by InsInvestigator » Fri Jan 21, 2011 06:58 am
Here are the details for case I picked up this morning involving United of Omaha. The insured lives in South Dakota and is approximately 35 years old. Give me a little feedback on this: Mark
Mrs. A purchased life insurance for herself and her husband on the 9th of September, 2008, while she was employed by her county's State's Attorney's Office. While meeting with the United of Omaha agent, Mrs. A. was advised that she could purchase life insurance for both, herself and her husband up to the amount of the guaranteed issuance without any necessity for a medical examination or proof of good health. Joe the agent explained that Mrs. A could purchase life insurance for herself and for her husband up to the amount of the guaranteed issuance without any need for a medical examination. Mrs. A explained to Joe the agent that could not be the case given her husband's cancer. Joe the agent assured Mrs. A she could purchase life insurance for him up to the amount of the guaranteed issuance regardless of any health problems because the amount was guaranteed.
The policy's benefit summary provides insurance for the Employee up to an amount equal to five times their annual salary up to $500,000 and 50% of the employees benefit - up to $100,000 for the employee's spouse. Based on Joe the agent's representations, Mrs. A purchased a $100,000 policy for herself at a per paycheck premium of $11.70. Additionally, she purchased a $50,000 policy for her spouse Mr. A at a per paycheck premium of $6.40. Mrs. A did not intend to purchase life insurance for her husband until Joe the agent assured her that no medical examination would be required and that his cancer was immaterial. For the past 18 months, premiums were deducted from Mrs. A’s paycheck to cover both these policies.
Unfortunately, Mr. A died on November 17, 2009. Mrs. A communicated with First Administrators Inc. to get a claim form, so she could submit a claim to United of Omaha Life Insurance Company. United of Omaha sent Mrs. A a claim form that consisted of two pages of warnings regarding the criminal penalties in the various states for submitting a false claim. With these warnings was a proof of death form that Mrs. A filled out and returned to United of Omaha.
It was perplexing to Mrs. A that she needed to sign an authorization to disclose medical information regarding this claim given that she had previously been informed by United of Omaha’s agent that such information was not needed because the policy was a guaranteed issuance. Nonetheless, Mrs. A completed the forms and sent them on to United of Omaha. It is her position, however, that these forms are not relevant to the processing of her husband’s death claim.
Mrs. A is in possession of a denial letter from United of Omaha, that forms the basis of this appeal. United of Omaha takes the position that Mrs. A’s policy did not take effect because Mr. A was disabled at the time the policy was purchased. This notion is entirely incorrect, and she disputes the position that Mr. A was disabled under the meaning of the policy on the 9th of September 2008. His cancer was present. However, he was doing well under the meaning and engaging in many activities of daily life at that time. More to the point, United of Omaha is estopped from relying on the disability provision in this circumstance.
Equitable estoppel precludes someone from asserting a position contrary to the representation made by that party against another who justifiably relied on the representation and would suffer damage if the representation were withdrawn. Joe the agent represented to Mrs. A that her husband was eligible for guaranteed issuance life insurance irrespective of his health. Mrs. A relied on this representation and purchase life insurance for her husband. After collecting premiums from Mrs. A for 18 months, United of Omaha cannot now repudiate that representation and argue that Mr. A was not eligible for coverage because his health condition. Furthermore, Mrs. Day was not permitted to investigate any eligibility requirements because a copy of the policy was never provided to her. Mrs. A had to rely on the representations of Joe the agent and now United of Omaha is bound by those same representations.
Mrs. A purchased life insurance for herself and her husband on the 9th of September, 2008, while she was employed by her county's State's Attorney's Office. While meeting with the United of Omaha agent, Mrs. A. was advised that she could purchase life insurance for both, herself and her husband up to the amount of the guaranteed issuance without any necessity for a medical examination or proof of good health. Joe the agent explained that Mrs. A could purchase life insurance for herself and for her husband up to the amount of the guaranteed issuance without any need for a medical examination. Mrs. A explained to Joe the agent that could not be the case given her husband's cancer. Joe the agent assured Mrs. A she could purchase life insurance for him up to the amount of the guaranteed issuance regardless of any health problems because the amount was guaranteed.
The policy's benefit summary provides insurance for the Employee up to an amount equal to five times their annual salary up to $500,000 and 50% of the employees benefit - up to $100,000 for the employee's spouse. Based on Joe the agent's representations, Mrs. A purchased a $100,000 policy for herself at a per paycheck premium of $11.70. Additionally, she purchased a $50,000 policy for her spouse Mr. A at a per paycheck premium of $6.40. Mrs. A did not intend to purchase life insurance for her husband until Joe the agent assured her that no medical examination would be required and that his cancer was immaterial. For the past 18 months, premiums were deducted from Mrs. A’s paycheck to cover both these policies.
Unfortunately, Mr. A died on November 17, 2009. Mrs. A communicated with First Administrators Inc. to get a claim form, so she could submit a claim to United of Omaha Life Insurance Company. United of Omaha sent Mrs. A a claim form that consisted of two pages of warnings regarding the criminal penalties in the various states for submitting a false claim. With these warnings was a proof of death form that Mrs. A filled out and returned to United of Omaha.
It was perplexing to Mrs. A that she needed to sign an authorization to disclose medical information regarding this claim given that she had previously been informed by United of Omaha’s agent that such information was not needed because the policy was a guaranteed issuance. Nonetheless, Mrs. A completed the forms and sent them on to United of Omaha. It is her position, however, that these forms are not relevant to the processing of her husband’s death claim.
Mrs. A is in possession of a denial letter from United of Omaha, that forms the basis of this appeal. United of Omaha takes the position that Mrs. A’s policy did not take effect because Mr. A was disabled at the time the policy was purchased. This notion is entirely incorrect, and she disputes the position that Mr. A was disabled under the meaning of the policy on the 9th of September 2008. His cancer was present. However, he was doing well under the meaning and engaging in many activities of daily life at that time. More to the point, United of Omaha is estopped from relying on the disability provision in this circumstance.
Equitable estoppel precludes someone from asserting a position contrary to the representation made by that party against another who justifiably relied on the representation and would suffer damage if the representation were withdrawn. Joe the agent represented to Mrs. A that her husband was eligible for guaranteed issuance life insurance irrespective of his health. Mrs. A relied on this representation and purchase life insurance for her husband. After collecting premiums from Mrs. A for 18 months, United of Omaha cannot now repudiate that representation and argue that Mr. A was not eligible for coverage because his health condition. Furthermore, Mrs. Day was not permitted to investigate any eligibility requirements because a copy of the policy was never provided to her. Mrs. A had to rely on the representations of Joe the agent and now United of Omaha is bound by those same representations.
Posted: Fri Jan 21, 2011 12:55 pm Post Subject:
I don't see a reason why it takes 18 months for a carrier to identify whether the insured has actually satisfied the eligibility norms. Again, I'm wondering what the agent was doing for all this while!
Posted: Wed Jan 26, 2011 02:21 pm Post Subject:
Furthermore, Mrs. Day was not permitted to investigate any eligibility requirements because a copy of the policy was never provided to her. Mrs. A had to rely on the representations of Joe the agent and now United of Omaha is bound by those same representations.
What a great example of APPARENT AUTHORITY in all its glorious misrepresentation! Hope the company and agent are held jointly and severally liable for this one. Then see what happens to the agent when UoO manages to finagle its way out of paying its share of the damages.
I'm wondering what the agent was doing for all this while!
I'm sure he was busy misrepresenting coverage all over town, as he had been trained to do.
Give me a little feedback on this
Obviously, Mark, the insurer is going to attempt to rely on the paragraph in their contract that states "No agent has the authority to . . . ." To get the estoppel invoked by the court, it may be necessary to do a sting on the same (or another) UoO agent, presenting the same "facts" (my spouse has cancer, and can't be covered) to see what the response is. If it comes back in essentially the same manner as reported above, then it's a dead-bang example of a "general business practice" to misrepresent the terms of coverage.
Or get a former UoO agent to blow the whistle on their training practices, like State Farm got hammered with several years ago when it stole the book of business from one of its agents in Alaska by transferring him out of the state without allowing him to retain the right to his book or compensating him for his loss of income.
Best of luck to you on this one!
Posted: Thu Jan 27, 2011 05:13 pm Post Subject:
Here’s where it starts to get good.
There were 2 identical cases in South Dakota that settled last year. Different captive agent for UoO but same pitch and the Agent was advised that the dependant spouse had cancer…”no problem” says the agent.
When the claim comes in they say “sorry see confined/disabled”. So it, no doubt, is a general business practice.
A portion of this, for me, remains ERISA. That is UoO using ERISA, when they know it doesn’t apply, to scare denied insureds away. In both denial letters they tell my client that if she’s unhappy she has rights under ERISA. But the claim file (which I have a portion of) says “No ERISA”. Unum had some internal memos talking about the wonders of ERISA in that Bourhis book Insult to Injury.
Posted: Fri Jan 28, 2011 08:26 am Post Subject:
As far as I can tell, the possible prohibitions about suing insurance companies for claims issues under ERISA does not apply to group life insurance.
The South Dakota precedents may be indicative of UoO's training methods, which have gotten many insurance companies in trouble over the years -- to wit, the "vanishing premium" sales talk in Universal Life in the 1980s that eventually cost the industry billions of dollars in restitution, fines, and other considerations.
Go get 'em, Mark!
Posted: Fri Jan 28, 2011 02:36 pm Post Subject:
Stories like this should make all of us a bit paranoid. We should all start recording conversations with our agents. But this makes me wonder... will recorded assurances help you win a particular case like this?
Posted: Sun Jan 30, 2011 12:56 am Post Subject:
will recorded assurances help you win a particular case like this?
They could. Or they could get you prosecuted for privacy violations. In California, for example, there must usually be a disclosure that a recording is being made.
Posted: Sun Jan 30, 2011 06:16 am Post Subject:
Unless you're just using it to prove to a law firm or regulatory agency that a problem really exists. Just can't be admitted as evidence. We've used recording devices in stings before.
Posted: Sun Jan 30, 2011 06:07 pm Post Subject:
Just can't be admitted as evidence
Point well taken.
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