"MetLife wholly ignored Kellogg's counsel's request for documentation," the court wrote. "The car crash -- not the seizure -- caused the loss at issue, i.e. Brad Kellogg's death."
Kimball then ordered the insurer to pay the full face value of the accidental death policy, as well as $75,377 in legal fees and 10% interest.
Under ERISA, insurers have also been able to dispute the nature of deaths that involve medical errors. In February 2007, Trudy Barnes, a 31-year-old housewife in Wills Point, Texas, had elective surgery for scoliosis, an abnormal curvature of the spine.
During the procedure at Baylor Regional Medical Center in Plano, an anesthesiologist incorrectly inserted a catheter into her chest, causing massive internal bleeding, a medical examiner found. She died two days later.
Her husband, Clint, an aircraft mechanic, had purchased an American International Group accidental death insurance policy for her in 2004. The coverage came through a group plan from his employer, L-3 Communications Holdings Inc., a company in New York that maintains Air Force planes. It was Trudy Barnes' only life insurance policy.
AIG sent a letter to Clint Barnes on Sept. 6, 2007, saying it wouldn't pay out on the policy.
"This is an accident-only policy and does not cover sickness or disease," AIG, then the world's largest insurer, told Barnes in a letter. "We regret that our decision could not be favorable."
Barnes says he couldn't believe an insurer could make up such an excuse.
"How could they say that when the death certificate says it's an accident?" he asks. He needed $16,000 for his wife's funeral, he says, and he expected to get the money from her insurance.
Barnes sued AIG for breach of contract in July 2008 in New York. His lawyer, Michael Quiat, says insurers face no risk when denying claims under ERISA.
"From a business standpoint, it makes perfect sense for them," he says.
On Feb. 4, 2010, U.S. District Court Judge Denny Chin granted Barnes' motion for summary judgment, meaning he found the facts against AIG so overwhelming that there was no need for a trial.
'Arbitrary and capricious'
"This was an unintentional, unexpected, unusual and unforeseen event -- an accident," the judge ruled. "AIG's determination to the contrary must be set aside as arbitrary and capricious."
AIG paid Barnes the $148,000 death benefit, along with unspecified interest and attorney fees of $50,533.
AIG spokesman Mark Herr declined to comment on the specifics of the case. "It is AIG's practice to conduct a good-faith review of all claims submitted to determine whether a particular claim is covered," Herr says. "If a claim is not covered by the policy in question, we do not pay it."
Barnes says he can see now why life insurers would routinely deny legitimate claims.
"They know the average person doesn't know what to do," he says. "They figure you're the little guy. Just pay us your money, and we'll keep it."
A death in a war zone
One of the highest-profile cases of an insurer refusing to pay a death benefit claim involved television correspondent David Bloom. He reported live from Iraq for NBC News for 18 days in 2003.
Bloom rode with U.S. troops as they fought their way into Iraq to topple the Saddam Hussein regime. He spent up to 20 hours a day sitting with his knees bent, jamming his 6-foot frame into a 2-foot-by-3½-foot space inside an M88 tank recovery vehicle, says his cameraman, Craig White.
"We were unable to straighten our legs, and we weren't able to stand," White says. "Added to this, we were required to wear chemical gear, flak jackets with trauma plates and helmets."
On April 2, 2003, Bloom hurt his left foot leaping from the vehicle to the sand, White says. Four days later, the journalist collapsed and died. He was 39.
A blood clot from his leg, called a deep vein thrombosis, had traveled through his bloodstream to his lungs, causing a fatal pulmonary embolism, his autopsy revealed.
MetLife, which provided insurance for General Electric Co., then the parent company of NBC, paid Bloom's widow, Melanie, $2.9 million on his term life policy. The insurer refused to pay on Bloom's $1.2 million accidental death policy.
One doctor's opinion
In a denial letter dated July 23, 2003, MetLife said Bloom had died because his genetic background had made him three to six times more at risk of a deep vein thrombosis than the average person.
MetLife relied on Clayton Hauser, a St. Petersburg, Fla., family physician. Hauser is the same doctor who in 1994 performed a drug test that caused a new employee at Bankers Insurance Group to lose her job because of what she ate for breakfast.
The insurer dismissed Julie Carter after Hauser determined she had tested positive for morphine. Actually, Carter was clean; she had just eaten two poppy seed bagels.
Carter sued Bankers under a federal law protecting workers wrongly accused of drug use. She won $859,000 from the insurer.
"That's not my fault," Hauser says of the false positive for Carter. "That's what the lab reported. I collected a urine sample."
Abraham Jaros, Melanie Bloom's attorney, asked three medical experts to examine her husband's death, and each determined it was accidental. Kenneth Hymes, a professor at New York University School of Medicine, concluded that MetLife was wrong to blame David Bloom's genes for his death.
"That would be like saying the cause of a fire was oxygen rather than gasoline or a match," Hymes wrote on Nov. 18, 2003. "Almost every person has some genetic mutation. Mr. Bloom had this gene mutation for 39 years, traveled extensively on airplanes with cramped conditions and experienced no problems."
Melanie Bloom sued MetLife in federal court in New York in July 2004, and the company settled for an undisclosed amount in October 2005. She declined to comment in detail on the case.
"Given the painful and deeply personal nature of this matter, I am not able to participate," she says.
In Colstrip, Jane Pierce says the odds are stacked against families when insurers wrongfully deny benefits.
"I think it's just a racket," she says.
Sitting at her kitchen table, she recalls how husband Todd's health had been improving just before his fatal crash and how they were looking forward to skiing in the winter. Two years after he died, his voice is still on their home answering machine.
She says she got the strength to fight the life insurance company from Todd, who would never give up.
"He'd amaze me," she says.
This article was reported by David Evans for Bloomberg Businessweek.
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.
It's bad enough they tried to get out of paying out a claim, but for them to even THINK about suggesting that case was a suicide is just downright MEAN......
I'm with BETTY on this......I wouldn't buy MET LIFE for all the tea in China, and I hope they DO go broke......
READ THIS, MET LIFE....YOU SUCK!!!!!!!!!!!!!!!!!!!!!!!!!
Just goes to show you....NICE GUYS FINISH LAST...
If you got something coming, just go right to the lawyer & SUE THEIR @SSES OFF......
Show those rat bass turds ENOUGH IS ENOUGH.......
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.
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