Case Studies - CEO - ERISA

Claimant, the CEO of a publishing company, had an ERISA preempted group policy. He was disabled with libele HTN, rheumetylogical autoimmune disease, Leiden Factor V, and protein C resistance.  He suffered loss of memory, inability to concentrate, difficulty thinking, joint pain, gastrointestinal problems, chronic fatigue and a genetic blood disorder.

The insurer spent nineteen months investigating the claim, made numerous repetitive demands for medical records and income information, demanded that the insured apply for Social Security disability benefits (which were to be set off from the policy benefits) and finally paid the claimant but with a reservation of rights (reserving the right to demand its money back). The company threatened to cut the insured off and seek reimbursement implying that it would drop its demand for reimbursement if the insured would agree to the termination of benefits.

Settled with the insurer agreeing to keep claimant on claim and to drop its threat to terminate benefits. However, because the claim was ERISA Preempted and the insured had no right to sue for bad faith, the insurer was unwilling to buy the policy out or pay any damages for consequential loss.