Life Insurance Lawyer Vermont

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Explain how ERISA litigation works as it relates to a denied life insurance claim

The Employee Retirement Income Security Act (ERISA) is a federal law that regulates most employer-sponsored group insurance plans, including group life insurance policies. ERISA sets standards for the administration and management of these plans, and provides certain protections to plan participants and beneficiaries.

If a life insurance claim is denied under an ERISA-governed group plan, the beneficiary may have the right to challenge the denial through ERISA litigation. ERISA provides a specific process for reviewing and appealing denied claims, known as the "administrative process."

The administrative process generally involves the following steps:

Requesting an internal appeal: The beneficiary must first request an internal appeal from the insurance company or plan administrator that denied the claim. This request must typically be made in writing within a certain time period (usually 180 days).
Review of the appeal: The insurance company or plan administrator must review the appeal and issue a decision within a certain time period (usually 60 days).
Requesting external review: If the internal appeal is denied, the beneficiary may have the right to request an external review by an independent third-party reviewer, such as an arbitrator or an independent medical expert.
Filing a lawsuit: If the external review is also denied, the beneficiary may have the right to file a lawsuit in federal court under ERISA. ERISA litigation is typically heard by a judge, rather than a jury.

During ERISA litigation, the court will review the administrative record (i.e., all of the documents and evidence related to the claim that were presented during the administrative process) and determine whether the insurance company or plan administrator acted reasonably in denying the claim. The court will apply a "deferential" standard of review, meaning that it will generally defer to the insurance company or plan administrator's decision unless it was clearly arbitrary or capricious.

If the court finds that the insurance company or plan administrator acted unreasonably in denying the claim, it may order the claim to be paid and may award attorneys' fees and other costs to the beneficiary. If the court upholds the denial of the claim, the beneficiary may have the right to appeal the decision to a higher court.

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Vermont Denied Life Insurance Claims Recently Settled

Freedom Life coronavirus death claim $75,000.00
AAA sickness exclusion that we overturned $105,000.00
Nationwide wrong age on application $240,000.00
American Family COVID-19 death denial $101,000.00
Effortless Life lapsed the policy deceased $89,000.00
Accidental Death and Dismemberment won $670,000.00
Oxford Life power of attorney changed policy $133,000.00
Cincinnati Life self-inflicted injury suicide $205,000.00
American Equity material misrepresentation $36,000.00
Trinity Life smoking turned up in records $54,000.00
NRA Life self-inflicted injury or accident $103,000.00
Sentinel Life wrong social security number $79,000.00
National Integrity interpleader successfully won $40,000.00

Gerber material misrepresentation $102,500.00
SGLI beneficiary change form $400,000.00
Allstate interpleader lawsuit resolved $286,000.00
FEGLI appeal legal brief won it $142,800.00
Vermont divorce and life insurance $1,025,750.00
Prudential AD&D accidental death $421,000.00
ING alcohol exclusion drunk driving $409,000.00
Vermont denied life insurance claim $904,300.00
Mass shooting life claim denial $112,000.00
ERISA appeal quick resolution $168,000.00
Transamerica autoerotic asphyxiation death $419,000.00
Fidelity beneficiary dispute quick resolution $225,000.00
Denied life insurance claim Vermont $628,000.00
Stonebridge suicide self-inflicted injury $271,000.00

Vermont Life Insurance Law

If there’s one thing we know from spending years fighting the wrongful denial of life insurance claims, it is that life insurance companies go to great lengths to try to avoid making policy payouts. If you look at this practice from a pure business perspective, it makes sense. Life insurance companies are for-profit entities. Therefore, the less money they have to spend on paying claims, the more profitable they are at the end of the year.

Sometimes, however, the claim denial decisions made by insurers border on the ludicrous. They have a practice of twisting and manipulating policy language to make a policyholder’s circumstances of death fit within even the most obscure policy exclusions. In fact, the insurers hire more lawyers than you can imagine for that very purpose.

One of the more unfortunate exclusions that we’ve seen life insurance companies rely on in recent years is sometimes called the “felony exclusion.” If you are a fan of television crime dramas, you may be familiar with the concept. In essence, the felony exclusion says that if a life insurance policy beneficiary intentionally kills the policyholder, the beneficiary does not get to collect the policy payout.

This makes sense from a moral perspective. One person should not be able to profit from the death of another. But what happens if the death was accidental? This article explains one such case, and how the beneficiary was finally able to recover the full policy benefit after hiring a lawyer specializing in life insurance claim denials.

A tragedy all the way around

This case involved a couple named Jane and Mark. Jane was an executive with a large alcohol distributor. As part of her employment, she received an extensive benefits package which included a group life insurance plan. Jane’s life was insured for $500,000 and she named Mark as her sole beneficiary under the policy.

One afternoon in late winter, the couple set out in their Mercedes SUV to visit Jane’s parents who lived just over 100 miles away. The temperature was well below freezing, but because it was supposed to stop snowing for a few hours, Jane and Mark thought it was safe to set out on their drive. Mark was behind the wheel and Jane, who was exhausted from a busy holiday season at work, decided to lay down in the back seat to sleep.

About an hour into their trip, Mark hit a patch of ice on the freeway and lost control of the vehicle. Witnesses said the SUV spun several times before careening off the edge of the freeway and landing on its roof in a deep rut on the side of the freeway. In the process, Jane (who was not wearing a seatbelt) was thrown from the car, landing nearly 30 feet away. Jane did not survive the crash.

First responders arrived at the scene within moments and an investigation ensued. After speaking with witnesses and doing a forensic study of the scene, police investigators concluded that Mark had been driving approximately 15 miles per hour over the speed limit when he lost control of the vehicle. The final police report noted that fact and also noted that Mark was aware his wife wasn’t wearing a seat belt at the time of the accident.

Predictably, Mark was overwhelmed with grief. People who knew him well knew that the last thing he ever would have wanted to do was hurt his wife in any way. Now, at the young age of 47, he was facing life without his best friend and partner. He was so devastated that he could barely function.

A shocking accusation from the life insurer

A few weeks after the accident, Mark was able to submit a claim to Jane’s life insurance company. The claim process involved filling out a form regarding the circumstances of the death, and submitting a death certificate and the police report regarding the accident. At the time, Mark had no reason to suspect the insurance company would deny the claim.

Unfortunately, that is exactly what happened. Mark received a letter from the insurance company that nearly made him pass out from shock. In relevant part, it read:

We regret to inform you that we are not able to honor the claim made against your wife’s life insurance policy. After reviewing the documents submitted with your claim, we have determined that your actions on the evening of the accident were instrumental in causing your wife’s death. Specifically, you were exceeding the posted speed limit in inclement weather. Additionally, as the driver of the car, it was your responsibility to ensure all passengers were wearing safety restraints. The police report indicates your wife was not wearing a seat belt. Your wife’s policy contains a coverage exclusion in the event the beneficiary caused the policyholder’s death. Due to the acts and omissions outlined above, we must apply this exclusion and deny your claim.

Incensed, Mark immediately found a lawyer specializing in the wrongful denial of life insurance claims. The lawyer reviewed his case and recognized that the insurer was simply trying to exploit Mark’s grief and guilt in an effort to avoid paying out on a perfectly valid claim. Without delay, the attorney filed a lawsuit against the insurance company on Mark’s behalf.

Ultimately, the court recognized that the exclusion the insurance company was trying to rely was really intended to prevent a claim payout if the beneficiary was the intentional murderer of the policyholder. In this instance, Mark’s actions, while perhaps slightly negligent, were not undertaken with malice. Accordingly, the court ordered the insurer to pay Mark’s claim in full, with interest.

Vermont Life Insurance Law

Policies through work are governed under ERISA. The primary regulating force here in Vermont is Title 8 of the Vermont Statutes, and oversight is provided by the Vermont Insurance Division.

Most Common Reasons for a Denied Life Insurance Claim in Vermont

Number one is a misrepresentation on the application. This typically involves failing to disclose a medical condition. However, we can get over this hurdle the majority of the time.
A lapse of a life insurance policy is probably second most common. What happens is that the insured gets sick and misses a payment or two. These are tough, but often we can get these claims paid.
Probably third is the type of death exclusion. This could be a suicide or it could be a self-inflicted injury. Murder is another exclusion. Health again can fall under this exclusion. We often win suicide exclusions as we cite case law that the death was actually accidental.
A very common exclusion is the alcohol exclusion. The insured may have been killed in a car crash, but the autopsy revealed alcohol in the person’s system. We have many legal briefs to combat this exclusion.
Heroin and opiates or illegal drug exclusion is one of the biggest now. With the opioid crisis, there are tens of thousands of deaths.
Prescription drug overdose exclusion may involve an overdose of medicine or taken medicines that are contraindicated.
An ex-spouse being cut off from life insurance benefits is a big one. We actually have a half dozen ways to get over this hurdle.
Having a spouse not listed as a beneficiary is another reason for denial
Having a child not listed as a beneficiary is one too.
Having only a primary beneficiary who is deceased is another.
On an AD&D (accidental death and dismemberment) life insurance policy, a fall not being considered an accident is extremely common.
The insured’s age not being correct on the initial application is a reason for denial.
Having the wrong social security number listed is common.
An autoerotic asphyxiation exclusion is an easy one for us to beat.
An omission on the application is a big reason for denying a life insurance claim, but we have legal briefs to this effect.
Not providing the required documents to the insurance company after death is a reason.
Information which is argued to not be correct is one.
When there is a dispute between two or more beneficiaries, an interpleader may occur, and we always get these resolved quickly.
A beneficiary not named is a reason for not paying it out.
A life insurance policy may be transferred from one company to another by the employer which causes major problems.

Can an underlying illness nullify an accidental death claim?

Life insurance companies will use illness to deny accidental death and dismemberment claims

Life insurance companies are like any other for-profit business. They exist for the sole purpose of generating profits. In order to do this, however, life insurers have to engage in some rather manipulative practices.

One of those practices is to craft policy language that gives the insurance company the best chance of being able to deny valid claims made by life insurance beneficiaries. Indeed, these companies employ scores of attorneys whose sole job is to come up with policy loopholes that will relieve the company from its responsibility to pay claims.

As attorneys who specialize in contesting the wrongful denial of life insurance claims, we see this all the time. One policy type that is particularly rife with “outs” for the insurance company is accidental death and dismemberment (“AD&D”) riders. AD&D riders are add-ons to a regular life insurance policy that are intended to pay an extra death benefit if the insured dies as the result of an accident.

As one Federal Appeals Court case out of Mississippi illustrates, however, AD&D riders – like other life insurance policies – are filled with policy language that bolsters the insurer’s ability to deny valid claims.

When someone who is sick gets in an accident

In the case at hand, the insured was a gentleman named Mike. Mike had obtained a life insurance policy as a benefit of his employment. The policy contained an AD&D rider that would double the policy payout if Mike died as the result of an accident.

Unfortunately, Mike did pass away as the result of an automobile collision. One Sunday afternoon, he lost control of the van he was driving, crashed into a retail establishment, and died in the ambulance on the way to the hospital.

While this may seem like a clear case where the AD&D rider would pay the additional death benefit to Mike’s wife’s Christina, that did not happen in this case. There were additional facts at play that the insurance company grasped onto in an effort to deny Christina’s claim.

Specifically, at the time Mike crashed the van, he was suffering from a brain tumor. At the time of the accident, he had lived with the brain tumor for over six years and had experienced occasional blackouts as a result.

When the coroner’s office performed an autopsy on Mike, they discovered his brain tumor. In fact, the tumor was listed as the official cause of death on Mike’s death certificate. There was no evidence to prove that Mike had blacked out before the crash. Nonetheless, the official cause of death was a big win for the insurance company.

The underlying illness exclusion

Indeed, when Christina filed a claim for death benefits under Mike’s life insurance policy and AD&D rider, the insurance company immediately turned to the coroner’s report and death certificate as justifications for denying coverage under the rider. This is because Mike’s AD&D rider contained an “underlying illness exclusion.”

In essence, the underlying illness exclusion allows an insurance company to deny coverage if, at the time of the accident, the insured is suffering from any sort of major illness. In this case, the insurer claimed that Mike’s brain tumor was a major illness that precluded coverage.

Christina promptly appealed the claim denial with the insurance company’s internal auditors. After reviewing the files, they upheld the decision to deny AD&D coverage.

Specialized attorneys make all the difference

Fortunately, Christina was not one to give up easily. After receiving the second claim denial letter, she immediately contacted an attorney specializing in life insurance claim denials. That attorney reviewed the case and advised Christina that the best course was to sue the insurance company for breach of contract and breach of the duty of good faith and fair dealing. The case ended up going to trial in a United States District Court within the State of Mississippi.

At trial, Christina’s lawyers argued that the insurance company did not do a proper investigation into the true cause of Mike’s death before denying her claim. In particular, they argued that in the absence of hard proof that Mike had passed out prior to the accident, the insurance company had a duty to seek additional medical evidence regarding the true impact of Mike’s condition on the accident.

The jury agreed and the trial court awarded Christina the full $175,000 AD&D payout, plus interest. Even though the insurance company eventually appealed the case to the Fifth Circuit Court of Appeals, the appellate court upheld the trial court’s decision. Consequently, Christina was finally able to enjoy the payout that her husband Mike had intended for her.

Lessons learned

There are a couple of important lessons that emerge from this case. First of all, this case illustrates that a life insurance company’s first order of business is to deny valid claims. Even though the company eventually had to spend the time and money to litigate Mike’s case, it was worth it to them to try to uphold their bogus use of the underlying illness exclusion.

Secondly, and perhaps more importantly, this case shows how important it is for life insurance beneficiaries not to simply give up when they are faced with the denial of a claim. Again, as attorneys who specialize in such denials, we see wrongful claim denials every day. It is our singular goal to help our clients successfully contest those claim denials.

We recognize that not every client wants to become embroiled in litigation against an insurance company. The good news is, lawsuits are not always necessary. Sometimes, simply having a specialized attorney question the claim denial is enough to reverse that decision. We won’t know how your insurance company will react until we contact them.

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If you are facing the wrongful denial of a life insurance claim, please call us. We have a proven track record of success in battling life insurance companies. Call today. We’re here to help.