“Hello Ms. Smith, this is Charlotte Perry from Unum. How are you today? I wanted to give you a quick call to discuss the results of our recent medical review. Our medical consultants have concluded that you have, or will have within the next three months, work capacity and could return to work at that time. Well, actually our board certified physician says you can go back to work in a month, but what I’d like to offer you is three months of benefits in anticipation of you returning to work.. I could have the check sent to you today.”
“Gee, I don’t know”, replied Ms. Smith, “I’m not really ready to return to work yet and my doctor hasn’t released me. I could use three months of benefits in advance though. I’d like to think about it and check with my doctor first.”
“Tell you what, I’ll send you a check for three months of benefits and if you are unable to return to work at that time, we’ll re-open your claim and begin paying your benefit again. Thanks for your time.”
This is called an Advance Pay & Close. It allows Unum to pay insureds and claimants up to 6 months of benefits in anticipation of either returning to work, or meeting a specific policy limitation.
According to Unum’s own benefit manual there are specific criteria which must be met in order for the claims handler to offer the Advance Pay & Close. The problem is, Unum never abides by its own policy manual rules and the offer of Advance Pay and Close violates Unum’s internal claims review procedures. The above described scenario as described above violates Unum’s criteria for the offer of an Advance Pay and Close. Here’s how.
According to Unum’s Benefit Manual effective 1/2013:
“AP&C can be considered when this payment option has been presented to the claimant, the claimant agrees to it, and one or more of the following circumstances exists:
- An anticipated RTW (return to work)/release to work date has been set for 60 days or less, and this date is reasonable based on the claimant’s motivation and medical records, or
- The claimant could reasonably be expected to RTW within 3 months in another occupation at the CID (change in definition) and other gainful occupations that the claimant can perform have been identified, or
- The post-CID definition of disability is ADL/cognitive loss and the claimant agrees with our determination that s/he would not longer meet the definition of disability after the CID, or
- The policy maximum duration date (i.e. remainder of the maximum benefit period) is 3 months or less.
The first criteria required for an AP&C is that the claimant agrees to it. Notice in the above example Ms. Smith did not agree to the offer of the AP&C and really had no choice in the matter.
Unum’s claims handlers and managers use Advance Pay and Close before holidays because they know insureds and claimants need money and are more likely to accept the offer of up to 6 months of advance benefits regardless of whether they can return to work or not six months later.
After all, for a monthly benefit of approximately $2,000, the possibility of receiving a check for $12,000 upfront is nothing to pass up. What claimants do not realize is that they have just been “paid off”; the claim has been closed; and it will take an Act of Congress in medical proof to get Unum to re-open it – a process very similar to the initial claim investigation when the claim was first filed.
The written communication sent to claimants describing the Advance Pay & Close is deceptive and misrepresents what actually happened. The letter tells the claimant the claim is closed, but that it will be happy to review any additional information submitted if the claimant is unable to return to work.
If the AP&C was given for reasons other than RTW, it is pretty much a done deal, and the claim is terminated without having given insureds written notification of their appeal rights which is a violation of ERISA.
Unum deliberately uses the term “closed” and not “denied” or “terminated” in their AP&C letter because then it would have to cite ERISA appeal rights in the written communication which it doesn’t. (For ERISA policies.)
In actual fact, AP&C claims are shut down (terminated); financial reserve is eliminated; and there is an immediate contribution to profit. And, claimants are not given their appeal rights. This is important because claimants would never know they have the right to appeal an AP&C which is administered improperly or “forced” upon them.
Unum gets away with not citing appeal rights by stating in their Benefit Manual that claimants “have to agree to it”, and by using the word, “closed”, rather than “denied”, which is really just a matter of semantics. In Unum’s mind, when they actually deny the claim 6 months later when new information is submitted, then it will cite appeal rights in the denial letter.
In the meantime, claimants are deceived. Tempted with a large lump sum payment, claimants often agree to the AP&C and decide to worry about re-opening the claim later – a really big mistake.
Unum’s Benefit Manual also contains the following criteria:
“When AP&c Should Not Be Considered
AP&C should not be considered if any of the following conditions are present:
- There are ongoing disputes about the claim.
- The claimant is motivated to RTW, but based on a review of the claim, it appears s/he may be unrealistic about his/her plans.
- the advance payment is to a policy limitation date, such as the mental illness limit or the self-reported limitation date. (The policy limitation date is different from the policy maximum duration date.)
- The claimant’s mental capacity (whether based on a mental illness or other condition) is in question. However, AP&C may be considered as an option on a mental illness claim when the claimant and the claimant’s AP (physician) are in agreement that the RTW plan is reasonable.
- The policy maximum is within 15 days or less and the claim is administered on BAS (Unum’s payment system), to a coding limitation with that system. (This is really a shoddy deal since most other insurers will payout several months of benefits just prior to maximum duration of claim.)
Allow me to break this down a bit. Based on Unum’s Claims Manual the required criteria for an Advance Pay & Close is: 1) claimant must agree to it, 2) there must be a documented and employer agreed to date of return to work, 3) the claimant’s physician must have documented a specific return to work date with a written release, and 4) mental illness claims aren’t good AP&C opportunities.
It’s important for readers to understand here that although Unum is required by the states to have written “benefit manuals”, there is no requirement that Unum actually abide by it, and quite frequently on a claim by claim basis Unum ignores what’s written if its interests are better served another way. Claims handlers must do what directors and managers tell them to do, particularly before profitability closes i.e. end of month, quarter or year-end.
DCS, Inc. recommends the following when approached with an AP&C offer:
- Do NOT be tempted by the offer of large sums of money in advance. If agreed to, and accepted, your claim will be terminated and it will take a preponderance of medical information to get it reopened, if Unum ever does.
- Be clear with Unum (in writing, for the record) that you do NOT AGREE with the Advance Pay and Close and that you intend to challenge Unum’s application of any mental and nervous 24-month limitations.
- Point out to Unum that your physicians have NOT released you to return to work and that there is no employer who has agreed to a specific return to work date.
- Realize that Unum’s presentation and communication letters deliberately misrepresent the fact that your claim has been terminated on Unum’s payment system and that you actually have the right of appeal if Unum misrepresented or communicated the AP&C to you. In fact, you should appeal the AP&C if Unum violated its own Benefit Manual procedures, or you never agreed to it.
Truthfully, Unum’ Advance Pay and Close is a way for the company to immediately “shut down” financial reserves early instead of waiting 3-6 months for claimants to actually go back to work or meet policy limitations.
AP&Cs remind me of Unum’s old “90 codes” when the company terminated claims on the payment system if it could possibly deny claims within 90 days in order to report levels of profitability “early” when needed. The problem with “90 codes” was that claims handlers really couldn’t deny claims 90 days later and Unum’s profitability statements became distorted.
AP&Cs basically do the same thing as long as the company refuses to reopen claims when new information arrives. Advance Pay and Close is the same “90 code” horse of a different color with a slightly different twist of “claimant must agree to it”, if in fact Unum actually follows its own Benefit Manual.
My objections to Advance Pay & Close are:
- Large sums of money are held out to claimants as incentive prior to holidays in an effort to get them to agree to the settlement.
- Unum does not follow its own Benefit Manual criteria and offers AP&Cs to unsuspecting claimants who risk the future of their claims. Even when claimants do not “agree to the AP&C offer”, Unum sends out checks based on its own internal medical opinions about return to work capacity.
- Although Unum “shuts down” the financial reserve associated with AP&C claims, no appeal rights are given in written communications. It is not well explained to claimants the level of medical evidence required in order to reopen claims. Claimants often think all they have to do is submit an APS form from their doctor stating they are still disabled and Unum will put them back on claim. Not so. Unum may decide not to reopen the claim at all.
Claimants and insureds should be well-educated when it comes to Unum’s offers of Advance Pay & Close, rejecting any offers which are forced upon them, and do not meet Unum’s Benefit Manual criteria exactly.
This procedure harms claimants who opt to take the offer of money because they essentially risk the future of their claims if they are unable to return to work, or are reaching the M&N limitations in their policies unfairly.
Eyeball the offer intelligently, and then refuse it.