Did The 2004 Multi-State Settlement Deter Unum Provident From Continued Bad Faith Claims Handling?

Almost fifteen years ago, Unum Provident entered into a historic multi-state settlement with 3 lead states, 46 other states and the District of Columbia, as well as the U.S. Department of Labor, that cost it in excess of $120 million to comply, required it to reassess claims it has denied dating back to 1997, and called for an additional $15 million in fines. Maine Superintendent at the time, Alessandro Iuppa, was quoted by the Insurance Journal as saying, “This action is one of the most significant multistate insurance regulatory actions in history, providing a uniform, verifiable and effective state-based settlement for the benefit of UnumProvident policyholders nationwide.” But did the over $135 million paid by Unum and the substantial, extensive corrective action and requirements of Unum under agreement, along with risk of another $145 million or more in fines, deter UnumProvident from continued bad faith claims handling?

Unum Provident is one of the most notorious disability insurance carriers, if not the most notorious. It has been repeatedly sued for years for allegations of unfair, deliberate and bad faith disability claim denials, and was further targeted in a 2002 class action suit. The District Court of Nevada’s staggering decisions in the Merrick v. Paul Revere Life Insurance Company are case in point with Unum Provident. The Merrick case involved a lawsuit filed under a guaranteed renewable, own occupation disability insurance policy described as “one of the ‘Cadillac’ policies that disability insurers had sold in the late 1980’s and 1990’s to doctors, lawyers and other professionals,” for which significant premiums had been paid since 1989. 594 F.Supp. 2d 1168, 1176-77 (D. Nev. 2008). Merrick was a successful businessman who served as CEO of some of the largest corporations in the United States and was also a venture capitalist, but suffered from debilitating chronic fatigue syndrome and tragic personal circumstances of which Unum was aware that were relevant to his disability claim and lawsuit. Id.

The District Court of Nevada did not mince words in a scathing opinion ordering Unum Provident to pay over $26 million in punitive damages alone to Merrick, describing tactics by Unum as: schemes to deny claims of their disabled policyholders that were intended to augment their profits at the expense of their disabled insureds and that Unum Provident profited enormously, and concluding in no uncertain terms that: Unum Provident engaged in highly reprehensible conduct; that Unum Provident engaged in misconduct to augment profits; that Unum Provident’s misconduct caused more than economic harm; that Unum Provident’s conduct risked the health and safety of its insureds; that Unum Provident targeted the financially vulnerable; that Unum Provident repeatedly engaged in this misconduct for financial gain; that Unum Provident acted with malice, trickery or deceit and not by accident; and that the reprehensibility of the conduct of Unum Provident required punishment at the highest levels constitutionally permissible. Merrick, 594 F.Supp. 2d 1168.

Unum is not only one of the largest insurers of individual disability insurance policies such as the one at issue in Merrick, but it is also among the largest insurance companies financially responsible for paying benefits under group short-term and long-term disability insurance policies provided to employees nationwide as a part of their employee benefit package. In the context of group disability insurance claims also being wrongfully targeted and denied by Unum Provident, “federal judges have repeatedly commented on Unum’s ‘disturbing pattern of erroneous and arbitrary benefit denials, bad faith contract misinterpretations, and other unscrupulous tactics.’” Sconiers v. First Unum Life Ins. Co., 830 F.Supp. 2d 772, 783 (N.D. Cal. 2011). Federal Judges have further found the relevant evidence against Unum “disconcerting,” and that “lawsuits and large-scale investigations have revealed that for at least a decade starting in the mid-1990s Unum systematically engaged in bad faith practices designed to wrongfully limit and deny plan benefits to ERISA plan participants.” Id. “[An examination of cases involving [Unum] reveals a disturbing pattern of erroneous and arbitrary benefit denials, bad faith contract misinterpretations, and other unscrupulous tactics . . . suggesting] that segments that have run in recent years on ’60 minutes’ and ‘Dateline,’ alleging that Unum Provident ‘regularly declines disability claims as a way of boosting profits,’ may have been accurate.” See Radford Trust v. First Unum Life Ins. Co. of Am., 321 F.Supp. 2d 226, 247-49 (D. Mass 2004).

There is evidence still today that begs the question of whether the millions of dollars in penalties paid by Unum Provident for its reprehensible behavior have done anything to deter Unum Provident from continuing to employ the very same bad faith claims handling in effort to reap profits in the billions. Particularly where the “Cadillac” individual disability insurance policies that Unum Provident companies underwrote years ago are involved, with expensive liability for lifetime benefit payments such as where a disability caused by injury versus sickness comes into play or partial disability versus total disability is made an issue. Did Unum Provident merely changed the names of its internal documents and systems, and rearranged its structure just enough to pass muster of the review required under the 2004 settlement, but still be able to operate under schemes to deliberately deny disabled policyholders their income benefits to augment profits? Are they just “smarter” about how they are doing it and covering their tracks? Unfortunately, we are oft still faced with patterns and evidence of the very same disturbing practices employed by Unum Provident years ago which legitimize these types of questions.

If you have a Paul Revere Life Insurance Company, Provident Life and Accident Insurance Company, Unum Life Insurance Company, or any other Unum Provident corporation disability insurance policy, and you are faced with the devastating situation where you must file a claim for disability benefits under your policy, or you have been denied disability benefits by Unum Provident, contact one of our experienced disability insurance lawyers today for a complimentary consultation. Let us hold them accountable for the insurance benefits they promised, and deal with them for you.