Death of a loved can be beginning of hard fight with life insurer
Jane Pierce spent nine years struggling alongside her husband, Todd, as he fought cancer in his sinus cavity. The treatments were working. Then in July 2009, Todd died in a fiery car crash. He was 46. That was the beginning of a whole new battle for Jane, this time with Todd's life insurance company, MetLife.
A state medical examiner and a sheriff in Rosebud County, Mont., concluded that Todd's death was an accident, caused when he lost control of his silver GMC pickup after passing a car on a two-lane road.
Their findings meant Jane was eligible to collect $224,000 on the accidental death insurance policy that Todd had through his employer, power producer PPL. MetLife, however, refused to pay. The nation's largest life insurer told Pierce on Dec. 8, 2009, that her husband had killed himself. The policy didn't cover suicide, the insurer said.
"How dare they suggest such a thing,'' says Pierce, 44, a physician assistant in Colstrip, a Montana mining and power production city of 2,346 people.
She says she's insulted that the man who courageously battled his disease for a decade was accused of abandoning his wife and two sons - one a Marine, the other a National Guardsman - and giving up on his fight to live.
Pierce argued with MetLife for months. She supplied the insurer with the autopsy report, medical records and a letter from the medical examiner saying the death was accidental. MetLife still said no. In May 2010, she sued.
In July, a year after Todd's death, MetLife settled and paid Pierce the full $224,000 due on the policy. The New York-based insurer, as part of the agreement, denied wrongdoing. It paid Pierce no interest or penalties for the year during which it withheld the payment.
Life insurers have found myriad ways to delay and deny paying death benefits to families, civil court cases across the United States show. Since 2008, federal judges have concluded that some insurers cheated survivors by twisting facts, fabricating excuses and ignoring autopsy findings to withhold death benefits.
Insurers can make erroneous arguments with near impunity when it comes to the 112.8 million life and accidental death policies provided by companies and associations to employees and members. That's because of loopholes in a federal law intended to protect worker benefits.
Under that law - the Employee Retirement Income Security Act, or ERISA - insurers can win even when they lose in court because they can keep and invest survivors' money while cases are pending.
Congress enacted ERISA in 1974, after bankruptcies and union scandals caused thousands of workers to lose benefits. The law requires employers to disclose insurance and pension plan finances, and it holds company and union officials accountable for funding plans sufficiently.
In order to achieve ERISA's goals, federal courts have ruled that employees must surrender their rights to jury trials and compensatory and punitive damages if they sue an insurer for wrongfully denying coverage. Judges have reasoned that companies and insurers should have these protections to encourage them to continue providing benefits.