Insurer Avoids Payout by Claiming Accidental Death was Suicide

Jane Pierce spent nine years alongside her husband, Todd, as he struggled with cancer. When returning from a family reunion, he lost control of his truck and died in a car crash. Despite the autopsy report determining smoke inhalation as the cause of death, MetLife refused to pay Jane the accidental death benefits. MetLife determined Todd’s death to be a suicide because he had traces of Tramadol in his system. Todd was indeed taking the pain reliever in association with his cancer treatments, but the medical examiner explained that Todd did not take high levels of the drug and it was not the cause of his death.

Under ERISA, employees must surrender their rights to compensatory and punitive damages and jury trials if they sue an insurance company for wrongfully denying coverage. Thus, even if insurers lose in court to people like Jane Pierce, they still win because they keep and invest the money while the case is pending. However, most people aren’t as determined as Jane and give up the fight due to lack of energy or knowledge.

MetLife eventually settled with Jane for the exact amount of the accidental death benefit. Had the case gone before a jury, and had that jury been able to award punitive damages, Jane probably would have received millions from the lying insurance company.

Tom Baker, from the University of Pennsylvania Law School stated, “If ever a law backfired for the public, ERISA is the perfect example.”

For more information, including many stories of insurance companies wrongfully denying claims, see David Evans, Accidental Death Becomes Suicide When Insurers Dodge Payouts, Bloomberg, Feb. 28, 2011.