3/3/2011 12:17 PM ET|
When insurers cry 'suicide'
By twisting the facts of an accident, they can blame the victim and avoid having to pay up. And even if the trick finally fails, it can still be profitable.
Jane Pierce 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 in Rosebud County, Mont., concluded that Pierce's death was an accident, caused when he lost control of his silver GMC pickup after passing a car on a two-lane road.
Their findings meant Jane Pierce was eligible to collect $224,000 on the accidental death insurance policy that Todd had through his employer, power producer PPL Corp. MetLife, however, refused to pay. The nation's largest life insurer told Pierce on Dec. 8, 2009, that her husband had killed himself. The policy didn't cover suicide, the insurer said, Bloomberg Markets magazine reports in its April issue.
"How dare they suggest such a thing," says Pierce, 44, a physician's assistant in Colstrip, a Montana mining and power production city of 2,346 people.
She says she's insulted that the man who courageously battled his disease for a decade was accused by an insurance company of abandoning his wife and two sons -- one a Marine, the other a National Guardsman -- and giving up on his fight to live.
Widow goes to court
Pierce argued with MetLife for months. She supplied the insurer with the autopsy report, medical records and a letter from the medical examiner saying the death was accidental. MetLife still said no. Finally, in May 2010, she sued.
In July, a year after Todd Pierce's death, MetLife settled and paid Jane Pierce the full $224,000 due on the policy. The New York-based insurer, as part of the agreement, denied wrongdoing and paid her no interest or penalties for the year during which it held her money.
Life insurers 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 in withholding death benefits.
Insurers can make erroneous arguments almost with impunity when it comes to the 112.8 million life and accidental death policies provided by companies and associations to their employees and members. That's because of loopholes in a federal law intended to protect worker benefits.
Under that law -- the Employee Retirement Income Security Act, or ERISA -- insurers can win even when they lose in court because they can keep and invest survivors' money while cases are pending.
Congress enacted ERISA in 1974, after bankruptcies and union scandals caused thousands of employees to lose benefits. The law requires employers to disclose insurance and pension plan finances, and it holds company and union officials personally accountable for maintaining sufficient funding.
In order to achieve ERISA's goals, federal courts have ruled that employees must surrender their rights to jury trials and compensatory and punitive damages if they sue an insurer for wrongfully denying coverage. Judges have reasoned that the measure encourages companies and insurers to continue providing benefits.
ERISA puts these issues under federal jurisdiction, so state regulators sometimes say they can't help consumers.
Delaying tactics benefit insurers
"The most important federal insurance regulation of the past generation is ERISA," says Tom Baker, deputy dean of the University of Pennsylvania Law School in Philadelphia. "If ever a law backfired for the public, ERISA is the perfect example."
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. But nobody keeps track of how often companies delay making those payments or how often they use spurious reasons.
As of 2009, the latest year for which figures are available, insurers in the United States were disputing an accumulated total of $1.3 billion in claims, the ACLI reports. Included in that amount were $396 million in death benefits turned down in 2009. In the same year, insurers paid out $59 billion, the ACLI reports.
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MetLife admitted that it broke the law by paying a dealmaker to win insurance contracts, and it agreed with the U.S. Department of Justice to pay $13.5 million to avoid criminal prosecution.
Can I do this too? can I admit that I broke a law and buy my way out of criminal prosecution? Aren't corporations treated as individuals? This is amazing...
These insurance companies are violating the law and should be prosecuted and those responsible for the crimes should go to prison and the companies should be shut down.
If you did what these companies do such as withholding information, theft by deception , giving false and or deceptive information you could go to prison. Every single person in this country should be demanding that these scum bag insurance companies be prosecuted to the full extent of the law just as you would be if you committed these crimes. We should all be demanding to know from your elected officials why these companies are not being prosecuted for criminal practices as you would be. I intend to start hounding my elected officials as to why insurance companies are apparently above the laws that they would hold you accountable to.
I also intend to make sure that I no longer invest in any company that has anything to do with MetLife and to inform everyone I know about the criminal practices of MetLife and other companies like them. If you want to stop these companies from the crimes they perpetrate you have to take action against them.
Aha! Didn't learn much new about insurance companies, everyone I know who has a company or even personal disability policy with a company that uses something called Unum to service it, they refuse to pay, drag it on and on and as one persons Attorney told them almost all of these policies stop paying after two years because of some clause broadly written in the policies. I did find it interesting that:
Congress passed ERISA in 1974 because of business bankrupcies and union scandalss caused thousands of employees to lose benefits. The law requires employers to disclose insurance and pension plan finances, and it holds company and union officials personally accountable for maintaining sufficient funding. Maybe that is why unions are so helpful to Obama and backed his Obamacare. IF they can't fund the health care they promise after retirement the top will have to answer as to where the money went. Golly if only ERISA applied to the politicians. Since they stole the money from Social Security and Medicare I would think all the politicians that voted for transfering these fund from trust funds into the general fund and all those that have continued the practice could go to jail. Would that be poetic justice or what?
Comments here relate to life insurance but please, if you have a car accident, do not sign off on any papers regarding any injuries, because any bouncing or jerking to your neck and spinal cord may not show up for days or weeks. Happened to a family member. Do not say you were not hurt, ever. Also, have a mechanic check your car's engine etc. My car ended up with a crack to some inside part. Repairing the outside of the car is important but for naught it suddenly it stops running.
Excellent reporting, Bloomberg, but this is just the tip of the iceberg.
Imagine what happens when you become disabled and try to file a claim through your employer's disability insurance megacorporation. Try to fight the routine denial and exhausting runaround when you're on your back.
Big bucks in this business of disability insurance denial. Google financial trader hitler and buffett satire
I have seen one attempt to get out of a policy fail by stating the policy was void because the insured missed the last payment before death... the last payment was due 3 days AFTER his death. That was one they could not get out of once they received the death certificate.
"Buy your own policy through your personal agent. They don't have to apply to ERISA laws. They may still try to deny claims, but you have more recourse to sue."
I agree with the above stated by Catherine (CatJMJ). Thinking back through the years of various friends and family members who died and had paid for life insurance apart from their jobs, their families were blessed by receiving those benefits quickly. In fact, I remember an insurance company contacting me about 9 months after a family member had died because I was the only remaining relative, but there wasn't any updated information on my whereabouts so they had to look for me. I did not know about the policy and was touched by the personal and caring nature of that insurance company.
I will say it one more time. You americans need to get a public plan ! I live in france and we have the best working health care system in the world. It is very affordable to all citizens.
Now what most of you do not understand is that when it comes to taxes, yes you may pay a little more with a public plan but when you think of it, how much is it costing you to pay a private insurance, also you have deductibles which I consider outrageous. In our universal health care, there are NO deductible. The government reimburse the bills right away.
When you have universal health care, you PAY into it FOR YOURSELF.
The insurance industry has been ripping off americans for way too long. They do not care about your health, they only care about your money !
You will love having a public plan because the government will ALWAYS pay the bills.
They will insure EVERYBODY ! and in the end with universal health care, you will get PREVENTIVE CARE which means that the whole country will save hundreds of millions of dollars and for you people paying a little more taxes will be cheaper than giving it to those criminals that are insurance companies. You will have peace of mind and will never loose your homes because you cannot pay your bills.
With our universal health care in France, we can see any doctors we want, only patient and doctors decided of the best treatment and treaments and test are never denied to us.
THIS IS GREAT ! I lived in the usa without health insurance for 10 years and now that I am in France, I love it because I will never have to worry !
A root canal in france cost 80 euros/ so 100 dollars
a colonoscopy cost 32 euros !!
dermathologue visite 28 euros !
Most medecines are reimbused 100% as all the above !
Your insurances companies and doctors are ripping you off ! also, our medical records are now all electronic/ no more paper work to mess with.
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