Life Insurance Company of North America ('LINA'), a disability benefit insurance carrier, was made to pay $1 million for a decision to deny benefit to a clearly disabled worker. In Rochow v. LINA, a Court of Appeals made the insurance company pay $1 million for the amount of denied benefits. The Court found that denial was without any baseless and not supported the policy’s language or medical evidence. What is of significance of the case is that the Court ordered Life Insurance Company of North America to return to the deceased claimant’s estate the profit it had made from the premiums paid by the deceased when alive. The profit made by LIN was approximately $3.8 million and all of it was ordered to be returned to the estate of the deceased. Lawyers for insurance companies are up in arms about the case and its result. See here and here. The American Association of Retired Persons (“AARP”) did write a fair and balanced summary of the case, see here. AARP concluded :
Requiring an insurer to pay back not only denied benefits but also the profits earned on those denied benefits will act as a deterrent to benefit denials where the insurer clearly knew it should have paid the benefit. This remedy will encourage insurers to properly pay benefits without requiring individuals to challenge the denial. Lebau & Neuworth attorneys have been successful in representing disability benefit claims in the claim and appeals process as well as in court litigation. We welcome your inquiries.
