Salina–based life insurer ordered to pay $7.3 million in restitution for denied claims

“Globe Life violated the trust of its policyholders who wanted to make sure that their loved ones were not burdened by expenses related to their funeral and other end-of-life issues,” Vullo said in the release. “With this fine and restitution, DFS is holding the company accountable for upholding its contractual obligations and restoring what is owed to the policyholders’ beneficiaries.”

The consent order resulted from an investigation conducted by DFS of Globe Life’s “contestable claims practices” from 2006 to 2016.  DFS noted that its investigation found that Globe Life engaged in the following violations of New York insurance law:

Improperly closing claims when policyholders died within the two-year contestable period without proving in a court action a misrepresentation by the policyholder on the application for insurance as required by law;

Engaging in unfair claims-settlement practices by improperly misrepresenting facts and policy provisions relating to coverage and not attempting in good faith to effectuate prompt, fair, and equitable settlements of submitted claims in which liability had become reasonably clear; and

Failing to refer in writing to a specific policy provision, condition, or exclusion in a policy that was the basis for denying a claim, or by not providing a specific reason for disclaiming coverage.

DFS said its investigation found that Globe Life “routinely” requested medical records from a deceased policyholder’s beneficiaries if the death occurred within the two-year contestable period, under which insurers may investigate and contest claims for material misrepresentations, even where it had “no basis to suspect a material misrepresentation. “ If medical records were not produced, Globe Life “unilaterally” closed the claim and notified the beneficiaries that the policy would not be paid because of the failure to provide medical records as requested, the DFS said. Globe Life also unilaterally denied claims when it received medical records and concluded that the deceased had made a “material misrepresentation.”

The third-party administrator will establish an email address, a website, and a toll-free telephone number for affected consumers. Information regarding the third-party administrator will be posted on the DFS website at www.dfs.ny.gov upon selection. 

Contact Rombel at arombel@cnybj.com