January 9, 2009 (MMD Newswire) -- Although approximately one-third of Americans obtain their life insurance policies through their employer or another type of group insurance policy, what Americans don’t realize is that when a loved one who was insured under one of these policies passes away, obtaining benefits may be exceedingly difficult.

Sarwara Faruque was a loyal, hard working employee for 7-Eleven for more than seven years.  Though her salary was meager, Sarwara relentlessly saved her earnings to fulfill her dream for her daughter and son to attend college.  Sarwara also signed up for a life insurance policy through 7-Eleven, for which 7-Eleven deducted premiums from her paycheck each month.  Unfortunately, in Spring 2007, Mrs. Faruque was diagnosed with terminal colon cancer.  She passed away within nine months.  Prior to her passing, Mrs. Faruque expressed her dying wishes on several occasions to her husband, Omar Faruque, that he ensure that her life insurance benefits were paid and that they were used to pay for their children’s college educations.  Mr. Faruque vowed to her that he would make certain that this occurred.

When Mr. Faruque called 7-Eleven to inform them that his wife had passed away and to inquire as to the life insurance benefits, he was informed that 7-Eleven could not assist him and that it was 7-Eleven and their insurance company’s policy that he initiate his claim through their third-party administrator, Excellerate HRO.  Excellerate HRO informed Mr. Faruque that the life insurance policy had been cancelled because Mrs. Faruque did not pay the premiums while she was on sick leave due to the terminal colon cancer.  Excellerate HRO failed to provide an application for benefits, the policy, or further explanation.  Mr. Faruque tried in vain to contact 7-Eleven, and even drove to 7-Eleven’s headquarters in Orlando, to ask for assistance.  7-Eleven refused, and continued to tell him that he must contact Excellerate HRO.  He made several more calls to Excellerate HRO but they still upheld their denial claiming that the policy was cancelled.  Ironically, Excellerate HRO said to contact 7-Eleven for further assistance.  The Faruque family, including daughter, Tanija Faruque, and Mr. Faruque, tried unsuccessfully for nine months to obtain these life insurance benefits.

Refusing to believe that his wife had not done everything correctly to retain her life insurance benefits, and getting nowhere with 7-Eleven and Excellerate HRO, Mr. Faruque hired Disability Insurance Law Group (“DI Law Group”), a renowned insurance benefits firm in Florida.   DI Law Group represents insureds in their claims for insurance benefits and regularly deals with employers, third-party administrators, and insurance companies, each of whom is trying to avoid liability or assisting the insured so as to not have to pay the benefits owed under the insurance contract.  Thus, DI Law Group was all too familiar with the Faruque family’s story when they called.  Upon being hired, DI Law Group submitted written requests and placed telephone calls to 7-Eleven for copies of Mrs. Faruque’s life insurance policy and full claim file.  Not only did DI Law Group suspect that there was a “waiver of premium clause” contained within the policy, which would mean that Mrs. Faruque was not required to pay premiums during the time period she was on sick leave because they were “waived,” but the policy is the most crucial piece of information in an insurance claim as it contains the provisions that govern whether benefits are payable or not. After numerous requests and finally receiving the life insurance policy document, it became clear that 7-Eleven’s hired company, Excellerate HRO, was wrong.  As DI Law Group suspected, the life insurance policy included a waiver of premium clause.  These clauses are written to make sure that insurance coverage is maintained during a period of medical disability from work, which very often occurs prior to death, as most times the insured is unable to afford premiums due to a loss of income.  Thus, because  Mrs. Faruque had been unable to work due to her sickness, her insurance premiums were waived and her life insurance policy remained valid.  It was also discovered that the company insuring the policy was Prudential Insurance Company; yet another company separate from 7-Eleven and Excellerate HRO.  Claim forms were immediately requested and filed.  Within one week of DI Law Group filing the claim forms and demanding payment of benefits from Prudential, the full life insurance benefits were released.

The incompetent handling of these claims appears to stem from the fact that they  are governed by the federal statute the Employee Retirement Income Security Act of 1974 (“ERISA”).  When insurance claims are wrongly denied, it is often financially and emotionally devastating.  However, under the current law, there is no availability of punitive damages or other penalties for unreasonably delaying and denying insurance claims falling under ERISA.  Even if the insurance company administrators’ denial is overturned by a court, the company is only  responsible for the past benefits owed under the insurance policy anyway.  This provides a shield for administrators of group insurance claims, including employers, third party insurance companies, and insurance companies, from any type of penalty for bad faith or negligent behavior, and has the effect of encouraging insurance administrators to unfairly delay and deny claims.  Why wouldn’t they?  What do they have to lose?  In fact, they have everything to gain if the insured individual or her family gives up or chooses not to pursue a denial of benefits further.  It also provides an incentive for employers and insurance companies to hire and utilize untrained third-party administrators to handle the initiation of claims.  Training and oversight cost money and there are no penalties for incompetent claims handling practices.

As a part of its series, “GMA Gets Answers,” Good Morning America covered the Faruque family’s story.  In addition to interviewing the Faruques, DI Law Group’s attorneys, and contacting 7-Eleven, Excellerate HRO, and Prudential, it also sat down with Sandy Praeger, former president of the National Association of Insurance Commissioners.  Praeger concurred that insurance administrators have little legal incentive to care as a result of ERISA shielding companies from punitive damages in lawsuits.  “The ERISA pre-emption does insulate them from really effective regulation,” said Praeger.  Praeger explained that regulation cannot come unless far more employees complain when they believe they have been wronged.  “Establishing a pattern relies on employees complaining, and often times they don’t,” Praeger said.  “They don’t get the benefit because they just, they throw up their hands and say, ‘Well, I have no recourse.”’

As Good Morning America recognized, the Faruque family’s story has a different ending because they did not “throw up their hands.”  However, this cannot take away the additional pain and frustration  endured by the Faruques  because of 7-Eleven and its third-party administrator’s callous actions.  As Attorney Paulino-Grisham told Good Morning America, “7-Eleven abandoned the Faruque family, and they disregarded the wishes of their employee.  The reason that she was paying for coverage was because she wanted to protect them and they didn’t care.”  Daughter Tanija Faruque explained that her mother deserved better from 7-Eleven.  “My mother was a very hard worker,” she said.  “Very loyal, very honest.  You know, after she died, this is how they repay her?  No.”  7-Eleven, Excellerate HRO, and Prudential all continue to deny that they did anything wrong and  refuse to reimburse the Faruques for interest on the past due benefits, costs and damages incurred as a result of the wrongful denial or attorney’s fees.

Chris Cuomo explained that beneficiaries should not assume that the third-party administrator understands the terms of the policy and that beneficiaries should demand a copy of the policy and request to speak to the insurance company directly.  However, Cuomo acknowledged that in this case the attorneys made the difference in the denial of benefits being overturned for the Faruque family.

Attorney Alicia Paulino-Grisham is a partner with Disability Insurance Law Group which focuses on individual and group disability insurance claims at all stages of the claims process.  The other founding partners include Attorneys Mindy Chmielarz, Cheryl Flowers, and Maggie Smith.  For more information please visit: www.dilawgroup.com 

Media Contact:
Toni Rewets
Toll Free: (888) 644-2644
Tel: (561) 202-9170
Fax:(561) 202-9194
E-Mail: toni@flowerspaulino-grisham.com

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