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UnumProvident Gets Subpoena From New York

Aug 7, 2004 | Portland Press Herald

UnumProvident, the nation's largest disability insurance company and a major Maine employer, has been subpoenaed by New York Attorney General Elliot Spitzer in connection with an investigation of the company's claims-handling procedures, the insurer revealed this week in its quarterly earnings report.

In June of this year, UnumProvident received a subpoena from Spitzer's office requesting documents and information relating to compensation and commissions paid by the company and its subsidiaries to insurance brokers.

Officials from Spitzer's office declined to comment, and said that subpoenas aren't open to the public. A UnumProvident spokesman didn't return a call for comment.

UnumProvident said in the filing that it's cooperating with Spitzer's office and is in the process of gathering and providing information in response to both requests. The company, which is based in Chattanooga, Tenn., is the latest of at least nine insurance companies to acknowledge having been subpoenaed by Spitzer's office about compensation and commissions paid to brokers. Spitzer is investigating whether there is a conflict of interest in insurers paying brokers who steer clients to the insurers, Dow Jones reported Thursday.

Other companies that have reported receiving subpoenas connected to Spitzer's probe include Aon Corp., Marsh & McLennan Cos., Willis Group Holdings Ltd., Chubb Corp., Cigna Corp., Aetna Inc., Hartford Financial Services Group Inc. and MetLife Inc.

UnumProvident drew the attention of Spitzer's office last year, as well. According to the UnumProvident's quarterly filing, it received a letter in September from the New York State Attorney General's office indicating that it was reviewing the disability claims-handling procedures of the company and its insurance subsidiaries.

Insurance officials in Maine, Massachusetts and Tennessee are also investigating claims handling by UnumProvident Corp. The company has been fined by regulators and sued by policyholders and investors. The three states each regulate parts of UnumProvident's domestic business, and rather than have numerous investigators auditing how claims are handled, regulators will coordinate their findings into a single report to the National Association of Insurance Commissioners. The investigation began last summer, and is expected to be concluded this fall.

UnumProvident officials have said they are confident the state investigations will validate the insurer's performance. UnumProvident says it has about 30 percent of the nation's disability insurance business.

The company was fined $1 million in 2003 by Georgia insurance regulators after an investigation of its claims handling. Georgia State Insurance Commissioner John Oxendine said UnumProvident had a corporate mentality of "looking for every technical legal way to avoid paying a claim."