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DENVER — A Colorado Springs woman is fighting insurance giant USAA in federal court. Her suit, filed in Denver, was recently dismissed. She is trying to appeal.

Erin Peterson claims the Fortune 500 company refused to pay out a $1 million life insurance policy after her husband unexpectedly died. Peterson and her deceased husband, Ted Bobkowski, were both members of the U.S. Air Force.

“USAA has been part of my life, my entire life,” Peterson said.

Peterson is a retired lieutenant colonel. Bobkowski, who died at age 52, achieved the rank of captain.

“He was perfect,” Peterson said. “We were very happy. We were raising a beautiful family.”

Peterson spoke to FOX31 before her initial case was dismissed. She says her late husband, who was honorably discharged from the Air Force, was the family’s breadwinner. He worked as an electrical engineer. He passed from an aortic aneurysm just more than two years ago.

Bobkowski left behind his two adult children, his wife and her two children. He took precautions to ensure his family would be financially protected — or so he thought. His life insurance policy from USAA— worth $1 million — was denied.

Peterson’s lawyers say insurance adjusters are trained to look for any excuse to deny coverage. They claim that’s what happened in Peterson’s case.

“They have an obligation to protect their veterans and this is not the way to do it,” said Peterson’s attorney, Lars Bergstrom.

When Bobkowski applied for life insurance, he answered a series of questions. One question asked if he had ever consulted a health care provider for asthma, emphysema, pneumonia or other respiratory system disorders. Bobkowski answered ‘no.’ Peterson’s lawyers say that is why USAA denied the claim — insisting Bobkowski had sleep apnea.

“What they’re going to claim is that respiratory problems should have been answered ‘yes’ on the application process,” said Peterson attorney Jason Jordan.

But Peterson says her husband did not consider his snoring a respiratory problem.

“Those weren’t clear questions,” Bergstrom said. “He didn’t recognize it. He wouldn’t have thought about that.”

USAA says sleep apnea was listed online to get a quote for the policy and on the application. Bobkowski died from an aortic aneurysm. Experts differ on if that could be linked to sleep apnea.

“I never expected USAA to look for any excuse to deny a policy,” Peterson said.

USAA provided FOX31 the following statement:

“USAA provides life insurance to protect hundreds of thousands of military families, and we pay out hundreds of millions in claims each year. And we do that with great care, knowing the passing of a loved one is a devastating loss. When obtaining life insurance, applicants are asked about certain health conditions because medical science recognizes that some conditions can present significant health risks. In dismissing this suit, the court recognized that there was a knowing failure to disclose a relevant health condition during the application process. While we recognize this is a tragic time for our member, we are compelled to act in the best interest of our entire membership-based association. We appreciate the court’s affirmation that USAA acted appropriately, and we are confident any appeal would lead to the same conclusion.”
—Roger Wildermuth, USAA spokesperson

Peterson can no longer afford her home where memories were created with her husband. As she navigates the real estate market, she waits for her day in court. But with her lawyers trying to appeal, the question is: Will that happen?

Lawyers for Peterson claim her suit has a broader impact. They argue that USAA’s tactics could affect military members across Colorado. Because of that, they are asking for three times the million-dollar damages under the Colorado Consumer Protection Act.

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