People around Chicago, and elsewhere in the country, have experienced a disturbing trend of employers telling them they have life insurance coverage, only to make a claim and have the insurer tell them the coverage lapsed, or they were not eligible insureds. The problem is that when people expect they have the coverage, they rely on it by having it be part of their planning for an unfortunate event. Often times the insurer is the responsible party, but occasionally it is the employer who sponsors the plan and buys the insurance. In a recent case, a court allowed a widow to proceed with claims against the employer for telling her late husband he had life insurance coverage, and even continuing to pay premiums for him during a period he was laid off.
In Teisman v. United of Omaha Life Insurance Co., No. 11-1211 (W.D. Mich. Nov. 8, 2012), the court held the widow had valid claims against her late husband's employer for breach of fiduciary duty and estoppel under the Employee Retirement Income Security Act ("ERISA"). When Jedco, Inc. laid off Mr. Tesman, it told him his life insurance would continue and that it would continue paying his premium. After he died, his widow made a claim to the insurer for the life insurance, but it denied the claim because Mr. Teisman was not eligible to be covered while he was laid off. She also raised claims against the employer, essentially seeking to hold it to its promise that Teisman had coverage. The court determined that in light of Cigna Corp. v. Amara, 131 S. Ct. 1866 (2011), the widow's claims for breach of fiduciary duty and estoppel against the employer could proceed. The claims have withstood summary judgment, meaning there may be a trial to resolve any issues of fact.
If you have experienced any kind of misrepresentation or misleading in a life insurance claim, it is critical to get the advice of a skilled ERISA lawyer. If you have questions about a life insurance claim, call an ERISA lawyer.