In Brown v. United of Omaha Life Insurance, United unsuccessfully tried to avoid paying a death benefit to Lloyd Brown III, the beneficiary of a life insurance policy chosen by his father, Lloyd Brown II. Ultimately, Brown III won, but the case was remanded to the district court to determine the exact monetary amount of his award as well as the amount of attorney’s fees and prejudgment interested to which Brown III was also entitled.
Overview of Facts
It all started in December 2011, when Lloyd Brown II, a truck driver for West Side Transport Inc., submitted a “Benefit Election Authorization” for life insurance offered by his employer through Hartford Insurance Company. The effective date of the policy was February 1, 2012. West Side terminated its relationship with Hartford effective January 31, 2012, and offered optional life insurance to its employees through United of Omaha Life Insurance.
Beginning on February 1, 2012, West Side began deducting an amount from Brown II’s paycheck that would pay for $30,000 worth of life insurance. From March 21, 2012, until Brown II’s death in November 2012, an amount was deducted from his paycheck which was equivalent to a $181,666.67 death benefit. Following his father’s death, Brown III submitted a claim for the death benefit, which United denied on two grounds:
1) United agreed to take over policies in effect as of January 31, 2012. Although Brown II had applied for the guaranteed issue policy in December 2011, the effective date was February 1, 2012. Therefore, Brown II did not have coverage since he had not submitted evidence of insurability as required by policies issued after United took over.
2) Even if Brown II had coverage, it was limited to $30,000 since the record did not show that he ever made a formal request for an increased death benefit.
Brown III exhausted his administrative remedies and then filed this ERISA lawsuit. His motion for summary judgment was granted by an Ohio District Court and United appealed. The Sixth Circuit Court of Appeals affirmed the District Court decision in favor of Brown III, but remanded for further proceedings.
Brown II Was Not Required to Submit Evidence of Insurability
United argued that in December 2011, when Brown II applied for life insurance through Hartford, it was guarantee issue and the plan did not require evidence of insurability. Since Brown II’s policy did not take effect until February 1, 2012, after United took over as the insurer and required evidence of insurability, something Brown II did not provide, he did not qualify for a death benefit.
The Court conducted a comprehensive analysis of the policy language and held that it was clear that an employee who “elected” insurance under the prior plan was not required to submit evidence of insurability. Since Brown II “selected,” which is the same as “elected,” insurance under the prior plan, United was bound by the plain language of the term “elected” and Brown III was entitled to collect the death benefit under Brown II’s policy.
Appellate Court Agrees Brown III is Entitled to a Minimum of $150,000 and Remands for Determination of Accurate Amount
United argued that even if there was coverage, it was limited to $30,000 since there was no evidence that Brown II had ever requested an increase in coverage. Brown II presented evidence that the death benefit amount withheld from Brown II’s wages increased from approximately $4.00 a month to $122.81 a month. Brown II would have objected to that withholding amount if it was incorrect. The Court agreed, but remanded for a determination of the accurate amount.
Remand for Amount Determinations
According to the terms of the policy, the death benefit would be $150,000 or five times Brown II’s annual salary, which ever amount was less. The appellate Court remanded for a determination of the proper amount of the death benefit and also for a determination of the amount of attorney’s fees to which Brown III was entitled.
This case was not handled by our office, but can be instructive for those struggling to obtain a death benefit after a loved one dies. For questions about this or any other question about death or disability benefits, contact one of our disability attorneys at Dell & Schaefer for a free consultation.