A federal court in Indiana found that MetLife unreasonably paid out death benefits to a woman’s ex-husband even though she had changed her beneficiary designation after their divorce and before her death.
The Facts
Carolyn Widley worked for General Motors (“GM”) for several years. As part of her benefits, she had a basic life insurance benefit of $60,000.00. The life insurance policy was issued by MetLife. In 2004, Widley completed a beneficiary designation form naming her then-husband, Jeffrey Tame, as the primary beneficiary of the death benefit. In February of 2011, Widley and Tame divorced. In March of that same year, Widley completed another beneficiary designation form in which she named her two sons - Jeremy and Joshua Zartman - as primary beneficiaries.
On the first line of the beneficiary form, Widley wrote Jeremy and nothing else. On the second and third lines, Widley correctly wrote her sons’ complete names and demographic information. Widley also specifically noted the date of her divorce from Tame at the bottom of the form. The same day she provided GM with the updated beneficiary form, Widley submitted a hand-written note to GM attaching her divorce decree and asking Tame to be removed from her health insurance.
MetLife sent Widley a letter stating it was unable to process the beneficiary designation changes because the form contained incomplete or missing information. MetLife noted Widley needed to provide the demographic information for all beneficiaries. Basically, before MetLife could process the change of beneficiary for Widley, it needed Jeremy’s demographics. Widley never provided another beneficiary form and died in 2017.
Widley’s son Jeremy filed a life insurance claim form with MetLife, which was rejected. MetLife advised Zartman’s claim was denied because Tame was still the primary beneficiary under Widley’s life insurance policy. Zartman appealed MetLife’s decision, which it rejected. After Zartman’s claim for the death benefits was denied, Tames filed a claim with MetLife. Tames’ claim was approved and MetLife paid out 100% of the benefits to him. Zartman then filed a lawsuit against MetLife and Tames for the death benefits under his mother’s life insurance policy.
The Courts Review of MetLife’s Decision
If you are eligible for benefits through your job, including life insurance coverage, this benefit is likely governed by the Employee Retirement Income Security Act of 1974 (ERISA). Because Widley’s life insurance coverage was provided through GM, the death benefit claim was governed by ERISA.
Most group life insurance policies contain discretionary language. This language gives insurance companies like MetLife have the discretion to determine if someone is entitled to benefits. Under ERISA, when a plan document has discretionary language, the court will apply an arbitrary and capricious standard of review. Put simply, the insurance company’s decision will not be overturned unless it is downright unreasonable. Unreasonableness is a difficult standard to meet.
The plan documents governing Widely’s life insurance policy contained the necessary discretionary language. Even so, the court found MetLife’s decision to deny Zartman’s claim to be downright unreasonable.
The court came to its conclusion due to the following reasons:
- Widely plainly showed her intent to remove Tame as a beneficiary from all of her GM benefits;
- Widley tried to make the changes by updating her beneficiary information as required by MetLife;
- Widley provided the change of beneficiary on MetLife’s approved form; and
- The changes requested by Widley became effective as of the date she completed and signed the beneficiary form, not the date MetLife decided to approve the changes.
Therefore, the court found that even with Widley’s typo on the beneficiary form, she substantially complied with MetLife’s requirements and her sons were the beneficiaries under the policy at the time of her death. Accordingly, MetLife unreasonably denied Zartman’s claim and wrongly paid the death benefits out to Tames.
Help from an Attorney with Expertise in ERISA Claims
Insurance law is complicated. This is particularly true if the policy is governed by ERISA. If your claim for insurance benefits was denied or being delayed by an insurance company, it is important to get help from a lawyer with expertise in this area of the law.
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- Our lawyers specialize in insurance;
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Because federal law applies to most group insurance claims, we do not have to be located in your state to help.
Dabdoub Law Firm represents clients nationwide with:
- Submitting a life insurance claim;
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Call to speak with an ERISA attorney. No fees are costs unless clients are paid.
