On October 19, 2021, the Fifth Circuit Court of Appeals absolved National Oilwell Varco of any liability in a life insurance benefits case (under ERISA) where an employee’s wife was unable to collect on a life insurance policy purchased by her husband four years previously. Key points in this case are as follows:
- The husband was a long-term employee of NOV and had purchased a supplemental life insurance policy. He paid premiums for nearly four years via bi-weekly payroll deductions and received annual confirmation/re-enrollment statements ensuring coverage.
- At no point did either NOV or the insurer (Unum) inform him or his wife that he was supposedly not enrolled in the insurance plan. They relied on the premium deductions and annual statements to logically understand that they were covered.
- When the husband passed away and his wife tried to collect the benefits, Unum rejected her claim, stating that he should not have been enrolled. It turns out Unum had informed NOV (four years previously) that it was rejecting the application, but NOV did not do anything with this information and never informed the husband or wife. Instead, NOV deducted premiums for four years from its employee’s paycheck and continued to send false annual enrollment/confirmation forms.
- The Appeal Court’s ruling actually faulted the husband and wife for not checking to make sure they were covered, despite the consistent premium deductions and representations from NOV that they did have coverage.
The moral of the story is that NOV employees may believe they have insurance coverage, but they (or their beneficiaries) may not know for sure until it is too late. Therefore, steps should be taken to confirm all your insurance coverages – especially life and disability insurance – before its too late.