Contesting an exclusionary period claim denial

Jul 2, 2019

  1. Montana Insurance Kingpin
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    Has anyone had any luck contesting /challenging a claim denial? A friend of a friend asked me for help. Quick story. Non disclosure of prescribed cholesterol hypertensive had a heart attack 15 months after issue and passed prior to the exclusionary --passed paramed and blood. The owner of the policy purchased policy through captive multiline (SF, Farmers, Allstate) possibly clean sheeted for issue by agent to meet quota. Any ideas would be helpful.
     
  2. billyb
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    Sounds to me like there may be more to this story. If the drug was prescribed it should have been reported on the script check and a denial for a cholesterol drug doesn't make sense. What was the name of the drug? Sounds like the policy was FU so all medications should have been disclosed. An agent can't clean sheet a FU application because the paramedic would ask the same questions and if they didn't match it would raise a red flag.
     
    billyb, Jul 2, 2019
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  3. Montana Insurance Kingpin
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    Exactly. The drug should have shown up on the script check. The captive company is denying the claim based upon the client not "disclosing a statin and or hypertensive" and dying from a cardiac event. The policy was issued. How do these people fight it ( face amount 350K)?
     
  4. pfg1
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    I've not known a paramed exam on fully UW case to not ask those questions, and for them to not run a script check. The client could have lied sure, but I find it hard to see they wouldn't have seen it on rx check and/or APS. That is worth having an attorney to look into it, imo.
     
    pfg1, Jul 2, 2019
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  5. VolAgent
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    So...

    If the carrier ran a script check, or even if it didn't, its not their duty to find the statin, it was the insured's responsibility to disclose it.

    So, taking what has been said at face value, it does appear there was a misrepresentation.

    Also, it does not appear that a misrepresentation has to even relate to the cause of death. All I could find for Montana concerns property insurance, however the decisions cited are life insurance cases. https://rolfeshenry.com/Uploads/files/50 State Survey - Reliance.pdf

    All that said, I suspect the company would have issued the policy anyway if it was just a statin for high cholesterol. In which case, I don't believe there would be much of a leg to stand on for denying coverage.

    Since the death benefit appears to be sizeable, were I the beneficiary I would consult with an attorney. They may get offered a lower sum to settle if nothing else.
     
  6. Montana Insurance Kingpin
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    This actually took place in Arizona. Thanks for referencing the revised statutes. In Arizona:
    All statements and descriptions in any application for an insurance policy or in negotiations therefor, by or in behalf of the insured, shall be deemed to be representations and not warranties.  Misrepresentations, omissions, concealment of facts and incorrect statements shall not prevent a recovery under the policy unless:

    1. Fraudulent.

    2. Material either to the acceptance of the risk, or to the hazard assumed by the insurer.

    3. The insurer in good faith would either not have issued the policy, or would not have issued a policy in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss, if the true facts had been made known to the insurer as required either by the application for the policy or otherwise.
    I think the people I was referencing have a case. According to precedent, all 3 of the above have to be met to constitute denial.
     
  7. fed up
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    If there was a failure of disclosure AND that disclosure WOULD have caused an increased premium or reduced DB, then I think the insurer has been able to check off on all 3 boxes. Taking a Statin for hypertension most likely would have been a denial, higher premium (table rating), or reduced DB. If the contestability period is 24 months, does not appear that they crossed that line.
     
    fed up, Jul 3, 2019
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  8. VolAgent
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    I did find a case in Arizona where a state appellate court reversed summary judgement saying that the way the law is written, the legislature did not intend for merely an increased premium or even rated policy being sufficient to meet #3. It was remanded back to the trial court for trial.

    There may be a case here, there may not be.

    I have a strong suspicion there is more than merely medication for high cholesterol being used for the denial.
     
  9. Life Hawk
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    And I agree. The best way to approach this is to have the agent (if possible) or Beni to find out exactly what the cause of the denial was. That said... if the cause is only as you stated... I strongly agree with fed up... there may be a case for reduced DB based on what might have been issued rated.

    Side note... if the agent goes down this road and has some kind of culpability, it may be his head on the chopping block.

    Your answer is in your question. $350K goes a long way to fight a case like this. And if they have even a thought that they can win... they will fight. :yes:
     
  10. rousemark
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    Yeah, many attorneys will take it on a contingent bases.. After all, if they win this case, their fee would be at least $117K plus expenses and costs.. If they don't win, then the client is out $0.