Blog - Page 11 of 111 - McKennon Law Group

This article was updated: Sept. 5th, 2023

A death in the family can be a stressful and emotionally charged event. Add to that the financial stress resulting from the death of a loved one, and it can become an overwhelming task to deal with. Life insurance policies are meant to help alleviate some of the financial stress left by the passing of someone who is important in your life. But what do you do when you are blindsided by a claim denial? Our life insurance litigation attorneys explain the process of filing a claim and what you can do if you believe your claim was denied in bad faith.

What Is the Life Insurance Payout Process?

Life insurance is a type of contract between an insurance company and a policyholder with the purpose of paying out a death benefit when the insured person passes away. When the policyholder dies, the insurance company needs to be contacted right away — this is the first step to initiate a death claim. Every insurance company follows a slightly different process for handling life insurance claims. Some companies may allow you to file a claim online, while others may still require paperwork to initiate your claim. Either way, be prepared to provide supporting paperwork and evidence to back up your claim and to provide essential details so that the insurance company has the right information to issue the correct payout amount.

Next, the insurance company will investigate the claim and either agree to pay the claim or deny it. According to California’s Fair Claims Settlement Practices Regulations, once a claim is received, insurers have up to 40 calendar days to “accept or deny the claim, in whole or in part,” and “the amounts accepted or denied shall be clearly documented in the claim file unless the claim has been denied in its entirety.” If the claim is accepted, most insurance companies will issue a payout within 30 to 60 days from the date when the claim was received.

What Is the Contestability Period in a Life Insurance Policy and How Long Does It Last?

A contestability period is a clause included in virtually all life insurance policies. It allows for the insurer to delay issuing a payout to ensure material misrepresentations were not made in the policy application. The contestability period applies if the policyholder dies within the first one to two years after the policy is issued. In those situations, insurance companies can delay the payment for as long as is reasonably necessary while they carry out further investigations into whether to contest a policy.

Almost all insurance carriers will conduct what is known as a “contestable investigation” if a death occurs within one or two years after the policy is issued. If the policyholder did not provide a complete and accurate picture of his or her medical history and habits such as engaging in extreme sports or risky hobbies, smoking tobacco, any criminal records that would indicate risky behaviors, and whether they have an occupation that can be considered dangerous (such as law enforcement or construction work), the insurance company may deny the claim, or in some cases, issue a smaller payout after retroactively adjusting premiums to accommodate for the previously unknown risk factors.

If the insurer finds no material misrepresentations in the application process, typically it will make the death payment to the named beneficiary, assuming there are no policy exclusions that apply.

What Are Some Reasons a Life Insurance Claim Can Be Denied?

Life insurance claims can be denied for a variety of reasons, but among those are (1) failure to disclose an important medical condition or other pertinent information (as discussed above); (2) the policyholder stopped paying life insurance premiums and the policy was lapsed; (3) the policyholder has outlived their term life insurance policy; or (4) an exclusion in the policy, such as the policyholder died by suicide within the first two years of the policy issuance.

If the policyholder stopped making premium payments and allowed the policy to lapse, then your claim will be denied because the policy was not in force at the time the death occurred. In some cases, we find that the insurers have not properly lapsed policies yet they still assert that the policy was properly lapsed. In some cases, if the policyholder was paying for a term life insurance policy that reached the end of its term and was not extended or converted into a permanent policy, a death benefit payment will not be issued. Finally, all life insurance policies have some exclusions. For example, most policies provide that a death benefit payment is not payable in certain situations, such as suicide if the suicide took place within the first two years after the policy was issued. Instead of paying the death benefit, the insurer will return to the beneficiary any premiums paid up until the date the death occurred. In many cases, we find that the insurers have not properly invoked policy exclusions.

What Steps Should I Take if My Life Insurance Claim Was Denied?

If you have submitted a life insurance claim and it was denied, the insurance company needs to provide a written explanation of why they decided to deny your claim. After the insurer denies your claim, they may terminate the policy and return any premiums paid. If you believe your claim should not have been denied, your first step is to try to communicate with the insurance company and see if they will reconsider their decision after you provide additional documentation that may have been missing from the original claim. If that does not work, you may try to file a consumer complaint with the California Department of Insurance. However, our experience is that we have never seen such a filing result in overturning the claim denial. Alternatively, you may want to seek the help of a life insurance attorney. At McKennon Law Group PC, our attorneys have assisted thousands of clients in navigating their insurance claims denials and achieving a favorable result.

Are You Required to Have Health Insurance in California in 2023?

There is an individual mandate in California that requires people to be covered by health insurance. This means, technically, you have to have health insurance or you are financially penalized. Find out more about this mandate and get some answers to some other common health insurance questions in California below.

What Is the Individual Mandate in California?

The federal government instituted an individual mandate with penalties when it implemented the Affordable Care Act. This involved requiring people to be covered by health insurance or pay a penalty when they filed their federal income taxes. The federal mandate and penalty have since been revoked, but several states have their own mandate, California among them.

The states that have such a mandate with penalties as of 2023 include California, Massachusetts, New Jersey, and Rhode Island. The District of Columbia also enforces health insurance via a tax penalty.

In California, the tax penalty for not having insurance is $850 per adult. You also must pay $450 per dependent under the age of 18. So, imagine that a family of five — two spouses and three children — are uninsured for the entire year. At tax time, the penalty they would face is $3,050.

How to Get Health Coverage in California

You can get health insurance coverage in California via a variety of methods. First, you may be able to take advantage of an employer-sponsored healthcare plan. These plans are offered by employers to covered employees. The employer pitches in to help cover some of the cost of the health insurance, which may make the premiums less expensive for employees.

You may also be able to buy an individual plan through a healthcare marketplace. This is the primary option for many people who do not have access to insurance through an employer. In some cases, people who do have access to a plan through an employer may choose to go this route because the employer-sponsored plan is too expensive or prohibitive. If the premiums offered by an employer are more than 9.12% of the income of your household in 2023, you can access discounts and other benefits through Covered California.

Eligible individuals can also take advantage of government programs such as Medicaid or Medicare to get insurance. Medicaid may be an option for those with lower incomes that cannot afford individual health insurance.

Do Employers in California Have to Offer Health Insurance Coverage?

California does not have a state mandate about employer coverage. However, there are federal guidelines for which employers must offer some sort of employer-sponsored healthcare coverage. Employers that have 50 or more full-time equivalent employees have to offer insurance or face monetary penalties.

This means that employers who have 50 or more full-time employees or the equivalent to that many employees in full- and part-time employees must provide coverage options. A full-time employee for the purpose of this mandate is someone who works, on average, 30 hours a week or more. A full-time equivalent refers to multiple part-time employees that add up to the full-time hours. For example, if you have two part-time employees that each work 15 hours per week, they total up to one full-time employee for the purpose of calculating whether or not you meet the mandate requirements.

If you are not sure what your obligations are as an employer when it comes to benefits, it can be a good idea to consult an experienced benefits or human resources attorney. Knowing your legal obligations can help you avoid issues in the future.

Protecting Your Rights With Experienced Health Insurance Lawyers When Your Health Insurer Denies Your Health Insurance Claim

Whether you have insurance through an employer or buy an individual plan in California, it is important to know what your rights are so you can work to protect them. It is not uncommon to experience disputes with insurance companies or feel that your insurance company is acting in bad faith concerning your medical insurance claim. Here are a few common disputes that occur between healthcare insurance companies and policyholders about which you may want to contact an experienced health insurance attorney:

Whether or not services are medically necessary. Insurance providers create language in benefits documents that says certain treatments or procedures will be covered if they are medically necessary. However, this often creates some room for insurance companies to deny procedures because medical necessity has not been proven to their liking — even when doctors or other providers believe procedures are required and thus medically necessary.
Whether usual or customary expenses are adequate. Insurance companies set usual and customary limitations on an amount they are willing to pay for common services. However, in some cases, these amounts may not be sufficient to cover required services.
Whether a treatment is considered investigational or experimental. In many cases, insurance companies do not cover investigational or experimental treatments. That can mean that coverage is denied for relatively new procedures or medications even if those have been deemed to be a good solution to a medical problem or a doctor has ordered them. Insurers will even deny medical insurance claims when medical procedures have been around for many years and are well-proven to be effective.

Get Legal Help Through Health Insurance Attorneys With Your Health Insurance Battles

Dealing with medical insurance disputes can be daunting, especially because you typically do so when you are not feeling well or are dealing with a serious medical issue or recovery. This is just one reason it is a good idea to get legal help when your health insurer denies your health insurance claim. If you are dealing with bad faith or ERISA health insurance claims disputes, contact the McKennon Law Group PC at 949-504-5381 for a free consultation to find out how we can help.

Does ERISA Apply To Your Employee Benefits?

ERISA is a federal law designed to protect benefits due to employees administered by private employers through group benefit plans. Employees often are covered by long-term disability, short-term disability, life insurance, health insurance, retirement plans, and other employee benefits that have been issued through their employers. ERISA sets forth standards for administering employee benefits. Where benefits are not properly administered, ERISA provides plan participants and their beneficiaries a process through which to appeal an insurer’s or plan administrator’s claim denial or other improper action, and to sue in federal court when an appeal is unsuccessful. For persons whose insurance benefits are not governed by ERISA, the process governing claims handling and appeals by the insurer or plan administrator vary greatly from state to state. So do the potential damages available to insureds whose benefits are improperly denied. Therefore, the issue of whether your insurance coverage/employee benefits is governed by ERISA can be very significant.

If you are enrolled in a pension plan provided by your private employer, that plan is governed by ERISA. ERISA also applies to other types of employee benefit plans issued by private employers, including:

Disability insurance plans
Life insurance plans
Accidental Death & Dismemberment insurance plans
Health and dental insurance plans
Vision plans
Severance contracts

When Does ERISA Not Apply to Your Employee Benefits

There are four main exceptions to ERISA. ERISA does not apply to plans offered by government employers and entities, unfunded excess benefit plans, plans maintained outside the United States, and plans established by religious organizations that do not irrevocably opt into ERISA. Whether these exceptions to ERISA apply to your plan can depend on several factors and may require someone with ERISA expertise to determine. Reach out to the ERISA experts at McKennon Law Group PC for a free consultation with experienced attorney for disability coverage in San Diego if you have a question about ERISA’s applicability to a claim denial.

When ERISA Does Not Apply – Government Employers And Entities

ERISA was initially enacted to prevent the systematic abuse of private employees’ pensions and other employee benefits. However, it was decided that state and local governments should be the ones to decide the most effective ways of protecting their employees and their benefits. Thus, benefit plans created by state or local governments or plans under a collective bargaining agreement between a union and a governmental entity are not covered by ERISA.

When ERISA Does not Apply – Plans Maintained Outside Of The United States

Plans that are maintained outside of the United States for the main benefit of non-residents of the U.S. are not covered by ERISA. This is because ERISA was created to apply exclusively to American employees. Because ERISA is governed by the Department of Labor, it can only apply to things or people that the Department of Labor has power over, which does not include persons residing outside the U.S.

When ERISA Does not Apply – the Church Exception and Other Exceptions

If you have an employee benefit plan that was established by your church, temple, mosque, or other religious establishment, it is not governed by ERISA unless the organization irrevocably opts into ERISA. Additionally, plans maintained for the sole purpose of complying with state disability, unemployment, or workers’ compensation laws are not subject to ERISA. Aside from these primary exceptions, there are also voluntary group insurance plans that are not subject to ERISA if the employer does not contribute to the plan. As noted above, religious organizations also have a right to opt into ERISA and some do. If you do not know whether your plan is governed by ERISA, an experienced ERISA attorney can help you. Contact the knowledgeable ERISA attorneys at the McKennon Law Group PC for a free consultation.

How An Experienced ERISA Insurance Attorney Can Help You

If you have questions about whether ERISA applies to you, McKennon Law Group PC offers free consultations. McKennon Law Group PC has a dedicated team of local attorneys specializing in San Diego disability insurance who will fight for your benefits.

Life insurance is a policy that financially supports families in case of an untimely death. This policy helps them cope with losing a breadwinner, pay off outstanding debts, or fund future expenses such as education and retirement. However, many people should know life insurance claims’ rules and regulations.

For example, some policies may have exclusions or limitations, such as pre-existing medical conditions or suicide clauses, which may affect your ability to claim.

Furthermore, it is essential to know the exact amount of benefits you are entitled to and any conditions or requirements for payment.

Understanding Life Insurance Law in Canada

The Canadian insurance industry is one of the most stable markets globally, making it an ideal place for life insurance investments. This sector manages over CAD 900 billion in assets and annually disburses over CAD 86 billion in claims and benefits.

Life insurance regulation in Canada dates back to the early 19th century. The first Canadian life insurance company was established in 1849. By the end of the century, life insurance had become essential to the country’s financial structure.

Types of Life Insurance Policies in Canada:

Term Life Insurance: A term insurance policy covers a specified period, usually between 10 and 30 years. The policy pays out a death benefit if the policyholder dies within the term.
Permanent Life Insurance: This insurance policy provides lifelong coverage and accumulates cash value, making them long-term investments.
Whole Life Insurance: This insurance policy offers a fixed premium throughout the policy’s duration, providing death benefits and an investment component that grows over time.
Universal Life Insurance: Universal life insurance combines life insurance coverage with tax-advantaged investment opportunities, allowing policyholders to earn tax-deferred interest on their cash value.

The Life Insurance Claim Process

The steps involved in filing a life insurance claim include the following:

Notifying the Insurer: Notifying the insurer of the policyholder’s death is the first step in filing a life insurance claim. The insurance company will then provide the necessary claim forms and instructions.
Gathering Documents: To file a life insurance claim, you must provide a death certificate, proof of your relationship to the deceased, and other documents like medical records, autopsy reports, and police reports.
Complete the Claim Form: Fill out the form accurately and completely, ensuring you have included all necessary details and supporting documents.
Submit the Claim: Once you complete the claim form and supporting documents, submit them to the insurance company. The insurance provider will review the claim and may request additional information or documents.

In some cases, the insurer might deny your claim if:

The policyholder commits suicide in the first two years of taking out the policy. The insurer may deny the claim.
The policyholder lied or omitted important information on their application.
The policyholder missed their premium payments and the policy lapsed, the insurer may deny the claim.
There is a dispute over the rightful beneficiary; the insurer may deny the claim until the matter is resolved.

The following are some strategies for avoiding a claim denial:

Proper Disclosure and Accurate Paperwork: Ensure you disclose all relevant information when taking out a policy to prevent misrepresentation. Also, complete all necessary paperwork accurately and provide all required supporting documents to avoid claim denials due to incomplete or incorrect paperwork.
Premium Payments: Ensure you pay your premium early to avoid policy lapses.
Choose the Proper Beneficiary: Ensure that the beneficiary named in the policy is correct and keep the policy up-to-date.

The Role of a Life Insurance Lawyer

Life insurance lawyers have expertise in the legal system and can navigate the

often-complex world of insurance law. They can also act as an intermediary between the client and the insurance company, negotiating for the best possible outcome.

There are several situations where hiring a life insurance lawyer is necessary. Suppose an insurance company denies a claim, delays payment, or disputes the policy’s validity. In that case, a lawyer can ensure the beneficiary receives the total owed.

Additionally, suppose there are disputes between beneficiaries, such as multiple people claiming to be entitled to the policy’s proceeds. In that case, a lawyer can help resolve these conflicts.

When choosing a life insurance lawyer, it is essential to consider the lawyer’s experience and expertise in dealing with life insurance claims. In addition, hiring a lawyer who is communicative and responsive to their client’s needs is also essential.

Strategies for Making Successful Claims

Gather Evidence and Documentation: Before filing any claim, ensure you have the necessary documentation and information regarding your claim. Your evidence may include medical reports, police reports, photos, property damage estimates, and witness statements to make your claim compelling and help you prove your case to the insurance company.
Understand Your Policy and Coverage: Ensure you understand your insurance policy’s details before making a claim. You should know what is covered, what is excluded and what limits apply to help you avoid claim denials.
Be Detailed and Specific: Vague or incomplete information can lead to claim denials. Therefore, include all relevant information about the incident, the damages or injuries suffered, and any other relevant information supporting your claim.
Negotiate with the Insurer: If the insurer denies your claim or offers a lower payout than expected, you can negotiate with them. You can use evidence and documentation to support your case and argue for a higher payout. It’s essential to remain calm and respectful when negotiating with the insurance company to help you build a better relationship with the insurer and increase your chances of success.
Seek Legal Assistance: If your insurance claim is denied or underpaid, you can seek legal assistance. Consulting a lawyer specializing in insurance claims can help you understand your legal rights, negotiate with the insurance company or get representation in court.

Here are some tips for maximizing your life insurance payout:

Name Multiple Beneficiaries: Naming multiple beneficiaries ensures that your payout is distributed according to your wishes and reduces the likelihood of disputes between family members.
Review Your Policy Regularly: It’s essential to review your insurance policy to ensure that your coverage remains adequate and that your beneficiaries are up-to-date.
Be Honest on Your Application: Accurate and truthful information on your life insurance application can prevent claim denials and ensure your beneficiaries receive the total payout.
Pay Your Premiums on Time: Paying your premiums on time ensures that your policy remains in force, and your beneficiaries are entitled to the total payout.
Consider Getting Professional Advice: If you have a comprehensive life insurance policy, seeking professional advice from a financial advisor or attorney may be beneficial to ensure your beneficiaries receive the maximum payout.

Common Issues with Life Insurance Claims in Canada

Some common disputes between policyholders and insurers in Canada include:

Misrepresentation: This could involve misrepresenting information about their health, lifestyle, or occupation.
Suicide: Many life insurance policies have a suicide clause prohibiting the insurer from paying out a claim if the policyholder died by suicide within a certain period after taking out the policy, typically one or two years. However, disputes may arise if the death is not a suicide or if the policyholder died by suicide outside of the exclusion period.
Exclusions and Limitations: Many life insurance policies have exclusions or limitations on what they will cover, such as death due to a pre-existing condition or death due to a risky activity. Disputes may arise if the cause of death is ambiguous or the policyholder does not fully understand the exclusions or limitations.

Recent Court Cases Related to Life Insurance Claims

In a misrepresentation case (Sietzema v Economical Mutual Insurance Company, 2018 ONCA 71). The Ontario Court of Appeal ruled that an insurer did not have to pay the policyholder’s wife a death benefit after the policyholder failed to disclose his history of depression and anxiety when applying for the policy.

In a case involving suicide (Young Estate v. Aviva Canada Inc, 2018 BCCA 98). The British Columbia Court of Appeal ruled that an insurer could not deny a claim where the policyholder died by suicide within the exclusion period. Still, the insurer could not establish that the death was a suicide.

Some key strategies for avoiding disputes with insurers include:

Be Honest: When applying for an insurance policy, honesty about your health, lifestyle, and occupation is essential. Failure to disclose relevant information could result in a denial of a claim.
Read the Policy: It is necessary to read the insurance policy carefully, including any exclusions or limitations, to understand what is covered and what is not.
Stay Up-to-Date: Keep your policy up-to-date by updating your beneficiary designations.

Recent Developments in Life Insurance Law in Canada

Recent developments in life insurance law in Canada include changes to the definition of “critical illness” or “total disability” for life insurance policies. It also has new regulations around genetic testing in underwriting decisions and obligations on insurers to provide detailed explanations of denied claims.

These changes have significantly affected policyholders and insurers alike.

Policyholders’ existing coverage may provide a different level of protection than before. For insurers, it may mean increased scrutiny from regulators and a need to adapt their underwriting and claims processes.

Policyholders and their advisors should review existing policies and understand any changes in the legal definitions of key terms affecting coverage to navigate these changes. Furthermore, advisors and policyholders should stay current on new regulations and industry developments that may impact future insurance needs.

Expert Insights on Life Insurance Law in Canada

Life insurance lawyers and experts possess specialized knowledge and skills in life insurance law. They help policyholders navigate the claims process to obtain a favourable outcome. Conducting interviews with these professionals can provide valuable insights into the legal framework governing life insurance in Canada and current industry trends and challenges.

Analyzing recent industry trends and challenges can help policyholders and lawyers stay up-to-date on changes to the legal and regulatory landscape governing life insurance in Canada. This can include changes to laws and regulations governing coverage, claims handling, and dispute resolution.

The life insurance claim process can be complex and challenging, particularly for those who need legal expertise. Policyholders should understand the coverage and benefits provided to succeed in the claims process.

In addition, policyholders should remain persistent even if a claim is denied or disputed by engaging legal representation. Pursuing the claim through legal channels may be necessary.

Get The Compensation You Need

Losing a loved one can be challenging, and dealing with the legalities surrounding their life insurance policy at the same time can also be overwhelming. Understanding how life insurance law in Canada is essential to help individuals seek financial security for their loved ones in case of an untimely demise.

The Canadian insurance industry offers a variety of life insurance policies, each with its unique features and benefits, making it easy to choose a policy that suits your specific need. With the expert strategies we’ve shared, we hope you are better equipped to create a claim and receive the benefits you’re entitled to.

In a case of first impression in California, McKennon Law Group PC has successfully defeated American General Insurance Company’s (“American General’s”) attempt to dismiss the counterclaims of our client, Nguyet Minh Le, in federal court in the Central District of California. McKennon Law Group PC is an insurance litigation law firm that attempts to compel insurance companies to pay insurance benefits that the insurers improperly refuse to pay. In some of our cases, unusual circumstances arise. Ms. Le’s case was one of those cases. We were hired to address an insurer’s negligence and recklessness when it paid over $1,000,000 in life insurance proceeds to the wrong person: Ms. Le. American General mistakenly paid her because it thought she was the true beneficiary of a life insurance policy it issued. Because of its gross negligence, American General confused Ms. Le with another beneficiary and confused the insured as Ms. Le’s husband. It sued Ms. Le to recover the money it paid to her. She turned to us for help. We mounted a vigorous defense against American General’s lawsuit and also countersued American General for negligence, negligent misrepresentation, and fraud. American General attempted to convince the court to dismiss Ms. Le’s counterclaims. In a June 22, 2023 opinion, the court concluded that Ms. Le had properly alleged claims against American General. See Am. General Life Ins. Co. v. Nguyet Minh Le, EDCV 22-867, slip op., (C.D. Cal. June 22, 2023). The question before the court had never been litigated in California previously: when a person is mistakenly paid life insurance benefits and relies on that money to pay off loans, buy cars, and otherwise make expenditures she would not have otherwise made, does she have a cause of action against the insurance company for wrongfully and negligently paying her life insurance benefits? The federal court answered this question with a resounding “yes.”

Ms. Le’s story is a sad and unusual one. Her husband passed away. Before his death, he informed Ms. Le that he had life insurance. However, he did not provide specific details about the policy. After his passing, Ms. Le contacted the National Association of Insurance Commissioners (“NAIC”) about the potential policy. The NAIC offers a service that helps people locate unclaimed life insurance benefits. In response to the inquiry to the NAIC, American General contacted Ms. Le. They informed her that her late husband had over one million dollars in life insurance coverage.

In fact, Ms. Le’s husband was not covered under the million-dollar policy that American General had identified. American General provided our client with a claim form and encouraged her to file a claim for the million dollars. When she did so, American General encountered numerous errors in its system. Unbeknownst to our client, various pieces of her and her husband’s identifying information did not match American General’s records for the policy. The Social Security numbers for the actual insured and Ms. Le’s late husband did not match. The Social Security numbers for the beneficiary and our client did not match. Our client and her husband lived in California. The policy’s insured and beneficiary did not live in California. American General still insisted that our client was the proper beneficiary and it paid her the policy’s death benefit.

After receiving the death benefit, Ms. Le drastically altered her life. She quit her job, she purchased an expensive car, she traveled, she paid expenses for her family members and she otherwise spent hundreds of thousands of dollars that she would not have spent had she not received over $1,000,000. She adjusted to a new life with these additional funds.

After having paid Ms. Le the death benefit, American General realized that it had erred. American General promptly sued our client to recover the money it had paid her. We responded to American General’s lawsuit with a counterclaim for negligence, negligent misrepresentation, and fraud. American General filed a motion to dismiss the counterclaim.

American General raised a variety of arguments why Ms. Le’s counterclaims should be dismissed. Its first argument was that the litigation privilege compelled the court to dismiss Ms. Le’s claims. The litigation privilege “precludes liability arising from a publication or broadcast made in a judicial proceeding or other official proceeding.” Fremont Reorganizing Corp. v. Faigin, 131 Cal.Rptr.3d 478, 493 (Ct. App. 2011). “[C]ommunications with some relation to judicial proceedings are absolutely immune from tort liability by the litigation privilege.” Chaffey Joint Union High Sch. Dist. v. Fieldturf USA, Inc., 2016 WL 11674265, at *2 (C.D. Cal. May 19, 2016). In its motion, American General argued that Ms. Le’s claims all arose out of it attempting to take the money back and, therefore, the litigation privilege applied because its attempts to take the money back were inherently part of litigation. Ms. Le argued that her statements were “non-communicative” in nature and it was American General’s negligent and/or reckless handling of the claim and insurance proceeds that had caused her harm, and thus the privilege did not apply. The Court dismissed American General’s argument. It explained that “American General’s alleged negligent and reckless acts were not communications made in a judicial proceeding or in connection with a judicial proceeding, and [thus] do not qualify for the litigation privilege.” See Nguyet Minh Le, EDCV 22-867, at **4-5. The mishandling of the claim and payment of insurance proceeds were the acts at the root of Ms. Le’s harm.

American General also argued that our client had not suffered any harm from its actions. The Court again disagreed. It explained that taking on financial obligations because of American General’s actions constituted a legally recognizable harm. See id. at **5-6.

American General next argued that Ms. Le could not bring a claim for fraud. “Under California law, the elements of a cause of action for fraud are: (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” Id. at *6 (citations omitted and emphasis in original). Given that an insurance company would not knowingly give the wrong person a million dollars, American General insisted that Ms. Le’s fraud claim failed as a matter of law. American General’s argument was incorrect. As the Court explained, if American General had acted recklessly, then, in fact, Ms. Le could bring a claim for fraud. Even if an entity does not know that it made misrepresentations, if it made statements in reckless disregard for the truth, the harmed party may still bring a claim for fraud. The Court found that Ms. Le had adequately alleged that American General had acted recklessly. As the Court explained, “The Court cannot overlook American General’s failure to investigate the mismatching SSNs, or take further steps to confirm the identity of the claimant before dispersing more than a million dollars in funds.” Id. at *7.

Finally, American General argued that it did not owe a duty of care to Ms. Le. Ms. Le’s negligence claims all required her to establish that American General owed her a duty of care. A “duty of care” is the legal requirement that a person act toward another with the care and prudence that a reasonable person would use. This duty does not extend to all people under all circumstances, and American General argued that no such duty extended from American General to Ms. Le in this context. The Court found that American General did owe Ms. Le a duty of care. As it explained:

[T]he Court concludes that American General owed a duty of care to Ms. Le because it treated her as if she were the proper beneficiary under the insurance policy. . . . Although the original life insurance policy was not intended to affect Ms. Le, it was highly foreseeable that if American General made Ms. Le believe she was the proper beneficiary of the policy [although] she [actually] was not, she would be harmed by the misrepresentations. Ms. Le certainly suffered injury by undertaking financial obligations she would not have [undertaken] if she were not paid the insurance money. American General’s alleged conduct directly caused Ms. Le’s injury. According to Ms. Le, she had done no more than request information of policies that matched her and her late husband’s information, and it was American General that contacted her and informed her that she was a beneficiary. American General’s mess was of its own making. Public policy should incentivize insurance companies to handle claims with reasonable care, such as to confirm basic identifying information, before dispersing more than a million dollars in funds. The Court is confident that Ms. Le’s circumstances are unusual enough that finding a duty of care here would not have an outsized “adverse impact on a class of defendants upon whom the duty is sought to be imposed.” Cf. Adelman v. Assoc. Int’l Ins. Co., 108 Cal. Rptr. 2d 788, 796 (Ct. App. 2001).

Id. at *8 (emphasis in original). The Court concluded that an insurer owes a duty of care when telling people that they are entitled to benefits under a life insurance policy.

The Court’s denial of American General’s motion was significant. Not only did it allow Ms. Le to pursue her claims in Court, but it also set the precedent that insurance companies cannot recklessly conduct their business and then just walk away with a complete disregard for the lives that they damage. When people receive significant amounts of insurance proceeds, they often make life-altering decisions based on the money that they received. An insurer must be held accountable for its actions.

5 Recent Changes and How They Impact Retirement Plans

Many Americans work for decades to save for retirement and diligently save money for the future. When an employer offers a pension or other retirement plan options, it can be helpful to those trying to save for retirement, especially when an employer matches employee contributions or offers other retirement incentives.

The SECURE 2.0 Act of 2022 (SECURE 2.0 Act) can benefit many working Americans by making it easier to save for retirement. The SECURE 2.0 Act was signed into law on December 29, 2022 to address issues related to retirement and savings. The SECURE 2.0 Act creates new flexibility and accessibility to help individuals plan for a more secure future.

Most of the SECURE 2.0 Act’s provisions take effect in 2024 (or later). At that point, a company will likely be required to automatically enroll eligible employees into its retirement plan, and employers who start new retirement plans will be required to automatically enroll employees at a rate of at least 3%, beginning in 2025. Exceptions to this requirement are new companies in business for less than three years and businesses with 10 or fewer workers.

Any change to the laws governing retirement plans can bring confusion for employers and employees alike. It is therefore important to stay up to date on these plans and your rights so you know whether you are receiving the benefits to which you are entitled. Some information about these changes is provided below. To learn more about these changes or get answers to frequent questions about ERISA, reach out to the expert ERISA attorneys at McKennon Law Group PC.

Employer Matching Based on Student Loan Payments

Around 43 million Americans carry student loans (as of 2023), making it even harder to save money in a retirement plan. This new update allows employers to offer an optional benefit that helps those paying student loans save for the future.

Beginning in 2024, student loan payments may be considered retirement contributions for the purpose of qualifying for matching contributions in a retirement account. Employers will also be able to contribute to company retirement plans on behalf of employees who are paying student loans rather than saving for retirement. This allows employers providing qualified retirement benefits to amend their plans so that qualifying student loan payments trigger a contribution match.

For example, an employer offering a 3 percent match (meaning it contributes up to 3 percent of the employee’s salary when the employee does the same) will now be able to choose to count student loan payments as the employee’s “contribution” and match it even if the employee is not contributing that much directly to the retirement plan.

It is important to note that employers can decide whether to implement this change; it is not an automatic right for those with retirement plan benefits.

New Options for Penalty-Free Early Withdrawals

Withdrawing funds from your retirement plan prematurely (before reaching the required retirement age) may result in a 10 percent early withdrawal penalty by the Internal Revenue Service (IRS). While people have some options allowing them to withdraw money as a loan to cover certain types of expenses, the SECURE 2.0 Act adds to those options. For example, The SECURE 2.0 Act will allow for temporary borrowing from retirement plans without a penalty to pay for long-term care coverage premiums, for emergency withdrawals of $1,000 per year, and for emergency savings accounts for some employees.

Limitations on Catch-Up Contributions for Some Workers

The SECURE 2.0 Act will also limit some employees’ ability to make catch-up contributions. Individuals who make more than $145,000 annually will not be able to make pre-tax catch-up contributions, although they will still be able to make after-tax catch-up contributions pursuant to the limitations set each year by the IRS. This may impact how much individuals are able to save via such contributions.

However, the SECURE 2.0 Act will also allow people aged 62 to 64 (depending on the plan) to contribute even more in catch-up contributions to qualifying plans. The maximum amount allowed will be adjusted annually to account for inflation.

Mandated Automatic Enrollment for New Retirement Plans

Starting in 2025, most major employers will be required to automatically enroll employees in any qualifying retirement plans offered. Currently, the trend is for employers to offer the plan and assume employees are not interested if they do not elect to enroll. The SECURE 2.0 Act reverses this assumption and the employee must elect to not enroll. This is a substantial change, especially considering that automatic enrollment defers 3 to 10 percent of a person’s income.

Higher Ages for Mandatory Distributions

Whereas employees previously had to take the required minimum distributions (RMDs) from their retirement each year beginning when they were 72, the SECURE 2.0 ACT increases the age for RMDs to 73 in 2023, and to age 75 by 2033. Once a person reaches the age for required RMDs, he or she must take RMDs every year or face tax penalties.

Being required to take minimum distributions can be an issue for individuals who do not yet need such an amount from their retirement and want to leave it in investment accounts or avoid paying taxes on the income in that year. This change therefore protects those who want to wait to take RMDs. Because these age thresholds do not stop persons from taking distributions earlier, the change serves to benefit those who want to wait.

Choose an ERISA Pension Attorney Who Will Fight for Your ERISA Rights

The laws related to retirement plans and benefits are detailed and complicated. Understanding your rights as to pension benefits is critical to protecting your access to those benefits. Employers and ERISA plans often deny claims for pension benefits. If an employer or ERISA plan denies your claim for retirement benefits, or any other ERISA claim (such as disability, life, health or accidental death and dismemberment), the knowledgeable and experienced attorneys at McKennon Law Group PC can help. Reach out to McKennon Law Group PC now for a free consultation.

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