Complaint Review: Federated Life Insurance Company - Owatonna Minnesota

This issue began in 2005 when their agent sold me a disability policy, and about a year later, I purchased another disability policy through their agent for an additional amount. I filed a claim beyond their 2 year contestability period on the first policy, but the second was still less than 2 years old.

I filed a claim in December of 2007 on both policies, and upon review, they rescinded the second policy due to my having seen a chiropractor regularly. The also accepted that the first policy was not contestable as it was beyond the 2 years. They paid partial disability benefits for about 1 year, until my doctor determined that I shoudl no longer be working part time. FLIC did a paper review, and claimed that I was not disabled, while noting all of my verified medical issues, and stopped paying the claim. They refused to allow any way to prove I was disabled, and even instructed me that I must file legal action to get this resolved.

I filed legal action in 2009 which FLIC had removed to Federal court in January 2010. After 3 years, their Lawyer literally lied to the court, and claimed that they did not learn about my chiropractic treatment until discovery which began in 2010. Even though it was the basis to rescind the second policy in 2008, after they recieved my entire chiropractic record on 2-12-2008.

Upon realizing that their position was indefensable, claiming I was not disabled, they completely reversed this claim going so far as to claim I was the one who committed fraud, by accepting their offer of insurance in the first place. Claiming that I was disabled the entire time, well before they offered they offered coverage, with an as yet unidentified "Back Condition", which was never diagnosed by any medical professional. Only claimed by their attorney...not even their main office.

Their claim was a full 4 years after my claim for benefits was filed...well beyond any contestability period of 2 years had passed.

The entire reason legal action started was due to their claim of "no disability", for over 3 years...all to be contradicted in their final ditch effort not to pay the claim. The Magistrate bought their lie, without even asking the simplist question of when they actually learned of my chiropractic treatment. The magistrate seemed not to care about the facts, only ending the case. He granted a summary judgement, which was appealed and won initially, but due to another attorney error, it was regranted. The second appeal was not won, by the court simply stating that with rescission, there was no case. Ignoring what the first panel stated in the first appeal.

FLIC was willing to risk approximately $5 million on a policy that was only worth about $900k, and due to the court believing their lie, they succeeded.

The second part is regarding a Life insurance policy I also bought from them. It came up for renewal, and I was already years into my case, and my wife said she believed that if I died, they would not pay. So I challenged them with that and asked for rescission, as I fully expected them to commit fraud, and would not pay my wife if I died. Rather than simply stating that they would honor the policy...they agreed, and sent me about 5 years of premiums, and rescinded the policy.

This is my response to the Ca. Dept of Insurance, who accepted the response from FLIC that this had been litigated, when it was not, so they have so far refused to even look at it.

To recap the issues, I did not ask for monetary consideration in this complaint, what I did ask for is for you to look into a predatory company that falls under your (Dept. of Insurance) authority. This is not just about MY claim, but all the other claims they are disposing of in the exact same manner.

After I filed a claim, which was approved and paid for about a year, Federated Life Insurance Company determined I had no disability. Ignoring my treating physicians, they gave no manner in which to contest their claim, no A.M.E. or I.M.E. and would not take the word of any doctor who was actively treating me. This claim of no disability lasted for the next 3 years, where they were not paying benefits that were due, and instructed me that my only option was to file legal action against them.

My attorney was blindsided by their attorney, who literally lied to a Federal magistrate, and after 3 years of claiming I had NO disability whatsoever (the entire basis of stopping payment on the claim), made the accusation that I was actually disabled the entire time.

A logical mind would think they would pay all back benefits at that moment, and try to cut their losses, but instead they claimed that 4 years into a claim, they were now able to rescind the entire policy as they now claimed I had committed fraud.

My concern is claims handling, due to what they were able to get away with in this case. Claiming it was actually litigated is the farthest from the truth. The magistrate is the one who recommended an A.M.E., and that report showed that my timeline is correct, that this disability began in 2007 as I claimed, while they told the court that I had been disabled since well before 2005, and well before the policy was purchased.

This was accepted by the court, and due to my attorneys errors, the magistrate granted a summary judgement…we did not actually litigate.

In this claim, they decided to risk upwards of $5 million dollars on a single lie…and succeeded due to the magistrate accepting their claim without question. Even though the facts were in the court record already, that they were fully aware of my entire treatment history well before paying any benefit.

No matter if the legal action was won or lost, it is still your obligation to determine what took place. Federated claiming it had been litigated does not take them off the hook for illegal methods and practices, even if a court dropped the claim before it could be litigated.

The second issue I informed you of was not part of any legal action…

This issue of my Life policy with FLIC that after several years, and the legal claims against the disability policy, I accused them of fraud and trickery. I explained that my wife would not be able to go through years of litigation if I died, as they would surely not pay the claim.

What I expected was a response that they “would abide by the contract”, or some other explanation, yet when I asked for rescission because they would commit fraud and withhold payment to my wife, they agreed by sending EVERY premium I paid on that Life policy.

This is also unheard of…as it would be like telling your auto insurance company that you had been with for years that you don’t think they would have paid if you had an accident. Then they send you all the premiums you ever paid them…I don’t believe it was legal or proper, as I expected simple confirmation that they would honor the contract.

All I have asked is for you to review this claims process on the disability claim. You have the authority to do this with all their California claims, to protect California consumers from this predatory company. I do not expect them to suddenly become obligated to pay me anything, but there are many other people who are worse off than myself, who may not survive because they relied on this company to honor their policy. Only to find out when it is needed most, they will do anything to get out of paying as the policy dictates.

I expect that this would be shown even more clearly with a simple query on this particular claim, as the main office likely only has the claim as non-pay due to lack of disability. Their attorney is the one who claimed I was disabled the entire time, without any evidence to support that claim, and I never received any letter from their home office confirming that they made or agreed with any such determination.

Respectfully;

Keith