Our client, a 46 year old former insurance agent, sued the defendants because they wrongfully terminated her long term disability insurance benefits. Our client had been approved for disability coverage in 1990. She paid premiums for three years until she became undisputedly disabled. The defendants paid her benefits for three more years and offered to buy out the remaining payments for a single lump sum. After this offer was rejected, the defendants discovered that an error had been made on our client’s 1990 application, which was not discovered at the time, and which allowed our client to receive a higher benefit than she would have been eligible for otherwise. Despite having charged our client the correct premium for the benefit she had received, and despite the fact that our client had paid those premiums, the defendants terminated her benefits and hired a collection agency to recoup what they claimed was an overpayment of more than $70,000. The defendants argued that they were simply adjusting our client’s benefits to conform to her eligibility. They asserted that our client was not entitled to the higher benefit under the terms of the insurance policy. As a result, they argued that they did not breach any contract and did not engage in bad faith. Our client was deprived of her monthly long term disability benefits for nearly two and a half years.
The case settled after suit but prior to trial for $450,000.