The truth is, most people have never even heard of FEGLI. Nonetheless, FEGLI (which stands for Federal Employees’ Group Life Insurance) is a program that provides several million Americans with life insurance coverage. When claims made against these policies are denied, however, it takes someone with specialized knowledge and expertise to handle the fight with the insurance company. That’s because FEGLI claims are subject to different laws than other life insurance policies. Consequently, claim denial contests can be even more convoluted than usual.
Moreover, just like normal life insurance policies, FEGLI insurers are highly focused on profits. Therefore, the more claims they can avoid paying, the better their end-of-year balance sheets appear. It is a game that works well for the insurance companies, but can be devastating to life insurance beneficiaries.
In this article, we explore a recent case that illustrates precisely why it is so important to hire a professional when dealing with the denial of a FEGLI claim.
A simple request to change beneficiaries
The case involved a man named Martin who had been a civilian employee of the U.S. Department of Veterans Affairs for 25 years. As a benefit of his employment, Martin received a FEGLI policy. When Martin first received the policy, he named his wife Sharon as the sole beneficiary. She remained Martin’s named beneficiary until she passed away twenty years after the policy was issued.
Shortly after his wife’s death, Martin set about to take care of all the administrative tasks that follow the death of a loved one. One of those tasks was to fill out a Change of Beneficiary form naming a new beneficiary under his FEGLI policy. Martin printed out the form from the internet. Without reading it carefully, he named his neighbor Jim as the new beneficiary, signed the form, and dropped it in the mail.
In truth, Jim was an appropriate beneficiary now that Sharon had passed away. For years, Jim had been like family to the couple. He was nearly twenty years younger than them and he acted very much like a son. He helped out whenever they got sick, he mowed their yard for them, and he was just generally available to help out with whatever they needed. Jim was especially great to Martin after Sharon passed away. Jim’s acts of kindness were very important to Martin given that the only child he and Sharon ever had, Naomi, lived nearly 1,500 miles away and couldn’t even be bothered to attend her mother’s funeral.
After mailing the Change of Beneficiary form, Martin informed Jim of the designation and gave the younger man all the information he would need to file a claim when Martin passed on. Martin lived for a few more years and the two remained close friends throughout.
Confusion following Martin’s death
When Martin passed away, Jim was the primary person to take care of the elder man’s affairs. He contacted Naomi to tell her of her father’s passing and was surprised to hear that her only concern seemed to be when and how she was going to get money from the death. Jim gave Naomi the telephone number for Martin’s attorney who he knew had drawn up Martin’s will and had general knowledge of the full value of Martin’s estate.
As instructed by Martin years earlier, Jim also made a claim for benefits against Martin’s FEGLI policy. He felt a little sheepish about accepting such a big payout (the policy was worth $75,000) but was grateful Martin had thought of him in this way.
A few weeks later, however, Jim was surprised when he received a claim denial letter in the mail. The letter stated that Martin’s Change of Beneficiary Form had been ineffective because Martin failed to include signatures from at least two witnesses. According to the letter, federal laws specific to FEGLI policies required that Change of Beneficiary Forms be witnessed in this manner. Given that Martin’s form was incomplete and that his original beneficiary (Sharon) was dead, the insurer claimed it would seek out Martin’s next of kin and award the FEGLI policy amount to that person.
Jim, of course, knew that Martin’s next of kin was Naomi. Given her reaction to the news of her father’s death, Jim couldn’t stand the thought of her receiving the policy payout. Jim decided to contact an attorney specializing in the wrongful denial of life insurance claims and see if there was anything he could do. It’s a good thing he did.
The attorney first acknowledged that FEGLI Change of Beneficiary Forms generally do require two witness signatures. In some cases, however, principles of equity warranted that an oversight like this be overlooked. The attorney asked Jim if anyone else knew of Martin’s intentions with respect to the policy. Jim knew of three people: (a) Martin’s personal attorney; (b) Jim and Martin’s mutual friend, Ted; and (c) Jim’s wife Patty. In short order, the attorney was able to get sworn statements from each person verifying Martin’s intention that the policy proceeds to go Jim. Martin’s attorney was able to go one step further and swear to the fact that Martin had instructed him to make sure Naomi was not awarded any portion of his estate. In other words, it would have been absolutely contrary to the man’s intentions if Naomi were to be awarded the policy payout.
The attorney presented an internal appeal to the Office of Federal Employees' Group Life Insurance (OFEGLI). After a half-day hearing, the attorney was able to convince the insurer that Martin truly intended for Jim to be his sole beneficiary. Jim was awarded the full policy payout, with interest.
Jim’s case is an important one in that it illustrates how beneficial a specialized attorney can be when facing denial of a FEGLI claim. If you have recently had a FEGLI claim denied and you’re not sure what to do next, call our firm. We specialize in all wrongful denials of life insurance claims, including FEGLI claims. Call us today. We’re here to help.