Disability Insurance Bad Faith by Linda Nee

(This article relates to Individual Disability Income claims not those subject to ERISA, unfortunately. Due to the content of the information I should remind everyone I’m not an attorney, and if you determine this information is relevant to your claim, we recommend you consult an attorney in your state. )

The laws in most states imply a duty of good faith and fair dealing on behalf of  disability insurers. This duty expects Unum and other disability insurers to act reasonably in the handling of claims submitted to them by the insureds. Even though disability polices do not contain specific language in the insurance policy concerning the duty of good faith and fair dealing, most likely it will be enforced by the courts as if it were.

In general, in order to prove an insurance company has violated their duty with respect to good faith and fair dealing, the insured (plaintiff) must show: 1) the disability insurer acted intentionally; 2) the disability insurer either denied the claim, failed to pay the claim, or delayed payment on the claim without a reasonable basis; and 3) the insurance company was aware it had no reasonable basis to act, or it failed to conduct a fair and objective investigation to determine if its’ actions were in fact reasonable. Bad faith disability is more difficult to litigate than one might think since the insured must prove intentional, and deliberate actions intended to harm.

Basically, disability insurers may not ignore the duty to investigate fully all of the facts of a claim before making a liability determination. If a claim is not fully and objectively investigated, the disability insurer may later be prevented from saying it had a good reason to act in ‘good faith’. Additionally, a disability insurer may not conduct an investigation favoring its’ own interests above those of the insured. Instead, the disability insurer is required to consider the interests of the insured at least equal to its own.

For example, the above concept doesn’t seem to fit in with Unum’s persistent denials of claims based solely on its own medical opinions rejecting all others, nor does it indicate Unum conducts objective and fair investigations considering all of the available evidence including that which favors the insured.

In order to prove an insurer has committed “bad faith” the insured must prove: 1) the insurer is guilty of violating the duty of “good faith”, and therefore has committed “bad faith”; and  2) and the insurer’s acts of “bad faith” were the cause of any damages suffered by the insured. When the insured is successful in winning a “bad faith” lawsuit, he/she is generally entitled to recover: 1) actual damages; 2) general compensatory damages; and 3) punitive damages.

In order to win compensatory damages, the insured must prove to a jury that the facts of the claim are more probably true than not. This is very different from beyond a reasonable doubt, which is a much higher standard used in criminal cases. The concept of “more probably true” means that the insured’s facts and evidence need only “outweigh” the defendant’s evidence by even the slightest margin.

In contrast, in order to win punitive damages, the insured must provide proof of clear and convincing evidence,  which is more than “mere probability”, but less than “reasonable doubt.” The insured is required to show the insurance company acted with an “evil state of mind” which is defined as: an intent to cause harm; or conduct motivated by intentional ill will; or willfully ignoring the substantial risk of harming the insured or others.

Again, those who might be inclined to “hurry into court” should realize “intent” is very hard to prove in bad faith cases particularly when companies such as Unum cloak their activities to avoid the appearance of engaging in bad faith.

 Awarding punitive damages is left entirely to the jury. Members of the jury may choose to consider: the character and motive of the disability insurer’s motives, the degree of harm it caused, and the standard of reported wealth of the company.

Disability insurers may also be sued for breach of contract, which arises when the administering insurer does not abide by the express written provisions of the policy issued.  On occasion,  one can prove a breach of contract where there is no express written provision, but when the insured has a reasonable expectation of coverage based on information communicated at the time of sale, or produced in marketing brochures or advertisements. In addition, some practices may also be considered consumer fraud  in some states.

Another  cause of insurance bad faith is when a disability insurer stops evaluating claims based on the unique facts of the claim, and instead, or in addition to, DOES SOMETHING specifically with the intent to terminate more claims. Internal strategies devised by management for the purpose of targeting claims for profit, or out of contract activities for the purpose of producing more profit could be determined to be “bad faith” by the courts.

Finally, there is also “bad faith by omission” meaning the insurance company knew it was right to do something (such as an IME), but failed to do it because the result would likely have been favorable to the insured. Sometimes NOT doing something in favor of the insured is as bad as deliberately intending to harm for profit.

In the end insurance bad faith is expensive, difficult to prove, and can take quite some time to get through the system.

I suspect “good faith and fair dealing” was pretty much trashed by disability insurers when it was discovered the concept wasn’t profitable and they could play the financial numbers and “get away with it” most of the time – not a good testament to the insurance industry at all.

Court of Appeals Finds Sun Life Acted Arbitrarily and Capriciously

Posted on April 5, 2009 by John Wood

Sherry DeLisle continued working after her car crashes in 1998 and 2000. She suffered spinal and closed head injuries.  Her employer, Krandall & Sons, fired her on April 17, 2002, stating that “she was not doing her job.”  Eight months later, DeLisle filed for long-term disability benefits with Sun Life, the insurer of Krandall’s disability plan. She submitted medical records and statements of five treating physicians. She listed April 17, 2002, as her date of disability.

The Social Security Administration determined that DeLisle was eligible for disability benefits effective April 17, 2002.  Nonetheless, Sun Life denied her claim and upheld its decision in an internal appeal.  The company found that she was no “actively at work” under the policy when her claimed disability started.  DeLisle filed suit in federal court.  The district judge found that Sun Life’s decision was arbitrary and capricious and ordered the company to determine whether DeLisle was in fact disabled on April 17, 2002.

On remand, Sun Life reviewed DeLisle’s extensive medical evidence. Sun Life sent DeLisle’s records out for review by a clinical neuropsychologist, a psychiatrist, an orthopedist, and a rehabilitation counselor. It denied her claim again, stating that the medical evidence did “not document the presence of conditions physical, psychological, or cognitive in nature of such severity that [DeLisle] could not continue to perform her occupation on April 17, 2002 or thereafter…” 

DeLisle appealed again, and Sun Life sent her records to three more records-reviewers (another neuropsychologist, another psychiatrist, and an orthopedic surgeon).  Sun Life upheld its denial of benefits.

DeLisle again sued Sun Life.  The district court granted her motion for judgment on the administrative record, finding that Sun Life’s denial of benefits was arbitrary and capricious. The district court sent DeLisle’s claim back to Sun Life to determine the amount of her benefits and ordered Sun Life to pay DeLisle’s attorney’s fees.

On appeal, the Sixth Circuit upheld the judgment of the lower court. The Sixth Circuit ruled that:

-Sun Life acted under a conflict of interest as claims decision-maker and payor of benefits. As such, the company had a “clear incentive” to find consultants who are “inclined to find” that claimants are not disabled. The Court pointed out that nearly all of the records-reviewers chosen by Sun Life were under regular contract with the company. 

-Sun Life’s in-house attorney told at least some of the records-reviewers that DeLisle had been “terminated for cause.” However, the only information communicated to Sun Life by Krandall was that DeLisle was fired “because she was not doing her job.” The assertion that DeLisle was terminated “for cause” gave the records-reviewers incomplete and potentially prejudicial information. The improper communications justified the court “giving more weight” to the conflict of interest.

-The Social Security disability determination was “far from meaningless.” The failure of Sun Life to mention DeLisle’s Social Security award, especially when the policy required her to apply for Social Security disability benefits, was not lost on the court: “Sun Life’s silence here does not make its denial arbitrary per se, but is among those ‘serious concerns’ that, ‘taken with some degree of conflicting interests,’ provide a proper basis for concluding that the administrator abused its discretion.”

-After reviewing the quality and quantity of the medical evidence, the court found that “the entirety of the medical evidence available to Sun Life was not reviewed in a ‘deliberate’ or ‘principled’ fashion, which is a factor suggesting that Sun Life’s ultimate determination was arbitary.”

-The fact that DeLisle worked for two weeks after leaving her employer and listed “lack of work” as her reason for leaving her employer did not amount to persuasive evidence that she was able to complete the duties of her job on April 17, 2002.

For these and other reasons, the Sixth Circuit agreed with the district court and concluded that Sun Life had acted arbitrarily and capriciously.

 The case is DeLisle v. Sun Life Assurance Co. of Canada, 2009 U.S. App. LEXIS 4251 (6^th Cir. March 4, 2009).

Watch Out For Unum’s Year-End Profit Targeting

Unfortunately for Unum’s insureds we are now heading into a crucial end-of-the year claim targeting focus in order to bolster profits for 2009. DCS, Inc. can already see the increase in “risk management” activity, meaning increased requests for IMEs, time sensitive updates for medical information, increased use of surveillance (even if inappropriate to the impairment), doc-to-doc calls,  and claims indiscriminately placed on ROR status to artificially reduce financial reserves.

Typically, Unum managers place a significantly larger number of claims on ROR status in the second half of the month, or at month end with year-end being the grand jackpot. Reducing financial reserves can under state Unum’s liability picture (IBNR) sending the message the company is doing much better than it really is.

This is also the time of the year when claims managers are fired up, stressed out,  and wiped out  calling for “focus days” and overtime in order to locate all of the claims that can be easily terminated before the end of the year. 

Unum’s goal is to locate claims which can be easily denied by planning surveillance, or an IME in time to have the reports back sometime in early December. This is the time of the year when executive management puts pressure on the claims departments to “roll in” those anticipated profits before the last bell sounds on December 31, 2009.

Which claims are targeted? To be honest, it’s a turkety shoot! Managers sometimes do file reviews to locate the “quick hits”, but more often the claims handlers are asked to “step up” medical referrals and walk-ins in order to get the file ”rubber stamped” by a “board certified” insurance paid physician before the end of December. 

In any case, this is the time of the year when insureds need to be extremely prepared to defend their disability claims. Please contact us privately if you have any questions about what’s happening to your claim. We’re here to help.

The Dichotomy of Unum Group by Linda Nee

The initial growth of what eventually became Unum Group is attributed to J. Harold Chandler who became CEO of Provident in 1993 and ran the merged UnumProvident-Paul Revere companies until he was dismissed in 2003 with a court won $50 million.

Under Chandler, Unum implemented cost-containment strategies pressuring claims specialists to deny valid claims under a micromanaged, impairment based claims review system. CEO Chandler’s fame is well-known for creatiing the “Hungry Vulture” award as a reward for claims review personnel who denied the most claims. Every prize received bore the motto, “Patience my foot, I’m gonna kill something.” Employees were particularly pressured to deny as many claims as possible during the “scrub” months – months at the end of each quarter.

According to a DEF 14A SEC Filing, made by UnumProvident Corp on 4/7/1007 the beneficial ownership of the Corporation rested with Hugh O Maclellan, Jr., members of his family, and/or trusts established for their benefit. In 1997 the Maclellan Foundation Inc. owned 17.57 percent of the corporation’s Common Stock while Hugh Maclellan, Jr. owned 40.94% or 18,705,568 shares.

Also in March of 1997 Common Stock ownership by management included J. Harold Chandler ( 1,120,006 shares), Tom Watjen (179,341 shares), and Robert Best (94,879 shares. Most people seem to think Tom Watjen came out of nowhere and was an innocent bystander to the horrible claims practices later discovered. The truth is,after the 1999 merger Tom Watjen transitioned to Executive Vice President of Finance, with responsibility for financial operations, investments and portfolio strategy. It was during his  reign that UnumProvident’s stock went down to $5 a share.

As Unum’s CEO Watjen also had the right to acquire an additional 1,000,000 shares through the exercise of common stock options, despite the fact he transferred 150,000 options, presumably to his wife pursuant to a domestic relations order.

Therefore, the lion’s share of UnumProvident’s (1997) Corporation Common Stock was owned by Hugh O. Maclellan, Jr. (40.94%), Directors and Executive Officers (47.98%), Charlotte M. Heffner (8.32%) and J. Harold Chandler (2.45%0. (.31% was also owned by stockholders of less than 5% ownership.)

The connection between the Maclellan Foundation and Provident can be traced to Thomas Maclellan who took a job with Provident Life and Accident Insurance in 1892. Both of his children, Robert and Dora, eventually served Provident in some capacity. When Thomas died in 1916, Robert succeeded his father as President of the Provident companies.

Dora, who also assisted her father in the early years of Provident, actually signed some of the early policies in her position as secretary. All of the members of the Maclellan family were active in the Second Presbyterian Church. Thomas, in particular, consecrated his philosophy in covenant as follows: ” all that I am and all that I have, the faculties of my mind, the members of my body, my worldly possession, my time, and my influence over others, all to be used entirely for Thy glory, and resolutely employed in obedience to Thy commands.”

Later, Dora’s message continued the legacy, ” Each individual and every generation of the Maclellan famuily has possessed a significant desire to minister and use the gift of giving for the furtherance of the Kingdom of God. Regardless of their individual visions, the family has undividedly recognized the importance of appointing leadership that has fervent faith and dedication to this mission.”

Dora passed away in February 1974  and therefore  missed the “Hungry Vulture Award” and the 3,000 lawsuits brought against UnumProvident during Harold Chandler’s reign of terror. It makes one wonder how such Christian principles could later wind up being so demented and responsible for the demise of so many. Apparently, Dora’s religious sentiment didn’t last long.

It is also interesting to note that in the lean times Unum Corporation has been able to muster additional capital from unknown sources, thereby saving itself from operating losses not favorably viewed by those those who determine investment bond ratings.

However, Forbes (4/2/2008) reported a new player in the continuing saga of Unum Group. Relational Investors LLC purchased $26.7 million in Unum Group shares, giving the company 10.4% in the current ownership. After its purchase Relational Investors reported to the SEC it held nearly 36 million Unum Group shares, “compared with the company’s 346.9 million shares outstanding as of February 21, 2008.

Effective Oct. 5, 2009, the Unum Group (NYSE: UNM) Board of Directors declared a quarterly dividend of $0.0825 per share on its common stock to be paid on Nov. 20, 2009, to stockholders of record on Oct. 26, 2009.

It is said in order to determine the future, you must only look to the past. If this is true, we need  look only at the history of Unum Group and its current bad faith claims practices  responsible for the financial hardships of many middle class Americans across this country. I wonder what Thomas and Dora might have thought about that.

It is hard to imagine the Provident companies as having such a background of religious influence. However, it looks like the “Hungry Vulture” may wind up looking like an innocent sparrow in comparison with what’s in store for Unum insureds in 2010. Thomas and Dora are probably turning over in their graves since the “hungry vulture” is once again killing everything in its path.

Obviously, the Presbyterian religious sentiments which influenced the company at the turn of the century along with Unum Life’s “vision and values” after demutualization disappeared and transitioned Unum Group into a major disability claims rainmaker – a modern day robber baron.

Too bad;  Thomas and Dora had it right, but the Unum Group  ”Hungry Vulture” is flying high again looking for something to kill - namely your claim.

Unum Denies Group Claim of Restaurant Manager

Unum recently denied an ERISA group claim for a restaurant manager diagnosed with fibromyalgia and depression. What makes this denial particularly egregious is an obvious arbitrary abuse of discretionary authority as follows: 1) Unum targets fibromyalgia as easy “quick hit” denials; 2) Unum completely ignored the opinions of all primary care physicians(There were three who supported disability.); and 3) Unum took approximately 8 months to make a decision on an ERISA policy. (The company claimed the right to take this long because the insured filed the claim late, and it was his fault.) 

This denial is consistent with our previous reports that Unum reverted to its pre-multi-state past by not placing any weight on the medical recommendations of the claimant’s own physicians. It’s pretty easy to deny disability claims if the only medical opinion considered is its own.

Unum has a “neat trick” in that it regurgitates the recommendations from primary care doctors in the denial letters, but then completely disregards the information in the decision. When a disability insurer consistently rejects all of the medical opinions other than their own, a deliberate ”pattern of business practice” emerges. Unum can write about the doctor’s opinions, but if all of the opinions are rejected resulting in a claim denial, the company has engaged in deliberate “bad faith”, or has abused its discretionary authority.

If Unum physicians are still getting considerable financial incentives for supporting Unum’s profit agenda, then it makes sense that all the company has to do is get their “board certified” physicians to document a medical review claiming the insured can work, and the claim can be quickly denied. Regulators have never taken the fox out of the hen house and he’s become pretty hungry.

As long as Unum’s internal physicians add to the record and create the “illusion” of capacity for work, the company will continue to terminate claims indiscriminately. However, we should not lose sight of the fact that it is WRONG (and sometimes illegal) of Unum to completely ignore all medical restrictions and limitations provided by physicians outside the company in favor of their own. Unum does not investigate claims in order to obtain a consensus of medical opinion as to whether the insured can realistically work or not.

Unum has always abused ERISA claimants because it knows federal jurisdiction isn’t favorable to the insured. Unum also counts on the fact that either attorneys won’t take the cases on appeal, or  insureds are too financially challenged to fight. In any case, Unum’s management is well aware that denials of ERISA claims are very, very profitable.

It may be time for NCDI and the major state entities who initiated the Multi-State Settlement Agreement to take a look at Unum’s claims review practices to determine if Unum should be required to pay an additional fine for operating outside of the guidelines set by the Insurance Commissioners.

It’s clear Unum thumbs its nose at the Multi-State Settlement Agreement. What we need to do is give the company a “blast from the past” and make it pay financially again….and again….and again, if necessary,  until it becomes unprofitable to deny claims at the expense of ERISA claimants and insureds.

We can also start getting the message back to employers that Unum group policies are not in the best interests of employees as part of any benefit package. The polices are actually crap when you consider how many, and how long the policies are actually paid. Employees can  be a very powerful voice for change by asking  employers to change from Unum to another group insurer with a better reputation for having a claims review process that is fair. Employers should be made aware when Unum denies a claim unfairly.

Unum went outside of any generally accepted disability claim review practices to deny this claim and management should be held accountable for the denial of a compensable claim. This claim will be appealed and litigated if necessary.

How Are We Doing After Two Months?

In the last two months Lindanee’s Blog received 15,794 views. These views are from a wide range of audiences. Apparently, the Blog is well represented on the search engines and our topics are very easy to find and click to.

Our most busy day so far was when I posted information about the ERISA Esq. attorneys. We received 556 views within two hours. My “About” page is second in popularity with first being the post on FMLA changes and of course the article “From the Lighthouse to the Outhouse” and “Unum’s Dilemma.”

 Reader feedback tells us these articles here and on the website are well written.  Thanks guys we sincerely appreciate the kudos.

We also received over 150 emails expressing concerns, but mostly asking important questions about claims and policies and what to expect from Unum.  THAT is really good news.

We’ve also made significant contributions to our data bases so keep the information coming for that as well. Whether we continue to publish the information here still needs to be resolved, but we are collecting and accumulating the information off screen.

What started out as an informative source of information for insureds is now a huge success. Please stay tuned when you have a chance and continue to email your private comments. Also, if there is a topic you would like to see here, please let me know that too.

The National Coalition of Disability Insureds, our non-profit sister company is expected to initiate our first major project in January 2010 with requests for Conduct Market Examinations of those US disability insurers who have demonstrated significant bad faith  ”patterns of business practices.” We certainly will keep everyone informed of the success of our first project, however, our real goal is to assist attorneys with real time RICO actions should the need arise.

We have also spoken with our local State Senator to explore ways in which the Maine Attorney General’s office can be held accountable for allowing the office to be influenced by Unum’s special interests causing harm to insureds all over this country.

In Maine, the Attorney General is elected by the legislature and does not have any accountablility to any body or person for its actions. We are working with our Maine legislators to change that. Perhaps in the future Maine citizens will be able to ask for legislative investigations, or require the AG to report to some legislative ethics committee when special interests such as Unum abuse the office.

We’re also very excited about the pending publication of Linda’s book, “Denial for Profit”, in the spring of 2010.

It looks like 2010 will be a very exciting year. Thanks to everyone who has made this Blog s success after two months, and we hope you continue to keep checking in.

The Unum Group Dilemma- Editorial by Linda Nee

(Reprinted by demand for non-client requests.)

Although the new Unum Group has spent a great deal of money in the last year attempting to change its image it has not been successful. In reality in order to change  the Unum company image it has to actually “walk the walk” and not just “talk the talk.”  Although all disability insurers engage in near identical claims practices designed to target and deny compensable claims, Unum crosses the “bad faith” line more so than most.  So, what’s up with Unum? Why does it always get the bad press? Let’s talk about it.

Arrogance. While Unum Life Insurance Company (prior to 1999) engaged in horrible claims practices the company gained the respect of employers and the investment community by reversing poor claims decisions and paying claims on appeal or in litigation. At the time, Unum’s management fully admitted to “agressive claims management” and denied and settled disability claims using open “risk management” strategies.

In contrast, Unum Group remains steadfast, even when errors of record beome obvious from the claim file. Like the old Ralph Mohney cronies, Unum Group still prefers to stall, and hope the insureds  just go away, or at best run out of money before the claims have to be reversed. Provident’s “starving out” ERISA claimants on appeal was well known and Unum Group appears to have reverted back to many of the old Provident ways now that regulators aren’t watching.  Unum Group literally settles cases on the “courthouse steps” if the insured can last that long financially. Obviously, the new Unum Group still believes it is big enough, powerful enough, wealthy enough and arrogant enough to do what it wants to whomever it wants to. This type of arrogance brought the company down once, and it probably will again.

Unum’s management and staff are masters of deception involving the misrepresentation of otherwise credible documents submitted on behalf of insureds. Unum’s tactics and strategies involving the “snatching” of key phrases from medical documents favorable to them are also well known. This is why Unum’s medical department insists on obtaining office consultation notes and not just Attending Physician Statements. Follow-up letters documenting doc-to-doc calls rarely contain accurate accounts of dialogs between unum physicians and the insured’s primary care doctors. Records of phone interviews with the insured often misrepresent the intent of additional information volunteered by the insured.

The purchasing of internal physician employee credentials such as medical board certifications in order to be able to attest to the credibility of reviews continually allows for the “rubber stamping” of denial decisions by medical insurance staff. Integrating egregious claims practices with first-line claims specialists who are deliberately kept ignorant of the significance of financial reserves are just a few of many misrepresentations taking place in the Unum claims review process. Unum Group completely disregards all medical  opinions other than their own.

Persistent non-admission of the existence of claim financial reserves and IBNR.  Unum Group hides the financial reserve figures from first and second-line managers because the company really got into trouble about using financial reserve figures to target claims particularly those with the highest amounts – the biggest bang for the buck. If I were to ask a Unum Group claims manager to divulge a specific financial reserve for a specific claim I would receive one of two responses: 1) the information is proprietary, or 2) we don’t have individual claim reserve figures.

In fact, Unum uses its claim payment system to manipulate financial reserves through placement of claims on reservation of rights status. Unum tries to keep financial reserves a secret, but it’s no secret. Hey guys – it’s ok to admit to financial reserves. Everyone already knows! There would be no pay-off in putting all those claims on Reservation of Rights at the end of the month if ROR didn’t reduce financial reserves would there?

Expert propaganda and lobby resources. How is it possible for Unum Group to engage in some of the worst egregious claims review practices and yet convince federal and state regulators they are the “good guys?” Unum Group has more public influence than you think. Internally, frequent emails go out to employees continually emphasizing Unum’s philosophies and justifications of its claims practices. Unum’s ability to keep their dirty laundry out of the news is remarkable. Employees are frequently cautioned NOT to speak to the press under fear of termination. Unum’s marketing and advertising departments are masters at manipulating the press and supressing articles and editorials.  It can “tell a story” about anything, and keep the “bad news” in the lavatory when it needs to. Never underestimate Unum’s ability to keep information about itself out of the media.

Articulating normal operations and profitability without sufficient financial reserves. This expert has been cautioning state and federal regulators, such as the SEC,  as well as investors to continually audit Unum’s IBNR which stands for “incurred but not reported” financial reserves. Unum’s over use of Reservation of Rights status and its refusal to remove it within a short period of time results in “off balance sheet financing” and the understatement of actual liabilities for claims. Unum’s investors and those institutions who assign Bond Ratings should also be concerned how under reserved Unum really is. One has to wonder how Unum manages to remain significantly profitable in a recessionary economy without severely understating its financial reserves. The answer seems clear – denial of increasing amounts of compensable claims and manipulation of reserves.

Misrepresentation of policy provisions. Unum Group’s “the policy contract means what we say it means” seems to be emerging as a popular strategy to convince claimants and insureds they have a burden of proof over and above what the policy really requires. Average lay persons probably wouldn’t know of their duties and responsibilities under the terms of the policy and certainly it seems reasonable for the insured to believe what they are told by the insurance company. It is actually against all insurance consumer protection laws (Unfair Settlement Claims Practices Acts) to misrepresent policy provisions to insureds; but what the heck?

So, why does Unum continue to have it’s very poor reputation despite the change in logo, TV commercials and the spending of enormous amounts of money to promote itself as a “people” organization? The answer is obvious- the company doesn’t “walk the talk” and still does bad things to good people.

Unum – From the Lighthouse to the Outhouse by Linda Nee

Unum Corporation can trace its historic origin to Mr. Elisha B. Pratt, one of the founders of the Connecticut Mutual Life Insurance Company who obtained a Maine Charter on July 17, 1848 to form a life insurance company named Union Mutual. The company sold life insurance policies to those crossing the country in the 1849 California Gold Rush. Mr. Elisha B. Pratt’s motto “find a better way” identified him as one of the most inspired entrepreneurs of that day.

The demutualization of Unum Mutual in the late 1980’s established the incorporation of Unum Life Insurance Company of America. In 1994 Unum Life , located on an impressive, high mounded campus surrounded by well-groomed lawns, trees, and landscaped gardens in Portland, Maine, proudly dispalyed the “Lighthouse of the World” logo with the slogan “We See Farther.” Mr. Elisha Pratt would have been proud.

Under Jim Orr’ III’s leadership Unum Corporation provided disability and special risk insurance solutions to individuals and businesses. Companywide in 1997 Unum employed 7200 employees and ran operations in the US, Canada, the UK, the Pacific Rim, Europe, Bermuda and Latin America. Under Jim Orr’s leadership Unum reported total revenues of $4,076,700 in 1997 and net income of $370.3 million.

The company’s subsidiaries included Unum Life Insurance Company of America, First Unum Life Insurance Company, Commercial Life Insurance Company, Duncanson & Holt, Iinc, Colonial Companies, Inc. and Colonial Life & Accident Insurance Company.

Unum Insurance became the leader in Group LTD coverage in the United States and Canada. Jim Orr told the claims specialists, “You are the cornerstone of the company. Without you (claim specialists) Unum Life Insurance would not exist.”

In June 1999, however, Unum Corporation’s  ”visions and values” were permanently abandoned when the company merged with the Provident companies to form a new corporation named UnumProvident. Although Unum Life was perhaps not one of the fairest of disability insurers, the company was well-respected and held top honors among the top five “best” employers in the United States.

UnumProvident, now led by the notorious Harold Chandler, Ralph Mohney and his “hungry vulture”  henchmen, changed the disability claims process to a micromanaged, profit-producing machine. The lighthouse logo and slogan were removed from the main office entranceway, as new management set about devising strategies to deprive insureds of their benefits.

On March 21, 2003 the State of Georgia fined UnumProvident $1 million and placed the company on a two-year probation. Commissioner John Oxendine said at the time, “They are going to be required to maintain a certain level of fundamental fairness.”

Subsequently, in 2004 UnumProvident was fined $15 million by a multi-state commission of 48 states and the District of Columbia for engaging in unfair claims practices. The company, required to reassess denied claims dating back to 1997, accrued a total cost in excess of $120 million as a result of bad faith claims practices in addition to the $15 million fine.

Finally, in October 2005, California’s Insurance Commissioner, John Garamendi fined UnumProvident $8 million in what was called the “biggest fine in the agency’s history.” Mr. Elisha Pratt most likely turned over in his grave!

In September 2007 Unum Provident completed the reassessment of approximately 250,ooo claims and re-organized into a company called Unum Group. The new organization began selling itself as a “people organization” with “better benefits.”

Unfortunately, Unum Group isn’t successfully pulling off the new image since its claims strategies have reverted to pre multi-state settlement levels. Employers who buy Unum’s new products really need to get their heads together and realize Unum’s denial strategies are even more devious as management continues to deny legitimately compensable claims.  Employers are NOT investing in employee benefit packages, but employee financial ruin.  Once employees are so damanged, employers will never get them back on the job.

If Mr. Elisha Pratt were here today, he’d find the company he started in the crapper – a very sad testament having gone from the Lighthouse of “We see farther” to the Outhouse of “Can you please pass the toilet paper?” Crap is crap no matter what you choose to call it.

UNUM Brings Shame on UK and US Insurance Industry

Numerous claims made by individuals who have become unable to continue with their insured occupation by illness or disability have been left high and dry by UNUM.

UNUM, their adjusters, doctors, and investigators engage in intentional deceptions and outright lies to prejudice and deny the claims.

These tactics include advising clients courses of action which render their policy worthless. They even employ agents who spy on clients, invade their privacy, make nuisance phone calls and break into cars to gather evidence.

We advise UK members who have made a claim against UNUM to seriously consider investigating UNUM’s tactics by requesting all information held on file by UNUM. This can be done in writing and is subject to the UK Freedom of Information/Data Protection Acts 

Unum Group Faces Another Lawsuit

April 5, 2007. By Heidi Turner

Martinsburg, WV: Yet another lawsuit has been filed against Unum Group (formerly UnumProvident) claiming that the insurance company breached its contract with a policyholder and violated the Unfair Claims Settlement Practices Act of West Virginia.

According to the lawsuit, the plaintiff waited almost a year between the time her husband died and the time that she received payment from Unum. The plaintiff claims that during that time she suffered financial hardship. The suit, which seeks compensatory and punitive damages, was filed in February.

Back in 2005, John Garamendi, California Insurance Commissioner was quoted in the Los Angeles Times as saying, “UnumProvident is an outlaw company. It is a company that for years has operated in an illegal fashion.” The quote came while talks were going on between UnumProvident and the State of California in order to reach a settlement regarding UnumProvident’s illegal activities. UnumProvident violated state law in almost one-third of the 1,000 claims investigated by officials. It was also investigated by, and reached settlements with, many other states.

Among UnumProvident’s questionable practices that were investigated by Garamendi:

• A 24-month limitation on benefits for mental and nervous conditions, which resulted in UnumProvident wrongly putting claimants in those categories to reduce its payments;
• Knowingly applying the wrong legal definition of disability when denying claims;
• Purposely targeting high-cost claims for denials; and
• Misuse of claimants’ medical records.

Unum has been accused of using a number of tactics to avoid paying policyholders’ claims. The company has denied legitimate claims, underpaid policyholders, claimed that policyholders were covered by another disability plan, retroactively changed a policy, and claimed that policyholders were never disabled.

Furthermore, policyholders claim that their benefits were unfairly cut off or targeted for cancellation by Unum in order to increase the company’s profits. These are all examples of bad faith insurance practices, practices in which an insurance company unreasonably denies a policyholder’s benefits. Essentially, bad faith insurance happens when a company simply looks for reasons not to pay a claim, rather than thoroughly investigating the claim.

In some cases, class action lawsuits can be an appropriate means to receive compensation for damages caused by bad faith insurance. They are appropriate when a large number of people have claims dealing with the same breach of law committed by the same company. Judgments in a bad faith class action lawsuit are binding to all parties, meaning that all members of the class action share the settlement, although the exact amount given to each person may differ depending on specific circumstances. Members of a class action lawsuit may also receive punitive damages, which are awarded to deter the company from continuing its bad faith practices.

If you have had an insurance claim from Unum Group (or UnumProvident) denied and you feel they were practicing bad faith insurance, try to get as much in writing from Unum as you can, and take detailed notes of any communication you have with the company. That includes times, dates, and the names of people you communicated with. Talk to a lawyer to discuss your options.