denial of benefits

Why Determining the Proper Beneficiary of a Life Insurance Policy Is Not Always Simple

Published on: January 18, 2021 | by Matt Pulle

Many life insurance lawsuits involve disputes over the designation of beneficiaries. In Humana Ins. Co. of Kentucky v. O’Neal (2018), the Sixth Circuit Court of Appeals had to evaluate two competing claims for life insurance proceeds under an ERISA plan (“Plan”).

Under the Plan, the decedent (“Decedent”) could name a beneficiary. If the Decedent did not name a beneficiary, Humana, the administrator of the plan, would pay the benefit at its option to either the surviving spouse or the estate of the Decedent. One year prior to the Decedent’s death in 2015, he named his then girlfriend as his beneficiary (“Prior Beneficiary”). The following year, during the re-enrollment period, the Decedent did not select any person or entity to be his beneficiary.

Shortly after the Decedent’s death, Humana received claims from both the administrator of the Decedent’s estate (“Estate”) and the Prior Beneficiary. After the district court determined that the Estate was entitled to the Decedent’s life insurance benefit, the Prior Beneficiary appealed.

What an ERISA Disability Plaintiff Has to Prove to Win Attorney’s Fees in an ERISA Disability Case

Published on: August 1, 2017 | by Matt Pulle

Even when plaintiffs win ERISA disability lawsuits, their attorney’s fees can cut into their awards. In some ERISA disability cases, however, plaintiffs can recover their attorney’s fees (and costs) under federal law.

What do plaintiffs need to show in order to be awarded their attorney’s fees in an ERISA disability lawsuit? In Sec’y of Dep’t of Labor v. King (1985), the Court of Appeals for the Sixth Circuit, the circuit which includes federal courts in Tennessee, set out five guidelines for district courts to apply when deciding whether to award attorney’s fees under ERISA. They include:

(1) the degree of the opposing party’s culpability or bad faith;

(2) the opposing party’s ability to satisfy an award of attorney’s fees;

(3) the deterrent effect of an award on other persons under similar circumstances;

(4) whether the party requesting fees sought to confer a common benefit on all participants and beneficiaries of an ERISA plan or resolve significant legal questions regarding ERISA; and

(5) the relative merits of the parties’ positions.

Sixth Circuit courts regularly use the above guidelines–referred to as the “King Factors”– in evaluating claims for attorney’s fees. For example, in Moon v. Unum Provident Corp. (2006), the Sixth Circuit applied the King Factors in awarding the plaintiff attorney’s fees even though the lower court initially ruled against her claim for long-term disability benefits. After the Sixth Circuit reversed the district court’s ruling (Moon 1), the case was remanded to the district court to decide whether the plaintiff was entitled to attorney’s fees.

Misrepresentation and Life Insurance: When Can Incorrect Information on an Application Result in a Denied Claim?

Published on: December 12, 2016 | by Matt Pulle

Under Tennessee law, a life insurance company can deny a claim for benefits if the insured individual was less than honest in his or her insurance application. Specifically, Tennessee Code Annotated § 56–7–103 provides that a misrepresentation in an application for an insurance policy can void the policy if the misrepresentation “increases the risk of loss.”

So what exactly does that mean?

Let’s take an easy example: If the applicant fails to disclose a known heart condition on his or her application, and then dies of a heart attack, the life insurance company likely will be able to deny any claim for the proceeds.

What happens, however, if the applicant dies of a heart attack after failing to disclose a DUI conviction? The Tennessee Court of Appeals dealt with these same facts in Smith v. Tenn. Farmers Life Reassurance Co. (2006) and held that the insurance company’s refusal to pay benefits under the policy was allowed under Tennessee law. As the court noted, the misrepresentation in that case did not need to involve a “hazard that actually produced the loss in question.” Rather, the issue was whether the misrepresentation would have increased the risk of loss. In Smith, the court determined that the insured’s misrepresentation influenced the insurance company’s decision to issue the policy and, therefore, increased its risk of loss.

It may seem like, based on the ruling in Smith, that it is fairly easy for life insurance companies to use a supposed misrepresentation on an application as a reason to deny benefits. Another Tennessee Court of Appeals decision, however, indicates that life insurance companies will have to support their misrepresentation claims with direct evidence, and cannot simply ask the court to infer that the applicant was less than forthcoming on his or her application.