Murder Victim's Claim Denied for 'Pre-Existing Condition'

Insurance Denied

The widow of a man killed last year when he was shot in the back is suing the life insurance company that refuses to pay a claim because the man had a "pre-existing condition," unrelated to the cause of his death.

According to the lawsuit filed by Stephanie McCraw, widow of Curtis McCraw, who was gunned down by unknown assailants last April in Knoxville, Tenn., Settlers Life Insurance denied her claim because her husband had Hepatitis C.

"Mrs. McCraw lost her husband and wants this life insurance company to pay what is owed her. The policy is not specific as to whether there is a difference as to how you die. It does not even say you won't get paid if you have a pre-existing condition," said Curtis's lawyer, William Hotz.

"Yet, the company is denying this claim because her husband had Hepatitis C, something totally unrelated to the way he was killed," he said.

"The cause of death had nothing to do with any sort of pre-existing condition," the lawyer said. "An accidental death at the hand of a murder is totally different from dying of natural causes."

Curits McCraw, 48 at the time of his death, was shot last April outside a housing project in Knoxville in what police have called a case of murder. He was declared dead on the scene by police who never identified or arrested any suspects.

Several months prior to his death, McCraw purchased a life insurance policy from Settlers Life Insurance.

Stephanie McCraw is suing Settlers for the $25,000 she claims her husband's policy was worth, plus damages. Under the state's bad-faith statute, she could be entitled to an additional 25 percent of the original claim, according to the lawsuit.

Settlers confirmed it denied the claim because of a pre-existing condition, but would not specify the illness, citing privacy laws.

The company, President Michael Lowe said, would not have to pay if it proved McCraw lied about his condition, thereby invalidating the policy.

"The law in Tennessee is clear that the cause of death is not relevant," Lowe said. "What is relevant is whether the insured truthfully informed the company of his health at time of his death. If an applicant lied, the company has a right to deny the claim."

Under state law, Lowe said, insurance companies have a two year period to contest the information in a policy holder's application. If in that time, the company "discovers the applicant did not tell the truth about his health, the company can void or rescind the policy even if the person has died."

Insurance companies check the information applicants give them against databases of other insurance companies and pharmacies in order to determine is someone has a medical condition and has not been honest about it, Lowe said.

Lowe would not say outright that Curtis McCraw lied on his application "because the matter is pending in court and the right place for us to present our position is in court."

"When people lie about their health and get a product they are not entitled to, that is fraud," the insurance company president said.

William Hotz, Stephanie McCraw's attorney, said neither Curtis McCraw nor his wife knew the slain man had Hepatitis C, an infectious liver disease.

Curtis McCraw was "shot multiple times in the back" just after 11 p.m. on April 19, 2008, said Knoxville Police Department spokesman Darrell DeBusk.

"Evidence would suggest that illegal activity was taking place at the time of the murder," DeBusk said.

Public records indicate McCraw had a lengthy criminal record that included drug trafficking, burglary, vandalism and public drunkenness.

No suspects have been apprehended and the "investigation is still ongoing," DeBusk said.

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