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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.

ERISA loopholes

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 AmericanCouncil 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.

What those numbers don't measure is the trauma that survivors like Jane Pierce face when wrongfully denied, says Aaron Doyle, a professor of sociology and criminology at Carleton University in Ottawa.

Most people don't sue

Most survivors don't have the stamina and knowledge to file a lawsuit, says Doyle, who has spent a decade interviewing life insurance customers, employees and regulators in the United States and Canada. Often, survivors are dissuaded by their insurers from taking their grievances to state regulators or to court, Doyle says.

"The company tells the customer, 'Oh no, that's not an unusual practice, so you don't really have a complaint,' " he says.

Insurers have an obligation to policyholders and shareholders to challenge death claims they consider fraudulent, says John Langbein, a professor at Yale Law School who co-authored the book "Pension and Employee Benefit Law." Insurers maintain a reserve of money to cover benefits.

'Conflict of interest'

"It's their job to protect the insurance pool by blocking undeserved payouts," Langbein says. But that doesn't give them the right to wrongly deny claims, he adds. "There's a profound structural conflict of interest," he says. "The insurer benefits if it rejects the claim. Insurers like to take in premiums. They don't like to pay out claims."

MetLife and Prudential Financial in Newark, N.J., declined to answer all questions on cases cited in this story, as well as all queries about ERISA and accidental death policies.

"We pride ourselves on delivering on our promises, paying claims in accordance with the terms of the policy and applicable law," says Joseph Madden, a MetLife spokesman.

"Our insurance businesses' primary focus is on paying claims," says Simon Locke, a Prudential spokesman. "Contested claims represent a small fraction of the overall number of claims that are paid. Prudential's claims professionals are trained to conduct an appropriate review and follow applicable laws, regulations and the terms of the policy."

Locke says Prudential denied 33 claims for misrepresentation in 2010, while paying out on about 255,000 policies. He declined to say how many claims Prudential denied for other reasons.

A $7.7 trillion business

Company-provided life insurance is a big business. Employers can offer either accidental death policies -- which cover only fatalities that an insurer deems to be accidental -- or term life insurance, or both. Group policies in the United States have a total face value of $7.7 trillion, or about 40 percent of all life insurance in the nation, according to ACLI data.

ERISA contracts bring the industry about $25 billion in annual revenue. MetLife says it has 20 percent of the ERISA market.

So eager are the largest insurers to get these ERISA contracts that they sometimes cross a line, according to prosecutors in California and New York. MetLife and Prudential have made improper, undisclosed payments to brokers to win business with companies, according to settlements.

The settlements

MetLife and Prudential each paid $19 million to settle accusations by the New York Attorney General's Office in 2006 that they had illegally paid brokers to get new corporate clients. In a similar case, MetLife paid $500,000 and Prudential spent $350,000 to settle with three California counties in 2008. In those cases, the insurers didn't admit wrongdoing.

On April 15, 2010, in a San Diego case, 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.

"MetLife made illegal payments that should have been fully disclosed," says Karen Hewitt, who was then the U.S. attorney in San Diego and is now a partner at Jones Day. "Because they were not, the transactions were criminal."

MetLife's Madden says the company improved its broker compensation reporting starting in 2004. Prudential says it cooperated with investigators and enhanced disclosure.

The money that life insurers refuse to pay to people like Jane Pierce is emblematic of how the industry is increasingly making efforts to delay paying out benefits. In the past two decades, insurers have made a common practice of keeping money owed to survivors in their own investment accounts, even after claims are approved.

Withholding benefits

Instead of sending lump-sum checks to survivors, companies send them "checkbooks." More than 130 insurers held $28 billion, as of July 2010, owed to families in these so-called "retained-asset" accounts.

Prudential, which has a contract with the U.S. government to provide life insurance to 6 million service members and their families, has sent such "checkbooks" to survivors requesting lump sums since 1999. MetLife uses the same system for payments to survivors of the 4 million federal employees it covers.