UnumProvident Corporation

Modified on 2009/10/14 21:52 by admin
UnumProvident Corporation, the nation's largest group disability insurer, is facing accusations of fraudulent claims-handling practices. In the fall of 2002, NBC's Dateline and the CBS news program 60 Minutes ran stories on the company's insurance claim policies, revealing UnumProvident's propensity to unilaterally deny claims without any basis. According to former employee and company physician interviews, UnumProvident, which reportedly issues one out of four disability policies in the United States, intentionally withholds benefit information, destroys critical medical reports and uses biased doctors to deny claims in an effort to increase profits. 60 Minutes revealed that policyholders have filed 3,000 lawsuits concerning UnumProvident's deceptive practices in the past five years.

In November 2002, U.S. Magistrate James Larson, who sits in the Northern District of California, upheld a $7.7 million jury verdict awarded to a chiropractor whose benefits were denied by the company. Saying the insurer had "a comprehensive system for targeting and terminating expensive claims," Larson described how UnumProvident subjected the plaintiff, Joan Hangarter, to biased medical examinations and falsely "recharacterized her occupation as a business owner, rather than a chiropractor."

State health regulators in Georgia, Tennessee and California are now scrutinizing UnumProvident's claims practices. The company sells policies through several subsidiaries, including Paul Revere Life Insurance Company, Colonial Life & Accident Insurance Company and Provident Life & Accident Insurance Company. The majority of victims are higher income professionals, including lawyers, accountants, company executives and physicians.

In January 2003, a California jury awarded $31.7 million to eye surgeon Randall H. Chapman who alleged UnumProvident fraudulently and maliciously denied his disability payments in 1999. Chapman had applied for payments after developing anxiety and tremors that prevented him from conducting surgeries. A few days before the Chapman verdict, attorneys representing other policyholders discovered a 1995 memo, written by an assistant vice president of claims for Provident Corporation (Provident and Unum merged in 1999), describing the company's formation of a task force to identify policies covered by the Employee Retirement Income Security Act of 1974 (ERISA). ERISA is a Federal law that restricts lawsuits against employer-supplied medical insurance programs. Under ERISA, victims who sue an insurer must file their claims in Federal court and can seek no more than the cost of the service that was denied. Punitive damages are not allowed. Attorneys allege UnumProvident used ERISA's loopholes to the company's advantage by forcing policyholders to go to court to seek damages.

In November 2004, New York State Attorney General Eliot Spitzer and New York State Insurance Superintendent Gregory V. Serio announced a multi-state settlement with UnumProvident and five of its subsidiaries. Under the terms of the settlement, UnumProvident will reassess 200,000 denied claims, pay a $15 million fine and restructure its claim handling procedures. UnumProvident officials say the company may end up paying over $100 million in restitution fees.

If you or a loved one have been victimized by UnumProvident's practices, it may be important to contact an attorney who can help protect your legal rights. Please keep in mind that there may be time limits within which you must commence suit.

See Also

  1. Managed Care & Insurance Companies / Bad Faith Claims
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