Over the past couple of decades, drug use in America has increased significantly. And we’re not just talking about use (or abuse) of illegal drugs. In fact, the misuse of prescription painkillers has been a leading news story for many years. It seems there is no community in America that is impervious to this problem.
Not surprisingly then, life insurance companies have had an increasing focus on writing policy exclusions that relieve the insurance company from making a death payout if the policyholder dies while under the influence of drugs. Known as “drug exclusions,” these policy provisions make sense at first blush. The use of illicit drugs has a direct impact on life span, whether it be from overdose, liver disease, or motor vehicle accidents that occur while a person is intoxicated by drugs. Life insurers have had to create policies that give them some relief from this very real risk of early death.
Unfortunately, however, life insurance companies have seized upon this increase in the use of illicit drugs and have used it to rationalize the denial of claims based on the use of perfectly legitimate drugs. It’s not that they’re justified in doing so. It’s that these companies make the highest profits when they find reasons to deny claims on bases that sound just plausible enough that beneficiaries won’t question their decisions.
This article explores a recent case where a life insurance company invoked the drug exclusion in circumstances that were truly incredible.
A life insurance policy issued to a “square”
Robert was a small town lawyer in his early 50s. He was a solo practitioner who had struggled for years to reach the level of success he was enjoying mid-life. In fact, his firm was doing so well that in 2009, he purchased benefits for himself that he had long lived without. Among other things, he bought himself a life insurance policy with a $500,000 benefit that would be paid to his wife Shirley in the event of his death.
Before his life insurance company would issue the policy, Robert had to fill out an extensive policy application. Among other things, the application asked if he had any history of drug use. Robert was proud that he could truthfully answer “no” to that question. Indeed, even though he had been mocked for it over the years, he had never taken an illegal drug in his whole life. Many of his friends and colleagues referred to him as the consummate “square.”
The “square” dies from drugs?
When Robert was 54, he came down with a nasty cold. The cold turned into bronchitis, the bronchitis turned into walking pneumonia, and before he knew it, Robert had full-blown pneumonia. His doctors prescribed nearly every antibiotic under the sun. Nonetheless, he simply could not shake the horrible cough and malaise that grew increasingly worse over time.
Even though he was very sick, Robert still had a solo practice to run. Consequently, he began taking copious amounts of over-the-counter remedies to relieve his symptoms. While nothing made him feel all the way better, at least he could function when he had moderate relief from the coughing, fever, and tiredness.
As with any medication, Robert’s body quickly developed a tolerance to these over-the-counter products. Consequently, he had to take more and more of them just to get through the day. Unfortunately, nothing he took was going to make him better. Indeed, those medications may have just made him worse.
On one Friday evening in January, after Robert had made it through a particularly grueling week with the help of his medication, the lawyer fell asleep and simply never woke up. An autopsy revealed that he died of complications from pneumonia. The autopsy report also revealed, however, that Robert died with an unusually high dose of those over-the-counter remedies in his bloodstream.
Life insurance claim denied due to “drug use”
Robert’s wife Shirley filed a claim for benefits under his life insurance policy. At the time, she did not anticipate any problems with the claim. She simply wanted to collect the benefit and then figure out how to live the rest of her life.
A few weeks later, however, she received a claim denial in the mail. The claims adjuster who wrote the letter claimed that Robert had died from excessive “drug use,” thus invoking the drug exclusion of his life insurance policy. The letter cited the autopsy report as the justification for this denial.
Despite her grief, Shirley found the basis for the denial to be laughable. In her mind, no one had a greater disdain for illegal drugs than her husband. Accordingly, she contacted one of his good friends who specialized in the wrongful denial of life insurance claims.
The first thing the attorney did was review the entire policy. While he quickly found the drug exclusion, he also noted that it only relieved the life insurer from paying a claim if the policyholder died while under the influence of “illegal substances.” Here, there was absolutely no evidence that Robert had used illicit drugs. In fact, the autopsy report noted that Robert’s blood work revealed the presence of legal medications only.
After doing a thorough review of case law involving life insurance drug exclusions, the attorney could not find a single instance where a life insurance claim denial was upheld based on the insured’s use of lawful drugs. As such, he filed an appeal with the life insurer’s internal appeals board. After a full-day hearing, the company overturned Shirley’s claim denial.
The truth is, this insurance company likely knew all along that its claim denial justification was bogus. It was hoping, however, that Shirley would be too sad over her husband’s death to do anything about it. Thank goodness she had the resources to contest the company’s bogus claim.
As lawyers who specialize in the wrongful denial of life insurance claims, we see these hijinks by insurance companies all the time. We don’t stand for it. If you have had a life insurance claim denied recently, please give us a call to discuss the situation. We’re here to help.