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Think your covered? Maybe not.

A recent Court decision applying the ERISA statute determined that a beneficiaries claim for life insurance benefits must be dismissed.

Melissa Amschwand and her husband-Thomas did everything they were told to maintain Tom’s life insurance when he was diagnosed with terminal cancer. After he died and his widow applied for his life insurance benefits they were told for the first time that Tom needed to have worked a single day in order to trigger his life insurance benefits. What is really egregious is that prior to his death, Tom and his wife repeatedly asked for a copy of the policy to make sure that he was covered. The company never provided the requested information. In fact, the company repeatedly assured Tom and Melissa over the phone that he was covered.

After he died, the company dropped the bomb on Melissa that Tom had failed to satsify the “Active Work Rule” which required that Tom work a single day to trigger the life insurance policy. Instead of paying the life insurance benefit of over $400,000 the company merely refunded the life insurance premium amount.

This case is yet another classic example of the legal morass created by the court’s interpretation of ERISA. A statute that was intended to protect an employee’s right to recive employer provided benefits has now been officially turned upside down.

I would strongly encourage anyone who thinks this type of injustice should be prevented to contact their congressional representative.

See this write up by Mark Sherman of the Houston Chronicle for more information.