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Insurer Tells Employees Suits Won't Affect Them

Sep 27, 2002 In an e-mail to 3,600 Portland-based employees this week, the head of UnumProvident Corp. denied allegations that the company has a policy of refusing to pay disability insurance claims.

J. Harold Chandler, UnumProvident's chairman, president and chief executive officer, also said that the company can respond to "any changes in the business and financial environment."

Lawsuits targeting the insurer's claims-handling process won't lead to job cuts in Portland, he said in the memo, which was obtained by the Portland Press Herald/Maine Sunday Telegram and confirmed as genuine by the company.

UnumProvident, which is under attack by a former medical director in Tennessee for how it handles claims, also received a clean bill of health this week from the Maine Bureau of Insurance. The bureau recently reviewed the company's procedures for such things as paying benefits and processing denials of coverage.

Chandler's e-mail came on Wednesday, just hours after a Press Herald story outlined a series of allegations made in a lawsuit by Dr. Patrick F. McSharry, a former medical director. He worked for UnumProvident at its headquarters in Chattanooga, Tenn.

McSharry alleges that UnumProvident routinely denies disability claims and then asks its medical staff to provide rationale for the denials. McSharry also said that non-medical UnumProvident personnel made medical decisions related to claims. Doctors received quotas for how many case files they had to review in a day, and were barred from ordering new tests or helping customers clarify their disability claims, McSharry contends in his lawsuit.

McSharry was fired in January because the company said he exhibited "disruptive behavior." His lawsuit said he was fired for refusing to take part in acts that violated federal insurance statutes.

The memo, from Chandler and Thomas Watjen, UnumProvident's senior vice president, denied the allegations and said the Press Herald article about them conveyed "a tone . . . which we believe does not reflect the company's position."

The company did not contend that the article itself was inaccurate, but said McSharry's allegations are false.

"Articles such as these go to the heart of the integrity of an organization like ours," Chandler wrote. "We also regret that articles such as this can impact your family and friends' impression of our company. I can assure you that our detractors will not take us off course."

Chandler then denied McSharry's claims and said, "Any employee who felt that they were put in a compromising position has the obligation to immediately bring that to one of us."

He said lawsuits are a fact of life for the company, and the one "brought by Dr. McSharry is no different."

"Please do not connect this event to our employment commitment in Portland, as indicated in the article," he said.

As the facts come out in McSharry's case, Chandler said, the doctor's value to other lawyers pursuing claims against UnumProvident will diminish. More than 60 lawyers contacted McSharry's lawyer, seeking to take the doctor's testimony, after he filed his lawsuit.

"There are a number of inaccuracies in his statements which we believe will emerge as this case proceeds; these will certainly impact his ability to be of assistance to those who are targeting our company," Chandler wrote.

Linnea Olsen, a spokeswoman for UnumProvident in Portland, said the article and McSharry's allegations upset some employees, prompting Chandler's e-mail.

Olsen said UnumProvident's complaint ratio remains below average, according to a recent report by the National Association of Insurance Commissioners. She also noted that the company paid out $3.6 billion in claims last year.

Maine's Bureau of Insurance recently completed a "market conduct" examination of Unum Life Insurance Co. of America, UnumProvident's Maine arm, and found "no red flags," according to the insurance superintendent.

Olsen said the division of UnumProvident handles all of the company's group disability coverage, the specialty of the former Unum Corp., which was founded and based in Maine.

Alessandro Iuppa, Maine's superintendent of insurance, said examiners apparently didn't see any high rate of denials. He admitted that the market conduct exam doesn't look specifically at that issue, and reviews only a small sample of claims.

He said the report, completed this week, focused mostly on how the company sells its products, and its record-keeping. Some of the areas studied included how quickly complaints are addressed, how the company notifies policy holders of claim acceptance or rejection, and how quickly checks are sent out.

"There was nothing surprising in it, nothing that certainly raised any concerns on my part," Iuppa said.

The only criticisms were a few concerns about record-keeping.

Iuppa said he was aware of the allegations raised by McSharry, but by law he can't even say whether his office is investigating an insurer.

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