Debbie McCravy purchased life insurance for her daughter. MetLife accepted the application and the premiums from the time the daughter was under the age of 19 until she was murdered in 2007 at the age of 25.
When the life insurance claim was submitted MetLife contended that the daughter should not have still been on the policy because she was no longer an "eligible dependent child" and denied the claim and offered to return the premiums.
The return of premiums was refused and instead MetLife was sued.
The Appeals Court decided in favor of McCravy. The Court ruled that under a recently decided decision under ERISA, the Amara decision that a plaintiff in this situation is entitled to a chance to get "full equitable relief." Since the plaintiff had relied on MetLife's continued collection of the premiums it had foregone an opportunity to obtain other types of life insurance on her daughter, MetLife was liable to pay upon the claim.
The Court found that it was terribly unfair for MetLife to collect premiums from someone like McCravy and then turn around and say we deny the claim. The Court noted that MetLife certainly was not running around returning premiums for everyone who was not on the policy but who had not yet made a claim.
We see this insurance nonsense all the time. A claimant will pay premiums for years but when it comes time to make the claim the insurance company may say "Oh we made a mistake in your accepting your premiums all this time" or "You were never really eligible." Of course what the insurance companies are doing is taking the premium from the 99.9 percent of the people who never make a claim thus deriving an enormous unfair profit while at the same time they are simply denying claims of people who actually get around to making a claim.
The name of this case is McCravy v. Metropolitan Life Insurance Company and it was decided by the United States Court of Appeals for the Fourth Circuit on July 5, 2012.