Life Insurance Benefit Denial
Life Insurance: The Basic Fundamentals of Life Insurance Law, Your Rights, and Ways Life Insurance Companies try to Deny Coverage.
The Joyner Law Firm has experience handling a variety of Life Insurance deniability cases. Most people think or believe that life insurance companies are on their side. However, like any other insurance company, life insurance companies are quick to deny your benefits. Going through the process of obtaining your benefits is also difficult as you are dealing with the loss of a loved one. This brief article provides you with a basic understanding of Louisiana Life Insurance law and how you can protect your rights as the beneficiary, and this article goes over various methods in which life insurance companies will try to push for a denial of coverage.
Louisiana Life Insurance Law basics:
An insurance policy is a contract between the parties and should be interpreted by using the general rules of interpretation of contracts set forth in the Louisiana Civil Code. Louisiana Ins. Guar. Ass'n v. Interstate Fire & Cas. Co., 630 So.2d 759 (La.1994). Contracts have the effect of law for the parties and may be dissolved only through the consent of the parties or on grounds provided by law. La. C.C. art. 1983. Interpretation of a contract is the determination of the common intent of the parties. La. C.C. art. 2045.Insurance policies are liberally construed in favor of coverage, and exceptions to coverage are strictly construed against the insurer (that is the Life Insurance company). LSA–C.C. art. 2056.7 Any ambiguity is construed in favor of coverage. Albritton v. Fireman's Fund Insurance Co., 224 La. 522, 70 So.2d 111 (1953). The insurer has the burden of proving that a policy exclusion precludes recovery. Lado v. First Nat. Life Ins. Co., 182 La. 726, 162 So. 579 (1935). Except for technical terms, the words of a contract must be given their generally understood meaning. Cap. Bank & Tr. Co. v. Equitable Life Assur. Soc. of U.S., 542 So. 2d 494, 496 (La. 1989).
To put things simply, Louisiana law actually favors you, the insured/beneficiary. Sadly, after the death of a loved one, many life insurance companies will try to find exclusions in order to avoid paying out benefits as contracted. Contrary to what life insurance companies may believe, Louisiana law makes it absolutely clear that is the insurance company’s burden to prove an exclusion is met and it is not the insureds/beneficiary’s burden to come up with evidence to show an exclusion should not apply. The clear language of your policy is looked at in your favor, not the other way around.
For example, in Cap. Bank & Tr. Co. v. Equitable Life Assur. Soc. of U.S., 542 So. 2d 494, 496 (La. 1989), the Insurance company tried to deny paying out benefits in an accidental death life insurance policy because the decedent died from severe smoke inhalation. The insurance company argued that the policy excluded paying benefits from any death involving the inhalation of “fumes.” The court found that “while the word “fumes” can denote smoke, it is primarily defined as: “a gaseous emission (as from a burning or evaporating substance) that is odorous and sometimes noxious. Since the word fumes is subject to more than one definition, it is ambiguous and must be construed against the insurer (the insurance company).” The court would go on to hold that the life insurance company was required to pay out their benefits, despite the ambiguity.
In another matter, the Louisiana 4th Circuit of Appeals again favored the insured and found that the accidental life insurance policy provided coverage to the plaintiff after the decedent died in an airplane crash. The court held that the life insurance company did not meet the burden of establishing that the decedent fitted within exclusion from accidental death benefits for a death occurring while the insured was piloting an aircraft. In the case of Durand, the movable control yoke of the crashed airplane was found in the opposite seat occupied by the insured, but the aircraft's only set of foot pedals controlling the rudder was located in front of seat used by the insured. Because the insurance could not prove for certain the decedent was operating any controls at the time of the crash, the court held that the insurance company had to pay out to decedents beneficiaries. Durand v. Horace Mann Life Ins. Co., 543 So. 2d 579 (La. Ct. App. 1989).
Popular denial strategies:
A popular method used life insurance companies to deny coverage to an accidental injury or death life insurance policy is the suicide exclusion. Again, under Louisiana law, it is well settled that when suicide is offered as a defense to a suit upon an insurance policy the burden of proof rests heavily upon the insurer to establish the occurrence of the suicide as an exclusion over every other reasonable hypothesis. Rome v. Life & Cas. Ins. Co. of Tennessee, 336 So. 2d 275, 276 (La. Ct. App. 1976).
In more detail, Louisiana looks a two part method that insurance companies have to meet to deny coverage. Where it is evident from the testimony that the insured killed himself, whether accidentally or intentionally, the case presents two questions. First, do the physical facts surrounding the death of the insured exclude with reasonable certainty any possibility of accident? Second, does the evidence show that the insured had a motive for taking his own life sufficient to overcome the presumption against suicide and make it reasonably certain that the death was not the result of an accident, but of the deliberate intention to take one's own life. Rome v. Life & Cas. Ins. Co. of Tennessee, 336 So. 2d 275, 276 (La. Ct. App. 1976). In the case of Rome, even though the decedent was found alone, in his car, with two bullet wounds to his temple, the court still found that the Life Insurance policy was applicable, because the insurance company could not provide evidence that the decedent had the motive for taking his own life. Again, Louisiana law is highly protective of a beneficiary’s rights, and it is the insurance company, not the beneficiary that has the burden of proving the death was by suicide and not by accident.
In another matter, the Louisiana 1st Circuit Court of Appeals found the life insurance policy provided coverage to the beneficiary, even when the decedent pulled out a gun during a fight with his girlfriend, and subsequently shot himself in during a physical altercation with his girlfriend. The court held that “the law presumes the love of life and negates suicide, of which no evidence was offered.” Therefore, plaintiff has established a Prima facie case of ‘accidental’ death. Johnson v. Nat'l Life & Acc. Ins. Co., 331 So. 2d 87, 88–89 (La. Ct. App. 1976).
Another method life insurance companies use to deny coverage is to argue that the insured/decedent committed fraud or filled out the initial insurance application with the intent to deceive, or there was a material misrepresentation, like the failure to disclose a pre-existing condition. If this situation arises, Louisiana law has made it absolutely clear that the insurer, that is the insurance company, has the burden to avoid liability on the grounds of misrepresentation in a life insurance application and must establish that false statements were made with an actual intent to deceive and that the misstatements materially affected the risk assumed by the Life Insurance company. Swain for & on Behalf of Est. of Swain v. Life Ins. Co. of Louisiana, 537 So. 2d 1297, 1299 (La. Ct. App.), writ denied, 541 So. 2d 895 (La. 1989) and Burley v. New York Life Ins. Co., 2015-263 (La. App. 3 Cir. 11/25/15), 179 So. 3d 922.
In simpler terms, Louisiana law shifts the burden to the insurance company to prove the insured knowingly (not accidently) provided inaccurate information to the insurance company during his application process. For example, in the case of Burley, the court found that the Life Insurance company was not able to submit evidence that the decedent intentionally provided an inaccurate response to the insurance application form, and it was not incumbent upon the beneficiary to provide proof or evidence that decedent’s inaccurate statement was not intentional. Burley v. New York Life Ins. Co., 2015-263 (La. App. 3 Cir. 11/25/15), 179 So. 3d 922, 930. The court in Burley made it clear that an insurance company cannot shift the burden to a beneficiary to prove the decedent/insured did not mispresent or falsify their application.
In another example, the 2nd Circuit Court of Appeals held that the defendant insurance company presented no evidence showing an actual intent to deceive on the part of the insured/decedent when pre-existing conditions were not noted in the contract. In that matter, the decedent (Mr. Swain) purchased a life insurance policy at the same time he purchased an automobile. The decedent was on crutches at the time of the incident and just had hip surgery with other prior medical issues. The agent for the insurance company prepared the policy and application form, which noted that Mr. Swain was in “sound health.” Mr. Swain died two months after obtaining the life insurance policy. During trial, the beneficiary’s (Mrs. Swain) uncontradicted testimony at trial showed that Mr. Swain was asked no questions about his health, although he was on crutches at the time; that he did not fill in the form or supply any information; and that he was not asked, nor did he read the application before signing it. The court found that since Mr. Swain was never asked to read or fill in the form and was apparently unaware of the contents of the form he signed, there is insufficient evidence for a reasonable factfinder to find an intent to deceive. Swain for & on Behalf of Est. of Swain v. Life Ins. Co. of Louisiana, 537 So. 2d 1297, 1299 (La. Ct. App.), writ denied, 541 So. 2d 895 (La. 1989)
The Joyner Law Firm hopes that after you read this article you have a better understanding of the rights you have as an insured and/or beneficiary. If you are in a situation in which you lost a loved one and a Life Insurance company is trying to deny your benefits, feel free to contact the Joyner Law Firm for a free consultation.