Drug Exclusion Life Insurance Claim Denial
Every insurance provider - auto, life, health, etc. - has what is known as a drug formulary. A drug formulary is a list of medications that that insurance plan will cover. Drugs not on the list are ‘excluded’ by the insurance provider. This will have different implications based on the type of insurance being provided.
The most practical use of drug formularies concerns the prescription of medication for injury or sickness. This is typically provided by health insurance. Patients that need a specific drug that is not on the list will have to revert to another, perhaps off-brand, drug that is included.
For life or health insurance plans, drug exclusions are put in place to protect the insurance provider from injury or death caused by specific drugs. Health or life insurance providers can then deny claims when the cause of the accident was related to drug use or drug overdose.
Here are two direct quotes from actual life insurance policies:
…accidental death benefits are not payable when death occurs as the result of taking drugs or medications that are not prescribed to the decedent
no benefits will be paid for any loss or covered injury that occurs as a consequence of being intoxicated or as a consequence of taking, using or being under the influence of any narcotic unless administered on the advice of a physician.
Of course, the line drawn here is very thin. What is considered drug use? What about prescription drugs? What if the person was drugged by someone else? What if I accidentally took too much or took the wrong drug?
These drug exclusions work as a protection mechanism for most life or health insurance providers. If drugs show up in someone’s system, it is an easy excuse to deny their claim. While many of these claims may be denied in good faith - actual drug overdose, attempted suicide attempts, negligence on the behalf of their policyholder, etc. - some of the claims may be denied in bad faith.
For that reason, it is very important to know the ins and outs of the drug exclusion clauses. Doing so can help you file a strong appeal to win your claim and receive your proper compensation.
Denied insurance claims for drug exclusion
Bad faith claim denials are typically made for one of three reasons: accidental overdose, overdose on prescription drugs, or death caused while on excluded or ‘illegal’ drugs.
What qualifies as an accidental overdose varies from provider to provider and between states. According to the National Institute on Drug Abuse, a coroner will record an accidental drug death when one of the following criteria are met:
Drug was taken accidentally
Too much of the drug was taken accidentally
The user took the drug by mistake or was prescribed it by mistake
Administration of the drug occurred during medical or surgical procedures
Someone else administered the drugs to the policyholder with the intent to cause harm
If none of the above criteria are met, then the overdose is typically recorded as a suicide which is generally excluded from insurance coverage for obvious reasons. However, medical professionals are prone to make mistakes when classifying the cause of death. There have been cases where ‘accidental overdose’ was actually ruled a suicide.
Prescription drug overdose
There is a large gray area in the realm of prescription drugs. State law and the National Institute on Drug Abuse help clarify things but only slightly.
In many cases where the overdose is on a prescription drug or where prescription drugs are found in the system, the insurance provider will stay pay out. The insurance provider would need to find evidence to support intent to overdose or an attempted suicide in order to deny a claim.
Death or injury while on excluded or illegal drugs
The last area where insurance providers may deny claims is when injury or death occurs while on excluded or illegal drugs. Here, the drugs are not the cause of the death or injury, but their presence may have played a role or at the very least void the contract.
Insurance providers will typically have a clause outlining the excluded drugs, but they will likely have another clause that includes a broader exclusion on illegal drugs such as marijuana, LSD, or cocaine.
For example: let’s say a man is driving down a residential road. He is driving the speed limit and following all the rules of the road. Another driver is coming towards him and looks down at her phone causing her to steer towards the first driver resulting in a crash. Unfortunately, the man behind the wheel lost his life. But when the autopsy reports that marijuana and cocaine were found in his system, his life insurance provider denies his beneficiaries claim. Even though he was not at fault for the accident, the presence of excluded and illegal drugs still voids the claim.
Handling a denied insurance claim because of drugs
These and other such examples highlight serious gray areas in life and health insurance. Any injury or death is sure to leave family and friends in enough grief already. A denied life or health insurance claim is only going to make things more difficult and confusing.
Fortunately, a denied life insurance claim because of drug exclusions is not the end of the road. Many of the denied claims are done wrongfully or in bad faith.
When your insurance claim is denied because of drug exclusion, it is important to take a step back, collect all the necessary data, and inspect the actual policy.
A life insurance lawyer will review the details of the case and talk with experts in the field to determine the true cause of death and to what extent the use of drugs actually played a role. They will thoroughly review the actual terms of the insurance policy and compare that with the factual details of the case. At that point, if a denied claim is suspected to have been made in bad faith, they will help file an appeal that is sure to win.
Our life insurance lawyers are experienced in drug exclusion cases. If your case has been denied or you are curious how drug use - prescription or otherwise - would affect your policy, give us a call today.