Insurers and employers are quietly adopting new rules that make it harder for family members to collect on employee life insurance, writes Houston Chronicle columnist L.M. Sixel.
Sixel uses as an example the case of Thomas Amschwand, who in the months before he died spent a lot of time on the phone with the human resources office of his employer, Spherion Corp., trying to make sure his life insurance was in order.
Amschwand was dying of cardiac angiosarcoma, a rare type of cancer. While he was at home on sick leave, his company switched to a life insurance plan that required employees to work one day under the plan to qualify for its benefits.
But Amschwand never learned of this, even after the new plan had been in effect for several months. He couldn't get his hands on the documents spelling out the policy's provisions because they weren't yet available. Still, the human resource officers at Spherion assured him that his premiums were paid up and the insurance was in place, according to his widow, Melissa.
So it came as quite a shock when Aetna refused to pay the $426,000 in life insurance after Thomas died Feb. 11, 2001.
Amschwand never knew about the one-day provision in the policy. It would have been easy for him to work that one day between chemotherapy treatments, Melissa said, adding that her husband offered to return to work several times during his treatment but was told to stay at home to take care of himself.
John Zavitsanos, the lawyer now representing Melissa, said it wasn't until 10 months after Thomas died that the company finally sent out a two-page pamphlet that mentioned the one-day work rule.
Sixel notes that Spherion, a human resource firm that supplies temporary workers, manages call centers and provides outplacement services. It has 375,000 employees, making it one of the nation's top 20 employers.
The company can't comment because it has not been served with the lawsuit, said spokeswoman Patricia C. Johnson in Fort Lauderdale, Fla.
Melissa Amschwand has sued Spherion, and because of that, the company won't comment on the matter, according to Sixel.
Aetna, meanwhile, won't comment on specific cases because of confidentiality, a spokeswoman told Sixel. She remarked, though, that it is up to the company that collects the premiums, files the claims, and makes sure its employees know the rules.
Andrew S. Golub, an employment lawyer in Houston, said in an interview with Sixel that it's fundamentally unfair to hold the beneficiary responsible for not following rules he was never made aware of.
Moreover, courts haven't been too pleased when employers keep changes in the benefit plans secret from employees. Jesse Gelsomini, an employee benefits lawyer in Houston, told Sixel that in several cases, employees have prevailed because judges have said that if the rules aren't laid out in the document outlining the plan, the employee can't rely on it.
Gelsomini said he recommends to employers that they inform employees of any benefit changes as soon as possible - and not only for legal reasons but to maintain good relations with employees.
Still, Sixel notes, many employers are slow to notify their workers because they rely on guidelines laid out by the Employee Retirement Income Security Act. Under ERISA, companies have 210 days after the close of the plan year in which the change was adopted to get out the notification.
