When Your Company Life Insurance Policy Won’t Pay
If you have lost a loved one, and the deceased individual’s employer-sponsored life insurance company denies or delays a claim, it’s time to call a lawyer right away. Read about ERISA law.
Here’s why: For non-government employees, employer-sponsored life insurance policies are governed by the Employee Retirement Income Security Act of 1974 (ERISA), which imposes strict, tight deadlines on appeals of claim denials.
Appeals must be in writing. If you need to contest a denied ERISA life insurance claim, you only have 60 days – and you need to get it thorough and correct the first time. Since it takes some time to prepare a case, you should contact an experienced life insurance attorney as soon as you get a denial letter from an insurance company telling you they will not be paying a claim, or paying a reduced amount.
With ERISA life insurance plans, you must go through the written appeal process before you can file a lawsuit to get the insurer to pay promised benefits. This is why it’s critical to get an attorney involved early: If you blow the 60-day appeal deadline, you endanger your ability to ever seek redress in the courts. And once the threat of a lawsuit is off the table, the insurance company has much less incentive to settle.
It’s critical to call us early in the process.
Your rights under ERISA
As a beneficiary of an ERISA group life insurance policy, you have a number of rights under the law, and employers and plan sponsors have some obligations. For example, ERISA holds benefit sponsors to a fiduciary standard of care. This is the highest standard of care recognized under the law, and requires the utmost good faith on the part of the plan sponsor.
Often, ERISA life insurance claim denials happen as a result of a mistake made by the employer and plan sponsor. It could be lost paperwork, or a failure to pay premiums as promised to the insurance company to cover the worker.
Because of the high standard of care expected of employee benefits sponsors under ERISA, employers may be liable for the financial consequences of mistakes, errors and omissions they may make in administering the benefit.
Employers frequently carry insurance to protect them against this liability, which provides an additional avenue through which a skilled life insurance attorney may be able to pursue compensation.
In short, we may be able to get compensation not just from the life insurance company, but potentially from the deceased’s former employers and their employment practices liability insurance carrier as well.
At the same time, ERISA limits your ability to file a bad faith or breach of contract lawsuit against the insurance company directly. You also can’t choose to have a jury trial. You also can’t introduce new evidence against an insurance company that you don’t include in the appeal – which is another reason you need an experienced attorney involved from the very beginning. If you don’t file a thorough appeal at the very outset, it is very difficult to go back and undo any mistakes you made in the appeal process.
As experienced attorneys specializing in life insurance law, we know what documents to demand from the insurance company and how to build a thorough case for an appeal that preserves your rights going forward.
What causes ERISA claim denials or delays?
Some potential causes of claim denials or delays are the type that sometimes occur with individually-owned life insurance contracts as well:
- Misrepresentation on the application
- Suicide (within a two-year contestability period)
- Excluded cause of death
- Deceased was committing a felony at time of injury that lead to his or her death
- Policy lapsed due to nonpayment of premium
- Claimant is not a beneficiary on the life insurance contract
Others are unique to employer-sponsored life insurance benefits. For example:
- The deceased was not an employee at the time of death and therefore the policy was not in force.
- The deceased did not work a sufficient number of hours to qualify.
- The deceased does not qualify because he or she was on sick leave at the time of death.
- The deceased does not qualify because he or she was on sick leave, personal leave, maternity, family medical leave or vacation at the time of death
- The deceased does not qualify because he or she was on duty in the U.S. Armed Forces at the time of death.
- The deceased does not qualify because he or she died as a result of terrorism, war or civil disorder excluded by the policy.
- The deceased did not apply to convert a company-owned policy to a portable, personally-owned policy
- The employer did not list the individual as covered
- The employer failed to provide required documents to the insurance company
- The employer failed to pay premiums
- The employer paid reduced premiums
- The employer cancelled the policy
- The benefit is reduced because accidental death and dismemberment coverage does not apply
If the denial happens as a result of error or misconduct on the part of the employer, you have an excellent chance of prevailing – if you have an experienced life insurance attorney on your side.
You can guarantee they will.
Don’t try to fight them on your own.
It’s vital to have an attorney who’s experienced specifically in ERISA life insurance litigation. This is because federal ERISA law governs these cases, and trumps any state laws that are in conflict with it. ERISA lawsuits happen in federal courts, not state courts. So even attorneys who have handled life insurance cases successfully within your own state can make costly mistakes when confronted with their first ERISA employer-sponsored life insurance case.
Don’t try to do this yourself. The amounts at stake are too high. The insurance companies and plan sponsors and their own employment practices liability insurance firms will have the best attorneys they can hire on the case working against you, looking for any excuse they can find that will allow them to get away with not paying the life insurance benefit your loved one was working for in good faith.
If you have received a denial letter, or if your deceased loved ones’ employer has told you the worker didn’t qualify for a promised life insurance benefit, don’t delay, call us today.
There’s no risk to you in calling – but failure to call an attorney can cost you tens of thousands of dollars.