy, she said.

“I think this is a step in the positive direction,” Chamberlain said.

If the association approves the changes, states such as Maine that are part of the national organization can adopt the new rule, she said.

Wal-Mart no longer carries life insurance on broad classes of employees. In 1996, federal law changed, ending the tax benefits that had made the life insurance attractive. By January 2000, Wal-Mart had canceled all of the policies.

In the Rice lawsuit, Slawsky argues that employees did not know about or consent to the life insurance policies, a claim that Wertz denied. Wal-Mart offered employees a free life insurance benefit as part of the program, Wertz said. Employees were told that their estate would receive $5,000 to $10,000 if they died, Wertz said. They could also opt out.

“It’s like offering you something for nothing,” Wertz said.

Wal-Mart ended the free life insurance benefits for employees in 1998, a year before Rice died.

Bangor Daily News business writer Deborah Turcotte contributed to this report.