Department of Labor Settlement with Unum Highlights Importance of ERISA Benefit Claims Lawyers
The U.S. Department of Labor has announced a settlement with Unum Life Insurance Co. of America, requiring the Portland, Maine-based insurer to revise its procedures for handling the proof of good health requirement, known as evidence of insurability, for participants in employer-sponsored life insurance plans. This decision comes after the department’s Employee Benefits Security Administration (EBSA) investigated Unum’s management of life insurance policies under the Employee Retirement Income Security Act (ERISA).
The investigation revealed that Unum frequently accepted premiums without confirming participants’ insurability, leading participants and their beneficiaries to believe they had coverage. However, Unum often denied benefits claims after a participant’s death, citing the absence of proof of insurability, thereby depriving beneficiaries of the life insurance benefits their loved ones had paid for.
Maia Fisher, Regional Solicitor in Boston, emphasized, “The U.S. Department of Labor will take appropriate action against any insurance company that collects regular premium payments from plan participants and later tries to wrongfully deny benefits based on technicalities like ‘insurability’ after the participant passes away.”
Additionally, EBSA’s investigation found that Unum provided coverage to dependents in certain policies without evidence of insurability. If a dependent died within two years of policy issuance, Unum would scrutinize their medical records to determine if they were disabled from the time of enrollment until death. If Unum concluded the dependent was disabled at enrollment, it would deny coverage due to a delayed effective date of coverage. Crucially, Unum did not clearly inform participants or dependents about these potential delays at the time of enrollment.
The settlement now prohibits Unum from denying benefits claims under an ERISA-governed group life insurance policy solely due to a lack of evidence of insurability when premiums have been paid for 90 days or more. Furthermore, the company must improve the transparency regarding the delayed effective date of coverage for dependents.
Carol Hamilton, EBSA’s Regional Director in Boston, stated, “People who pay life insurance premiums should feel secure that their beneficiaries will get the benefits for which they paid. While Unum is changing its practices, we urge all insurers to examine their practices to ensure that they aren’t engaged in similar conduct.”
Unum has agreed to voluntarily re-process claim denials based on the lack of evidence of insurability from January 1, 2018, to the present and claim denials based on the delayed effective date provision from July 1, 2016, to the present.
This settlement follows similar agreements with Prudential Insurance Co. in April 2023, United of Omaha Life Insurance Co. in September 2023, and Lincoln National Life Insurance Co. in May 2024. Investigations into other life insurance companies’ practices concerning evidence of insurability are ongoing.
Why an ERISA Benefit Claims Lawyer is Essential
An ERISA Benefit Claims lawyer plays a crucial role in matters like this. These legal professionals specialize in the intricacies of ERISA, a complex federal law governing employee benefit plans. When insurance companies deny claims based on technicalities such as the lack of evidence of insurability, a lawyer well-versed in ERISA can be instrumental in challenging these denials.
Firstly, an ERISA lawyer can help beneficiaries understand their rights under the law. They can interpret the dense legal language and explain how it applies to individual cases, ensuring that beneficiaries are fully informed about their entitlements.
Secondly, these lawyers are adept at navigating the appeals process. Insurance companies often have strict deadlines and specific procedures for appealing a denied claim. An experienced ERISA lawyer knows these procedures inside out and can ensure that all necessary documentation is submitted correctly and on time.
Moreover, an ERISA Benefit Claims lawyer can identify and address bad faith practices by insurers. In the case of Unum, for example, a lawyer could challenge the company’s failure to inform participants about the need for evidence of insurability, as well as their improper denial of claims based on technicalities.
Lastly, if the dispute escalates to litigation, an ERISA lawyer can represent beneficiaries in court, presenting a compelling case to secure the benefits that were wrongfully denied. Their expertise in ERISA law and familiarity with precedent cases significantly increase the chances of a favorable outcome for beneficiaries.
In conclusion, having an Erisa Benefit Claims Lawyer is not just beneficial but often essential in ensuring that beneficiaries receive the life insurance benefits they are rightfully owed.
