NEWARK (CN) - Prudential Insurance and the Department of Veterans Affairs refuse to pay life insurance benefits to families of military veterans who commit suicide due to post-traumatic stress disorder, four families claim in Federal Court.
Lead plaintiff Mathew Ecker's son Michael served in Iraq in 2005-06 and received "at least eleven medals, ribbons, and badges of honor for his service," his father says in the complaint. "After Michael's return from Iraq his parents observed a dramatic change in his personality. He was in constant physical pain, suffered memory losses, and was anxious all the time. Michael never left the war behind and after medical treatment efforts failed him, on August 28, 2009, he walked to the garden, saluted his father in military fashion, placed a gun to his head and pulled the trigger. Mathew was the sole beneficiary of the SGLI [Servicemembers Group Life Insurance] policy of his son, in the amount of $400,000.
"Mathew has testified under oath that, while alive, Michael never received from Prudential any notice that he could convert his SGLI policy to a VGLI [Veterans Group Life Insurance] policy."
The grieving families claim that Prudential denied benefits by claiming that late veterans did not switch their SGLI polices over to VGLI within 120 days of separation from the military.
"Members of the United States Armed Forces carry life insurance protection governed by federal statute. The life insurance protection is administered by Prudential under the SGLI and VGLI programs," the complaint states.
"The SGLI and VGLI insurance programs are federal programs, but the United States government is the policyholder, not the insurer. The United States has contracted since 1965 with Prudential, which serves as the primary insurer administering the program.
"SGLI and VGLI are guaranteed by the United States, to allow Prudential to derive monetary profit from administration of the programs. Thus in cases where service members are dying at higher rates than those envisioned by the risk calculations of Prudential, i.e. wars, the United States through the VA supplements the cash necessary to make certain Prudential does not lose expected profits from administration of the programs.
"SGLI is the insurance program for active service members and members of the reserves when they are in active duty training. VGLI is the insurance program which covers veterans. The insurance premiums for SGLI are collected by the United States. The insurance premiums for VGLI are paid directly to Prudential by veterans.
"Servicemembers and their dependents are automatically granted SGLI while in active military service, unless the servicemember opts out of coverage. SGLI coverage terminates automatically 120 days after the servicemember's separation from the military unless the deactivated member of the armed forces is disabled at the time of deactivation. Upon deactivation the insured is entitled to convert his SGLI coverage into VGLI coverage of equal value by submitting an application and the first premium payment with 120 days after the end of active service.
"Under the terms of the statute controlling the programs, SVA [defendant Secretary of Veterans Affairs Erik Shinseki] is required to issue guidelines determining who is disabled for the purposes of establishing whether beneficiaries are entitled to the policy benefit in cases where a service member has not timely converted his/her SGLI policy to a VGLI policy.
"When the service member is disabled at the time of deactivation, 38 U.S.C. §1968(a)(4) provides for continuous SGLI coverage for up to two years or until disability ceases, whichever occurs earlier."
The plaintiff families all claim that their loved ones suffered from post-traumatic stress disorder and were unable to hold onto jobs before they killed themselves.
They all claim that their loved ones were not informed in a timely manner about switching their policies from SGLI to VGLI.
They cite two similar instances, in which the Department of Veterans Affairs ordered Prudential to pay benefits to beneficiaries of deceased veterans.
In one case, "Prudential paid the benefit in that case even though: 1) the veteran failed to timely covert his SGLI policy to a VGLI policy, 2) more than two years had elapsed between deactivation and death, and 3) the veteran had been able to work at a refinery for period of fifteen months between deactivation and death," the complaint states.
"In another case, of information and belief, Prudential was ordered by SVA [the Secretary of Veteran Affairs] or VA [the Department of Veteran Affairs] to pay the VGLI benefit to the beneficiary of a veteran who committed suicide on the basis that Prudential had failed to notify the veteran upon deactivation from the service and/or separation from the Ready Reserve that he could convert his SGLI policy to VGLI."
The plaintiffs claim that the defendants "intentionally denied the benefits of the life insurance of their insured under the SGLI and VGLI programs, with no rational basis for so doing, whereas others identically situated to plaintiffs were paid benefits under the life insurance policies."
Citing The New York Times, the complaint states that "more than 4,000 former service members have died after returning home from Iraq and Afghanistan. Many of those returning veterans have died from self-inflicted wounds."
The families seek actual damages, and damages for constitutional violations, breach of contract and breach of fiduciary duty.
They are represented by Katherine Robinson with Layser & Freiwald, of Philadelphia.