RAPID CITY, S.D. – A federal jury on Friday ordered CUNA Mutual Group to pay $200,000 in compensatory damages and $6 million in punitive damages to the estate of a former school teacher who claimed the credit union insurer illegally denied her claims for credit life disability on her home equity loan.
Teri Powell died of cancer in 2007 but a team of attorneys and her personal representative, Sharon McElgunn, continued to pursue Powell's claim against CUNA Mutual.
In 2001, while she was teaching at the local high school, Powell took out a home equity loan at Highmark FCU to make improvements on her home and bought disability insurance from CUNA Mutual, court records show.
Over the next year, Powell's health deteriorated, and doctors advised her to retire. She suffered from rheumatoid arthritis, osteoarthritis, sacro dysfunction and hypertension, among other ailments.
But although she struggled financially, Powell continued to pay her home equity loan and maintained the disability insurance coverage, the records show. When she was diagnosed with cancer in 2005, Powell applied for benefits from CUNA Mutual reaching back as far as 2002, when she was forced to stop working full time.
In 2006, CUNA Mutual denied Powell's claim, noting that Powell had not contacted the insurer when she first became disabled in 2002. CUNA Mutual eventually paid Powell $3,080 to reimburse her for mortgage payments made from May 2002 to May 2003, but refused to reimburse her for payments made from May 2003 to 2006.
Powell, 58, died in January 2007, after which her personal representative, Sharon McElgunn, replaced her as the plaintiff. Before she died she recorded a video deposition in which she said she wanted her representatives to pursue her claim.
In a prepared statement the company said "CUNA Mutual carefully examines each claim and pays benefits due under the policy. In this case, we talked with Ms. Powell about the claim, explained how she could have our decision reconsidered and ultimately paid all of Ms. Powell's benefits after working with her on the claim. "
"As a closely regulated industry, CUNA Mutual routinely works with regulators to review claims handling practices. We are fully transparent, and the interpretation of the policy that the plaintiff’s lawyer challenged was one that our regulators have reviewed in the past and raised no question. And we are currently working with regulators to discuss how best to handle this situation. We have also had other courts examine this type of claim and agreed that CUNA Mutual properly handled the claim. As a mutual insurance company, our responsibility is to administer our claims fairly. We consistently meet that responsibility."
"While Terry Powell’s situation was tragic, we disagree with the verdict and believe the award to be excessive. As such, we are considering an appeal in this case. "
