Life Insurance Denials

When someone in Grand Prairie, Arlington, Dallas, Fort Worth, Mansfield, De Soto, Duncanville, Ennis, Weatherford, Aledo, or any other place in Texas, buys life insurance they expect that when they die, the life insurance company will pay the benefits of the policy to their named beneficiary. However that is not always what happens.
The Washington Post published an article on March 5, 2011, titled “Death of a loved one can be beginning of hard fight with life insurer.” The article is written by David Evans of Bloomberg News.
The article tells of a lady named Jane Pierce who spent nine years struggling alongside her husband, Todd, as he fought cancer in his sinus cavity. The treatments were working. Then in July 2009, Todd died in a fiery car crash. He was 46. That was the beginning of a whole new battle for Jane, this time with Todd’s life insurance company, MetLife.
A state medical examiner and a sheriff concluded that Todd’s death was an accident, caused when he lost control of his pickup after passing a car on a two lane road.
Their finding meant Jane was eligible to collect $224,000 on the accidental death insurance policy that Todd had through his employer. MetLife, however, refused to pay. The nations largest life insurer told Pierce on December 8, 2009, that Todd had killed himself. The policy didn’t cover suicide.
Pierce was insulted saying “How dare they suggest such a thing.” This man who courageously battled cancer for a decade was accused of abandoning his wife and two sons – one a Marine, the other a National Guardsman – and giving up on his fight to live.
She argued with MetLife for months. She gave MetLife the autopsy report, medical records, and a letter from the medical examiner saying the death was an accident. MetLife still said no and in May 2010, she sued them.
In July, a year after Todd’s death, MetLife settled and paid Pierce the full $224,000 due on the policy. As part of the agreement, MetLife denied wrongdoings. MetLife did not pay interest or penalties for the year it withheld payments.
Life insurance companies have found myriad ways to delay and deny paying death benefits to families, civil court cases across the United States show. Since 2008, federal judges have concluded that some insurers cheated survivors by twisting facts, fabricating excuses and ignoring autopsy findings to withhold death benefits.
To be fair, life insurers do pay most claims in full – more than 99 percent of the time, according to data from the American Council of Life Insurers, a Washington based trade group. Nobody tracks how often companies delay making payments or how often they use spurious reasons.
As of 2009, the latest year for which figures are available, United States insurers were disputing $1.3 billion in claims. Included in that amount was $396 million in death benefits rejected in 2009. In the same year, insurance companies paid out $59 billion, reports say.
Insurance companies have an obligation to policyholders and shareholders to challenge death claims they consider fradulent. It is their job to protect the insurance pool of reserves to cover benefits by blocking undeserved payouts.
However, that does not give them the right to wrongly deny claims. There is a profound structural conflict of interest. The insurance company benefits if it rejects claims. Insurance companies like to take in premiums, but they do not like to pay out claims.
For this article, MetLife declined to answer questions about any of the cases written on in the article. They also refused to discuss their accicental death policies.
In Texas, life insurance is covered in many areas of the law and statutes. But most of the statutes are found in the Texas Insurance Code Section 801 and 1101. The subsections in these two sections and other sections of the insurance code discuss and spell out the remedies available when an insurance company mistreats an insured or beneficiary.
Of course, whenever there is dispute with a life insurance company, an experienced Insurance Law Attorney should be talked to. That attorney will know the insurance laws and the other areas of law that would be beneficial to helping the insured receive the benefits to which they are entitled