Feds Immune from Federal Employees’ Group Life Insurance Act (FEGLIA) Lawsuit for Loss of Beneficiary Designations

In Graber v. Metropolitan Life Insurance Company, a lawsuit against the United States and Metropolitan Life Insurance Company to obtain the life insurance benefits of a deceased federal employee, a U.S. District Court in Ohio ruled yesterday that the federal government has sovereign immunity for the improper maintenance of life insurance beneficiary designation forms.  The dispute arose when Metropolitan Life Insurance Company denied a life insurance claim filed by the insured’s surviving spouse and subsequently issued payment of the benefits to the insured’s brother.  Met Life based its decision on the insured’s incomplete personnel file, which contained a form designating the brother as sole beneficiary in 1996 but lacked any record of the insured’s request in 2008 to change the beneficiary to her husband.

Under the Federal Employees’ Group Life Insurance Act, the United States has waived sovereign immunity for any “breach of legal duty owed.”  Although the federal government was responsible for maintaining the insured’s personnel file, the District Court’s holding that no duty exists to properly maintain FEGLI records precludes recovery, as the federal government has not unequivocally consented to be sued for the loss, misfiling, or misplacing of beneficiary designation forms.

Sound like a bunch of nonsensical legal mumbo jumbo?  Well, that’s debatable… even federal courts are somewhat split on the issue.  Prior to the Graber decision, the Fifth Circuit concluded in Metropolitan Life v. Atkins that the federal government does have the duty to properly maintain beneficiary designation forms in the care of its FEGLI personnel clerks.  Yet, other federal courts limit the United States’ duty under the Act to only negotiating and issuing the correct FEGLI life insurance policy.

The lesson to be taken away from this discussion is two-fold.  First, if you are a federal employee with group life insurance benefits, follow-up on any beneficiary designations to ensure that your personnel file accurately reflects your intentions.  And most importantly, always consult with a life insurance lawyer about your denied life insurance claim or beneficiary dispute.  Until the Supreme Court picks a side, every “designated” beneficiary deserves to make their case.

The full court opinions referenced in this post can be found here —–> Graber v. Metropolitan Life ; Metropolitan Life v. Atkins .

For additional information on how a life insurance lawyer can help you, visit www.life-insurancelawyer.com and www.life-insurance-law-firm.com or Contact Us at (800)403-5710 to speak with an attorney about your case now.

Interim Coverage Granted For Insured Who Died Prior To Policy’s Effective Date

If an insured passes away prior to a life insurance policy’s effective date but after the first premium payment, the insurance company will likely deny the beneficiary’s life insurance claim.  This makes sense to many of us, and to many state legislators, as the application for life insurance must generally be approved before an insurance company accepts the insurance risk.

In some states, though, temporary or interim coverage is recognized when insurance companies collect premiums on the application date but fail to clearly explain the delay in life insurance coverage.  In Pennsylvania, Heather D. Lee, Esquire recently won an administrative appeal after a major life insurance company denied a claim based on the alleged “inactive” status of a policy.  The insured, who suffered an unexpected heart attack less than one week before the policy’s “effective date,” was never properly notified of any delay in coverage even though the life insurance company eagerly accepted the first premium payment.  With the assistance of an experienced life insurance lawyer, the insured’s policy was reinstated and the claim properly reviewed and paid.

Under these circumstances, an insurance company is still entitled to conduct a standard review of the application upon reinstatement because the insured’s death will have occurred within two (2) years of the policy’s effective date.  For more information on how a life insurance attorney can help you with a similar or other life insurance denial, visit www.life-insurancelawyer.com and www.life-insurance-law-firm.com, or Contact Us at (800)403-5710 for a free claim evaluation.

MEGA Life & Health Agrees to $2 Million Settlement For Abusive Insurance Practices

Following multiple and habitual violations of Rhode Island’s Small Employer Health Insurance Availability Act since 2004, MEGA Life & Health Insurance Company has reached a settlement with the State’s Health Insurance Commissioner for more than $2 million.  Pursuant to the settlement agreement, MEGA Life & Health must pay $2.3 million in restitution to approximately 5,500 self-employed Rhode Islanders due to charging excessive membership fees and premiums, wrongfully denying coverage for pre-existing conditions, and failing to provide equal coverage among its eligible health insurance customers, among other violations.

WPRI Eyewitness News On MEGA Life & Health’s $2 Million Settlement

Rhode Island is not the only state that has accused MEGA Life & Health Insurance Company of violating state laws enacted to regulate the industry and to protect consumers against bad faith insurance practices.  In 2008, HealthMarkets, Inc. and its subsidiaries [MEGA Life & Health Insurance Company, Mid-West National Life Insurance Company of Tennessee, and Chesapeake Life Insurance Company] settled a multi-state bad faith suit in the amount of $20 million for wide-spread and abusive practices.  Many states and individual policyholders have also pursued independent actions against HealthMarkets and its affiliates.

If you have concerns about your insurance company’s compliance with state laws or the terms of a life, health, or other insurance policy, you should immediately contact an experienced life insurance attorney about your case.  The Life & Property Insurance Law Offices of Heather D. Lee, Esquire offer free consultations on all life and property insurance matters.

$50,000 Life Insurance Policy… for FREE?

In 2002, Massachusetts Life Insurance Company implemented a $50,000 free life insurance program (yes, free!) for the educational benefit of children in low-income families.  The program is nation-wide and will be offered to a total of 20,000 families, equaling $1 billion in life insurance proceeds.  To qualify for a 10-year term life insurance policy through the MassMutual LifeBridge program, a parent or legal guardian of one or more dependent children must be in good health, as determined by Massachusetts Life, and have a household income of no more than $40,000.  In the event of the insured parent’s or legal guardian’s death, MassMutual will pay the $50,000 proceeds to an educational trust, which can then be used to cover pre-school, private school, trade school, community college, and/or university expenses such as tuition, housing, books, and other educational expenses.  All proceeds are paid directly to the educational institution as covered expenses accrue, ensuring that the $50,000 is only used for its intended purpose.

Now, I know what you are thinking.  Or at least I know what I was thinking when I discovered this almost-too-good-to-be-true free life insurance program: ‘If MassMutual instituted the LifeBridge program in 2002, why am I only now hearing about it in 2011!?’  It is possible that Massachusetts Life has failed to promote the LifeBridge free life insurance program in ways calculated to reach eligible applicants in low-income communities. Only about 12,000 LifeBridge policies have been issued in the nearly 10 years since MassMutual launched the program, just over one-half of the $1 billion commitment.  Maybe corporate responsibility only mandates that MassMutual implement the LifeBridge program and receive credit for its altruism without making the families and children meant to benefit from the program actually aware of its existence.  All skepticism aside, though, the LifeBridge free life insurance program has secured and undoubtedly will continue to secure educational opportunities for many children in low-income families.

Is there a catch?  Not necessarily.  But there are some conditions and exclusions.  In addition to the requirements that the parent or legal guardian be in good health and have a household income of between $10,000-$40,000, the applicant for free life insurance must be between the ages of 19-42.  This means a grandparent with legal guardianship may apply, but only a very young grandparent.  The age requirement also excludes an 18-year-old parent, even though an 18-year-old child does not qualify as an eligible beneficiary.  Also, the parent or legal guardian must be a permanent, legal resident of the United States and employed full or part-time at the time of application.

An insured’s cause of death will not affect the payment of proceeds, except that suicide-related deaths occurring within two years of the policy’s effective date are not covered.  Parents or legal guardians who have been diagnosed with cancer, heart disease, Type 1 Diabetes, and/or HIV are specifically excluded from coverage, as well as any applicant who has abused alcohol or drugs within 10 years of the application date or is on probation at the time of application.  Finally, the $50,000 free life insurance policy is available only to one parent or legal guardian per household, so an eligible parent or legal guardian with three, four, five, or more children will have to spread the proceeds fairly thin or decide which child is most in need of a quality education.

If Massachusetts Life determines that a parent or legal guardian is eligible to apply for the LifeBridge program, the company assigns a MassMutual representative to verify the applicant’s identification, employment status, income, residency, children’s ages, and also to administer a blood and urine test and a brief medical exam.  Once accepted into the LifeBridge program, the insured’s children will be entitled to the educational benefit upon death of the parent or legal guardian during the 10-year policy term, and until the later of 35 years-of-age or 10 years after the insured’s date of death.  Do you think you are eligible to apply?  Then apply today!  Additional information and an eligibility form can be found here:

MassMutual LifeBridge Program Documents

And tell your friends!  Because in the words of Massachusetts Life Insurance Company: “All children, including yours, are the future of our country.  And the more educated our future leaders are, the better prepared they will be to help meet the challenges of tomorrow.” The Life & Property Insurance Law Bloggers agree.

Protecting Your Rights & Your Family

At the Life & Property Insurance Law Offices of Heather D. Lee, PLLC, we assist insureds and their beneficiaries on delayed and denied life insurance claims, homeowners and renters insurance disputes, and other contract and consumer protection matters.  Our mission is to protect your rights and your family by ensuring that powerful insurance companies fulfill their legal and contractual obligations to you.

While the Life Insurance Law Bloggers are primarily focused on life and property insurance matters, it is our priority to provide helpful information regarding many areas of civil claims and consumer law.  The information on this site may not apply to your state, as insurance laws vary from state-to-state.  The Life & Property Insurance Law Offices of Heather D. Lee are located in Florida, New York, Pennsylvania, and Colorado.  The information on the Life & Property Insurance Lawyer Blog is NOT and should NOT be construed as legal advice.  The information contained in this website does not create an attorney-client relationship between any person who reads such information and Heather D. Lee, Esquire and/or the Life & Property Insurance Law Bloggers.

For your free case evaluation, Contact Us to speak with an experienced life and property insurance attorney about the details of your claim today.