Many individuals in Chicago are often outraged after claiming life insurance plan benefits to be informed by the insurer or administrator that the insured person–whoever passed away–was no longer eligible to be insured at the time of death, even though they had been paying premiums for the coverage, and the insurer had been accepting those premium payments. There was a time when it was generally accepted that all the claimant could then recover were the premiums he or she paid while there was no valid coverage. Then the United States Supreme Court rendered an opinion in Cigna Corporation v. Amara, which opened the door to arguing that the deceived participant should get more than just the premiums back; she should get what she was promised she would get, which are the insurance proceeds in the event the insured died.
After the decision in Amara, that is what the Fourth Circuit Court of Appeals decided in McCravy v. Metropolitan Life Insurance Company on July 5, 2012. In that case, McCravy purchased life insurance coverage for her daughter through her employer sponsored plan, which MetLife insured. McCravy paid all the premiums on time for her daughter’s coverage, until her daughter was murdered at the age of 25. McCravy claimed the life insurance benefits, but MetLife told her that under the policy, an unmarried dependent enrolled full time in school could only be covered until age 24, so McCravy’s daughter was not covered at the time of death. MetLife tried to send McCravy the premiums back as a remedy, but McCravy sued for the insurance benefits.
The Court of Appeals held that MetLife’s acceptance of premium payments on the daughter’s behalf after it knew she was too old to be a covered dependent could be the basis for a claim the insurer breached a fiduciary duty by misrepresenting to McCravy that there was coverage. Finally, following Cigna Corporation v. Amara, courts are beginning to award the sort of make-whole relief previously denied to plan participants.
If your employer or insurance company misrepresented something to you about coverage under a life insurance plan, contact an ERISA lawyer.