Posts Tagged ‘ Denied Insurance ’

Think your Company-Sponsored Life Insurance has your back? Think again

April 26th, 2011. By Kristine B

In the realm of people being ripped off, there are a few stories that are often the most heart breaking. Seniors losing their life savings to Ponzi schemes, seniors suffering financial elder abuse at the hands of their own families and people being denied necessary medical treatment because of bad faith insurance practices.

But there’s another story that’s been emerging that is also heart wrenching—stories of how insurance companies have denied and/or delayed legitimate accidental death claims by alleging the death was not an accident at all. These situations leave the surviving family members to deal with mountains of paperwork and facing the death of their loved ones over and over again while ERISA laws reportedly help insurance companies get away it. 

The situation was first reported by David Evans at Bloomberg (02/28/11). A man died in a car accident after a long battle with cancer. A medical examiner and a sheriff determined that the car crash was an accident—meaning the victim’s death was accidental. But the insurance company refused to pay, saying that the victim committed suicide. 

In other words, the insurance company knew more than the medical examiner and the sheriff. Now, consider that for a moment. By claiming the man committed suicide, the insurance company allegedly aimed to get out of paying out the accidental death policy. But there’s more to it than that. Because the insurance company claimed to know the mind of the victim better than his own family and better than the investigators who looked into the accident. 

The good news is that the victim’s wife sued and received the full life insurance policy. The bad news is that the insurer still denied wrongdoing—apparently, it’s not wrong to allege someone committed suicide—and didn’t pay any interest or penalties for holding the money. 

Why? Because ERISA (Employee Retirement Income Security Act) protects insurers. It says they can keep the survivors’ money while a claim is in court and invest that money, too, keeping the profits. Furthermore, under ERISA, insurance companies don’t have to pay compensatory or punitive damages. In other words, they can hold the money for an extra year or two, make a profit off investing that money and still only have to give the survivor the amount of the policy at the end. They profit while the survivor loses. 

So, once again, insurers are only too happy to receive premiums and benefit if they delay paying out claims. 

And why is ERISA involved in this at all? Because many companies provide life insurance, and company sponsored benefits—such as life insurance—are covered under ERISA. Making matters even worse, because ERISA is a federal law, state insurance departments don’t have the authority to step in on survivors’ behalf. It’s up to survivors to hire lawyers to help them fight any wrongfully denied accidental death claims. 

The end result is that if you have a company-sponsored life insurance policy claim that you feel has been wrongfully denied, don’t rely on the insurance company to tell you what “normal procedure” is. Your best bet is probably to contact an attorney and find out if you can fight the denial. After all, insurance companies apparently have little to lose by denying legitimate claims.

Tags: Bad Faith Insurance, Denied Insurance, ERISA, Insurance, life insurance
Posted in Insurance, Pleading Ignorance | No Comments »

What’s the “Bad” in Bad Faith Insurance?

September 7th, 2010. By Kristine B

You’ve probably seen the commercials on tv: an actor—say Dennis Haysbert—walks around talking about how “his” insurance company (that would be Allstate) is his best friend…how it has his back in a bad situation…how it has bent over backwards to help him in his time of need…and, damn if he doesn’t sound so sincere! Or you’ve seen Flo–the Progressive Insurance girl–making it sound like no way no how would Progressive ever—EVER!—give you a lousy rate. No siree—Flo ensures us that buying insurance is as easy as ordering a Whopper with cheese, hold the pickles—thanks.

But, when it comes time to file an actual claim—when a real person needs real help from a real insurance company, all of a sudden it seems like there are a million reasons why the company won’t pay out a claim. Sometimes, that leads to claims of bad faith insurance—today’s Pleading Ignorance topic.

Before we get to that, though, the obligatory “not every denied claim is a legitimate claim” spiel. It’s true that insurance companies have to protect themselves from fraudsters and people out to make a quick buck off an accident. There are people who see an accident—real or faked—as a way to make easy money. This, of course, puts the honest people at a disadvantage. Why? Because they’re dealing with insurance companies that a) want to make as much profit as possible and b) have to unfortunately protect themselves from fraudsters who see the insurance companies as personal ATM’s.

The mix of profitability and self-protection can lead to claims of bad faith insurance.

So, what is bad faith insurance? You’ve probably heard of it before, because the companies that are accused of practicing it are often large insurance corporations—so it gets airtime in the news. Bad faith insurance occurs when an insurance company denies legitimate claims for illegitimate reasons.

Here’s the thing: When you buy an insurance policy to protect yourself or your family and you pay into it faithfully, with the full expectation that if you should ever need it, the policy will cover you, the insurance companies are required, by law, to pay out your legitimate claims.

Of course, it all looks good on paper—just like that insurance policy!—but when it comes down to it, some insurance companies use all sorts of tactics to avoid paying claims.

They might stall on the claim by forcing you to send in excessive amounts of paperwork—or they may claim to have found “mistakes” in the paperwork you’ve sent in. By stalling, they may push back the time your claim is received so that your claim is no longer valid. They might retroactively cancel your insurance policy—in effect waiting until you make a claim then deciding you shouldn’t have had the policy to begin with. They might find their own medical examiners who overrule your own doctor’s diagnosis. They might reclassify your illness or your claim and state that you should be able to work when you really cannot. Or they may classify a seemingly standard lab test as outpatient surgery requiring precertification that, of course, you did not get. The list of possibilities is endless.

Some insurance companies might target specific claims for denial; these claims might include anyone who claims Fibromyalgia or Chronic Fatigue Syndrome. People making those claims might automatically have their claims denied or may be required to send in additional paperwork to support their claim.

The bottom line is that “bad faith insurance” occurs any time that a legitmate claim that you’ve paid insurance premiums to be covered for is denied or delayed without sound reason. And, if you’ve found yourself in that position and have gone through the proper channels of contacting the insurance company and requesting that your claim be reprocessed or you’ve filed an appeal with the insurer to no avail, you may want to get some legal help.

Tags: Bad Faith Insurance, Denied Insurance, Insurance, Pleading Ignorance
Posted in Insurance, Pleading Ignorance | 2 Comments »