A co-worker referred Jane to a lawyer, Don Harris, in Billings, Mont. Under ERISA, Harris first had to file an appeal directly with MetLife, which the insurer ignored, Harris says. Pierce sued the company in federal court in Billings for breach of contract in May 2010.
'They had no facts . . .'
The insurer hired a Montana lawyer who rebuffed Pierce again, six weeks later. Harris says he then had a rational telephone call with the lawyer about the facts.
"Very quickly, he realized that they didn't have a leg to stand on," Harris says. After that, MetLife agreed to pay out the full policy amount. The case never went to trial.
Because ERISA prevents compensatory and punitive damages, Jane Pierce wasn't entitled to receive anything more. Harris, who was paid a fee of $4,500 for his seven months, estimates that a jury not bound by ERISA would have awarded punitive damages of more than $1 million -- five to 10 times the death benefit.
"They accused her husband of committing suicide, which is outrageous," he says. "They had no facts to support it. They just literally made it up."
'Nothing we can do'
Pierce never requested help from Montana's insurance department. If she had, she would have been turned away, says Amanda Roccabruna Eby, a spokeswoman. She says the agency can't assist people like Pierce because of ERISA's federal pre-emption.
"There's nothing we can do," she says. "We don't have any authority." The department does not even track ERISA complaints.
Prudential used the ERISA shield when it denied payment to the widower of a middle school teacher in Rochester, N.Y. Lois Brondon died of a heart attack at age 49 while refereeing a soccer game in May 2007.
The company refused to pay her husband, Christian, the $50,000 death benefit, saying the educator had failed to disclose her "heart trouble" when she applied for insurance.
Christian, who knew his wife had no history of a heart condition, sued Prudential in U.S. district court in Rochester.
"Mrs. Brondon had absolutely no symptoms referable to cardiac disease or heart trouble," Judge Michael Telesca ruled on Nov. 9, 2010. He said her records showed common and mild thickening of the aorta that required no medical treatment and didn't limit her activities in any way.
The judge, finding that Lois Brondon had been truthful on her application for insurance, ordered Prudential to pay the full $50,000.
The judge said Prudential's reasoning created false grounds that the company could use to wrongfully deny death benefits to others.
"Indeed, under such a scenario, only Prudential would be allowed to define what constitutes 'heart trouble,' " the judge wrote.
Three weeks later, a judge in Lexington, Ky., ruled on a case that shows how inventive insurers can be in their denials -- even to the point of invoking drunk-driving laws when the person who died wasn't in a car.
U.S. District Court Judge Joseph Hood ruled that Prudential had wrongly denied a $300,000 accidental death benefit to the family of Ernest Loan.
Loan, a medical sales representative for Bayer AG, fell down a staircase in his house after drinking three glasses of wine on June 29, 2006, according to court records. Prudential told his wife, Mimi, in a Nov. 7, 2006, letter that 53-year-old Ernest was drunk by state standards used in DUI cases.
The Loan family sued Prudential in January 2008. Hood initially dismissed the case, saying Prudential's argument was sufficient under ERISA guidelines. The judge was reversed by the Sixth Circuit Court of Appeals, which said drunk-driving law doesn't outlaw performing chores around the house.
"A legal definition specifically intended to apply to someone who is driving a motor vehicle is not rational as applied to someone who is in his home and is not operating machinery," the court wrote.
On Nov. 30, 2010, Hood ordered Prudential to pay the family $300,000.
The threshold for what judges will accept as evidence in an ERISA case can be so low that an insurer can use Internet searches and not interview witnesses.
Acting on scant evidence
Brad Kellogg, an employee of Pfizer Inc., died in September 2004 when he crashed his Dodge Caravan into a tree in Merced, Calif. MetLife paid his widow, Cherilyn, $443,184 under Kellogg's term life policy. The insurer then received a letter from Stephen Morris, Merced County's deputy coroner.
"Mr. Kellogg died as a result of traumatic injuries sustained in a motor vehicle accident," Morris wrote. "His death is considered to be accidental."
MetLife refused in November 2005 to cover his $438,000 accidental death policy, saying Kellogg's death was caused by a seizure while driving. The insurer referred to a police report citing an eyewitness to the crash.
"It appears that Mr. Kellogg may have possibly had a seizure," police wrote.
Cherilyn wrote to MetLife, disputing its conclusion, on Jan. 13, 2006. MetLife again refused to pay.
She sued in U.S. District Court in Salt Lake City on July 26, 2006, for breach of contract. MetLife didn't provide medical evidence and didn't specify what kind of seizure supposedly occurred, court records show.
'The low end'
Judge Dale Kimball found that MetLife's medical research was limited to Internet searches. The company failed to interview witnesses, the coroner, the police or responding paramedics and didn't obtain Kellogg's medical records, the judge wrote.
Even with those findings, Kimball dismissed the case. He said the insurer met the standard of proof under ERISA.
"The court need only assure that the administrator's decision falls somewhere on the continuum of reasonableness -- even if on the low end," the judge wrote.
The U.S. Court of Appeals for the 10th Circuit reversed that decision in December 2008.
VIDEO ON MSN MONEY
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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