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300,000 Claims Get a Second Look

Apr 25, 2005 | www.kiplinger.com

Hundreds of thousands of policyholders whose disability claims were turned down by UnumProvident are getting a second chance to collect benefits. As part of a deal with state regulators, the insurance giant is offering to reassess more than 300,000 claims denied since 1997. We reported on several of UnumProvident's claims-denial complaints and lawsuits in our February 2004 article, "You Call This Peace of Mind?"

The settlement also requires the company to pay a $15-million fine and to change its claims practices from now on. (An additional $145-million fine hangs over UnumProvident if a follow-up investigation finds it has failed to live up to the agreement.)

Among the practices cited after a yearlong investigation: the insurer's excessive reliance on in-house medical staff to support claims denials or reductions, often disputing a claimant's attending physician without ordering an independent medical examination; "company bias" in the interpretation of medical reports; and placing too great a burden on policyholders to justify their eligibility for benefits.

By now, about 220,000 people whose claims were denied or cut off since January 1, 2000, should have been contacted by UnumProvident about how to get their cases reevaluated. But nearly 100,000 more policyholders, whose benefits were denied between 1997 and 1999, won't be notified of their right to have their cases reopened.

Some state regulators and private lawyers don't think the multistate settlement is tough enough. Officials in California and Montana refused to sign on (although eligible claimants in those states can get their claims reevaluated like everyone else). "There are serious issues that remain to be addressed," says California's insurance commissioner, John Garamendi. One of his key concerns: "There is no provision for an independent third party to perform or review the claim assessments." He's pushing for a separate settlement that would provide for such an independent review of decisions involving Californians. He's also seeking a bigger monetary penalty.

As he pursues the case, Garamendi recommends that eligible Californians sign up to have their claims reassessed under the multistate settlement. "If we reach a settlement, then they will have additional protections," he says.

If you've been working with a lawyer to contest a denied claim, be sure to talk with him or her before signing up for the reassessment. You won't give up any legal rights unless the company offers additional benefits and you agree, says Garamendi. But if you do accept benefits, explains Massachusetts' Goetcheus, you cannot sue the company for punitive damages.