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Chandler Calls 60 Minutes Report

Nov 18, 2002 | Chattanoogan.com UnumProvident president Harold Chandler defended his company in a statement Monday, calling a 60 Minutes report "highly biased and unrepresentative."

He responded to four points made in the unfavorable piece, which aired Sunday night.

Mr. Chandler said:

As we expected, 60 Minutes aired a highly biased and unrepresentative segment on our company on Sunday, November 17. We had met with the producers of this program several times in an attempt to make them fully aware of the facts. They chose, instead, to take most of their information from a small group of plaintiff’s attorneys who are highly motivated by their own financial interests. While unfortunate, it is helpful to understand who the real sources for their broadcast were and why the facts were mischaracterized.

In the broadcast there were four main points to which I want to respond:

We do not set targets to close valid claims. Any business involves pressure to perform, and ours is no exception. However, to suggest that the natural stresses of our business involve pressure of any kind to close legitimate claims is absolutely false. We do make claim projections, the same as we make projections for other areas of our business such as sales, underwriting, or investments. Such projections are necessary to manage a business and to provide quarterly reporting to the financial markets. But to represent these as “targets” or “quotas” for closing valid claims is simply wrong.

A minute percentage of our claims ever involve litigation. Of those that resulted in a judgment by a court last year, our company won three out of four times. Our results when cases go to litigation further validate the inherent fairness of our claim process. The program referenced 3,000 lawsuits over a period of five years. That figure compares to approximately 2,000,000 disability claims managed during the same period. Our judicial system, while the finest in the world, is far from perfect. The two cases referenced in the broadcast are not representative of our company’s record in litigation. One is still being appealed in California, and we have strong grounds for our appeal. Five different doctors, including the original treating physician, said there was no objective medical evidence to support disability.

In the case of John Tedesco, the eye surgeon on the program, 60 Minutes chose not to share the full facts of this complex case with viewers. Originally, Dr. Tedesco injured his back lifting a golf cart, from which he subsequently recovered and chose to close his practice. The company never denied a claim based on Parkinson’s disease, a fact known by 60 Minutes. The first notice of Parkinson’s was not sent directly to our company and was not made fully available until after Tedesco’s lawsuit had been filed. Once we received the definitive diagnosis of Parkinson’s, we paid the claim a fact known by 60 Minutes. Dr. Tedesco and his attorney chose to litigate rather than fully cooperate in providing appropriate information, which is unfortunate. Ultimately, as the program referenced, we settled with Dr. Tedesco. To select only this case, with all of its complexities, falsely characterizes our claims process.

John Garamendi, who appeared on the program, has not yet assumed office as the Insurance Commissioner of California. It is interesting that the program’s producers chose Mr. Garamendi to comment on the company’s claim practices, since he is not yet in office. However, he has a history of valuing what is best for consumers. We believe that when he assumes office and has access to the full facts of our company, he, too, will value the thorough, objective means we use to manage claims on behalf of policyholders.

The former employees had various job performance and other problems while employed at our company. We know that the overwhelming majority of employees, including the others in the units these individuals worked in, have a very different view of our company and of our service to customers. These former employees are simply not representative of the 13,000 professionals of our company.

Finally, I would ask you to remember the facts. These were not refuted by the program, even after they had done extensive investigation into each:

We will pay $3.6 billion in disability-related benefits this year, an amount that has increased each year for the past decade.
Only 2% of policyholders who filed a claim with our company last year were found not to be disabled, an amount consistent with prior experience.

Nearly one out of every four companies in America, including CBS, has entrusted UnumProvident to provide disability income protection insurance for its employees. Fortunately, our market share has increased further in 2002. We are successful because we listen to our customers and their advisors.

UnumProvident said in a separate media release:

UnumProvident Corporation, the nation’s largest disability insurance company, has been the victim of recent negative publicity surrounding claims handling practices. Behind the allegations are a handful of plaintiff’s attorneys and a few disgruntled former employees, all of whom have personal interests in painting a negative view of the industry-leading company.

Among the allegations being leveled at the company are accusations that there are “targets,” “quotas” or financial incentives set to close valid claims. “Nothing could be further from the truth,” said Tom Watjen, chief operating officer of the company. “Any business involves expectations of performance, and ours is no exception. However, to suggest that the natural stresses of our business involve pressure of any kind to close claims inappropriately is absolutely false.”

The company does make projections for claims, just as it makes for other areas of the business such as sales, underwriting or investments. These projections are necessary to manage the business and to provide quarterly reporting to the financial markets. “But,” Watjen added, “to represent these as “targets” or “quotas” for closing valid claims is simply wrong.”

UnumProvident will pay approximately $3.6 billion in claims this year alone, an amount that has increased every year for the past decade. And only 2% of the policyholders who filed a claim with the company last year were found not to be disabled, an amount consistent with prior experience. “The facts simply do not support allegations that we deny valid claims,” Watjen said.

Correspondence to the company has been overwhelmingly supportive, prompting the creation of new web pages at www.unumprovident.com/commitment to provide a way for people to share their experiences with the company.

“We had a great demand from people who know our company well and wanted to be heard,” said Watjen. “They are angry that we are being misrepresented in the media.”

Since 1997 the company has managed over 2,000,000 disability claims. Only a minute fraction of claims ever involve litigation. When cases resulted in a judgment last year, the courts ruled in favor of UnumProvident three out of every four times, further validating the company’s fair, objective claims process. In the past six weeks, the company has won three more significant victories in front of juries across the country in defense of its claims practices.

“We are committed, even with the verdicts of most juries in our favor, to being a learning company an organization that listens,” said J. Harold Chandler, chairman, president and chief executive officer of the company. “In that spirit, we will continue to make adjustments whenever appropriate to serve our customers even better.”

The company has taken issue with the 60 Minutes coverage, which it characterizes as inaccurate and not representative of company practices. “I was particularly disappointed in their description of the case of Dr. John Tedesco,” said Watjen. “We never denied a Parkinson’s claim on Dr. Tedesco. His original claim was for his back, which he injured trying to lift a golf cart. We paid the claim. He subsequently chose to close his practice and became ineligible for further benefits. On appeal, he alleged a diagnosis of Parkinson’s disease. We denied benefits based on the back claim and requested a new claim for Parkinson’s with the appropriate information. The records needed were not made fully available until after Dr. Tedesco’s lawsuit had been filed. Once we received the definitive diagnosis of Parkinson’s, we paid the claim.”

The other case 60 Minutes briefly referenced is still being appealed. In that situation, five different doctors, including the original treating physician, said there was no objective medical evidence to support disability.

60 Minutes also interviewed the Insurance Commissioner-Elect in California, who has not assumed office. UnumProvident believes that when he does and has access to the full facts of the company, he, too, will value the thorough, fair and objective way claims are managed.

“Our employees are remaining focused on our customers during this period,” said Chandler. “They provide a stark contrast to the few former employees depicted on 60 Minutes. Our 13,000 associates realize that we deal with people during very difficult times in their lives. Return to work services require specialized skills, and the results can have an enormously beneficial impact on individuals and families. We take this responsibility very seriously.”

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