For many years, our law firm has practiced exclusively In the area of life insurance claim denials. As such, we have gotten very familiar with the strategies and tactics that life insurance companies use to deny perfectly valid claims for benefits. Well it is difficult to shock us at this point, we still find ourselves surprised from time to time by the bogus justifications these companies will use to deny claims.
From a business standpoint, it is not surprising that life insurance companies do everything that they can to deny as many claims as possible. After all, they are in business to make money. They cannot make the great profits they desire if they indiscriminately payout every claim that is submitted to them. Consequently, life insurers hire scores of attorneys who are paid to read policy language and then manipulate that language in an effort to deny valid claims.
One of the favorite tools is the policy exclusion. As the name suggests, policy exclusions are built-in justifications for denying claims made under the policy. One exclusion many people are familiar with, for example, is the suicide exclusion. While that was is frequently invoked in improper circumstances, it is the “inherently dangerous activity” exclusion that gives insurance company lawyers the greatest amount of wiggle room.
The inherently dangerous activity exclusion basically states that the insurance company is relieved from paying out a policy benefit if the insured dies while doing something dangerous. Many of the more legitimate life insurers clearly define what they consider to be “inherently dangerous.” Most policies include things like skydiving and bungee jumping within the definition. Other policies, however, just leave the term as is – “inherently dangerous” – and take full advantage of its vagueness.
This article explores one recent case where life insurance lawyers interpreted that term on a whole new level. Luckily, the beneficiary under the policy at issue had the wherewithal to hire a specialized attorney to help him obtain the policy payout.
Nobody likes aging
The case involved a woman in her mid-fifties named Brenda. Brenda was a successful life coach and public speaker. Thousands of people followed her advice and hundreds would show up to hear her speak in cities across the United States.
As Brenda aged, however, she began to be self-conscious of her looks. Her skin sagged more than she wanted it to, she was carrying a little more weight than she would have liked, and she was simply starting to feel like she looked old. After feeling this way for over a year, her husband Charlie suggested she go see a plastic surgeon.
The surgeon was happy to help. He suggested a face lift, some skin tightening treatments, and a tummy tuck. Brenda liked what he had to say and scheduled an appointment for surgery. While she was in the doctor’s office, she filled out all the pre-surgery paperwork, including an acknowledgement that she was signing up for elective surgery that carried with it several risks including, in extreme cases, the risk of death.
Unfortunately, things went terribly wrong on the operating table. Brenda had a rare allergic reaction to the anesthetic. Despite the best efforts of the surgical staff, Brenda died on the operating table.
An unexpected claim denial
Several years before she died, Brenda had obtained a life insurance policy with a $1,000,000 payout and named Charlie as the sole beneficiary. After Brenda died, Charlie pulled together the documents required to submit a claim against that life insurance policy.
Approximately one month later, Charlie received a claim denial letter in the mail. According to the insurance company, its lawyers had reviewed the circumstances of Brenda’s death and determined that Brenda had died during the course of engaging in an “inherently dangerous activity.” Specifically, the company said that since Brenda’s surgery was elective and she had signed a waiver acknowledging the dangers inherent in surgery, the death was excluded under the policy’s inherently dangerous activity exclusion.
To Charlie, this reasoning made no sense. If a person’s life insurance policy became nullified every time they had elective surgery, what good was the insurance? Charlie did some quick online research and found the number for an attorney specializing in the wrongful denial of life insurance claims.
Fortunately, the lawyer had seen cases like this before. He knew that as a general practice, life insurers did not consider surgery – even elective surgery – to be the kind of inherently dangerous activity that would trigger the exclusion. Moreover, Brenda hadn’t died from the surgery itself. Technically, the cause of her death was an allergy to a medication administered as part of her procedure.
The lawyer requested a hearing before the insurance company’s internal review board. In preparation for that hearing, he drafted a brief outlining other cases in which courts had held elective surgery was not the sort of “inherently dangerous” conduct that would destroy life insurance coverage. He also obtained the opinion of a medical expert who reported that Brenda had died from an allergy, not from the fact of surgery itself.
During the hearing, the lawyer made several arguments to lend credibility to that central point. Namely, he reminded the insurance company that had Brenda died from another form of allergy – a latent peanut allergy, for example – her claim never would have been denied. This was just like the latent peanut allergy, he argued, it just happened to come about while she was on the operating table.
Ultimately, the insurance company’s appeals board agreed with Charlie’s lawyer on that point. It awarded Charlie the full policy payout, with interest. While it was a great result, it is scary to think people in situations similar to Charlie’s simply walk away from policy benefits all the time.If you have recently received a life insurance claim denial that just doesn’t seem right to you, please call our office to discuss the matter. We’ll give you our honest assessment and help in any way we can.