SANTA FE (KRQE) - State employee Martin Hoefler could not have foreseen the unbelievable cold-hearted tragedy that unfolded last November.
Martin was a firefighter with the Energy and Minerals Department. He died last year at the age of 50 leaving behind his wife Lena and eight children.
"It's just hard without him," Lena Martin told KRQE News 13 in November. "We all just miss him."
Martin had a life insurance policy through his state job. But shortly after his untimely death, the insurance company refused to pay Martin's $33,000 death benefit.
A similar fate befell Bob Allard, a state park technician at Heron Lake. He died in 2010 survived by his wife and two adult children.
Allard paid his life insurance premiums through state payroll deductions. However, after his death, the insurance company said Allard wasn't covered and refused to pay his widow the $22,000 death benefit.
"When a family is expecting that money to pay for death benefits, and [then they] find out that they are not getting anything, I think that's obscene," State Personnel Officer Gene Moser said last year. "Their response was immoral. It's wrong."
At the center of the storm is the Standard Insurance Company of Portland, Ore., which provides life insurance policies for state employees.
"What we discovered was employees who had died and their families were thinking they had insurance coverage were finding out they weren't covered," Moser added. "This was a big deal. This was a very big deal.”
The impact was most acutely felt by the survivors, as Moser recalled from a conversation with one widow last fall.
"An 80-year-old woman who had been denied claims that her husband had died, she was distraught," Moser said. "She never thought this was going to be fixed. This was somebody who was living in a trailer by herself in a very rural area. It made a huge difference in her life."
The state ended up paying the Hoefler and Allard insurance claims and then sent Standard a bill for $55,000.
That was nine months ago. Now KRQE News 13 has learned of at least 10 other state employees who have been victimized.
According to internal state documents, Standard Insurance has denied more than $200,000 in death benefits to the families of a dozen state employees. And even though some of those cases go back four years, all of them - and probably more - have been kept under wraps.
"I was surprised to learn that there were this many claims that should have been paid but had been denied by the Standard," said Ed Burckle, cabinet secretary for the state's General Services Department, which manages employee insurance benefits. "There are 12 that have been disclosed today. There are likely to be a few more.
"We just don't know. Until Standard conducts a 100 percent review of all of its previously denied claims, we don't know."
Last November, Standard refused to talk about denied claims on the phone or in person. When KRQE News 13 paid a visit to the firm's Portland headquarters, corporate security guards were dispatched to protect the financial giant from unwanted scrutiny.
The state and Standard launched independent investigations. In April, following a lengthy negotiation, both parties agreed to resolve disputed life insurance claims. According to a written agreement, all previously denied death claims will be paid.
"When we talked last November, we didn't even have Standard at the negotiating table," Burckle told KRQE News 13. "I think it was your story that brought sufficient amount of publicity to the issue that actually created the situation where Standard came to the bargaining table.
"We were able to strike a deal where everyone was going to be covered if they had been paying premiums."
Standard is not solely to blame for what's happened. New Mexico also made mistakes. As a part of the settlement, New Mexico taxpayers will pick up the tab for future death claims made by state employees or their dependents up to a total of $300,000 a year. Any claims more than that amount will be paid by Standard.
But why would the state of New Mexico pay death benefits when it's not an insurance company?
"As part of the settlement with the Standard, neither party admitted any guilt whatsoever," Burckle continued. "However, the state has admitted that we had poor training, we did have inconsistent enrollment processes dating back to 2007.
"So, we admitted that and said we'll take on a minimal increase in the state's risk provided that Standard takes on the lion's share of the increased responsibility."
Former State Insurance Superintendent Don Letherer called the deal one of the strangest he's ever run into.
"I don't know how in the heck that can happen," Letherer said. "To me, it doesn't make any sense at all. They're not an insurance company. They're not licensed as an adjuster. And I don't know how in the world they can do that."
Letherer added he has never seen this kind of situation before.
The agreement with Standard does not resolve all of the outstanding issues. For example, out of the thousands of state employees who have been paying life insurance premiums, none have been provided with an important document called a certificate of insurance even though it is required by law.
"When somebody dies, people don't always know what they are insured for or not insured for," Letherer said. "How in the world would people know where to go to cash in on the life insurance if they have no certificates?"
While Burckle conceded employees paying for Standard policies have not received those certificates, Letherer points to that as a violation of state law.
"It's a super problem because, for one thing, the state statutes on insurance say a group program must include group certificates to the individual insureds, and it wasn't done in this case," Letherer said.
As the state continues to battle Standard, Burckle has a message for state employees.
"We have got your back," he said. "We are going to make sure that if you've been paying premiums and you suffer a death or your dependent suffers a death that you will be covered.
"No state employee has to worry whether they are covered or not covered."
The State Personnel Office also said employees will be protected.
"My job is to make sure that our employees are properly being covered in compliance with the Personnel Act and that we're insuring their safety and their welfare," Moser said. "We have an obligation. We made a promise that we would do certain things. We have to fulfill that promise."
Letherer still considers the situation "mind-boggling" and said he doesn't understand how it was allowed to happen.
"Life insurance especially has to be certain," he continued. "If it's not certain, you need to seek who's responsible for it not being certain. I think there's a lot of fault to go around, and I think it's both sides."
As a direct result of what’s happened with Standard Insurance, the state has now contracted with a private Human Resources firm to handle state employee benefits. The third party administrator will be paid $1.4 million a year to service benefit plans for all state employees.
Meanwhile, some state employees have filed a class action lawsuit naming both Standard and the state of New Mexico for failing to protect their life insurance benefits. The case is pending.
Three Albuquerque veterans remember vividly the sneak attack on Pearl Harbor that brought the U.S. into World War II 72 years ago Saturday.
A high school football player caught on camera punching an opponent and giving him a concussion during the state semifinals will not be suspended from the championship game by the New Mexico Activities Association.
The Sandoval County sheriff's sergeant struck by a car during a crash investigation on snow-slickened Interstate 25 Thursday has died.
After getting out of federal prison early this week it looks like former state Sen. Manny Aragón isn't at a halfway house after all. He's back at his own house in the South Valley.
The owner and an employee of a local smoke shop are in federal custody accused of selling spice at the Rio Rancho store.
The New Mexico State Police officer who fired his weapon at van filled with kids during a traffic stop gone bad has been fired.