Dateline NBC on Sunday night in its lead story said its investigation found “startling charges against the nation’s biggest disabilty insuror”, Chattanooga-based UnumProvident.
The story included interviews of a number of former and present UnumProvident employees as well as Dr. Patrick McSharry, former UnumProvident medical director who has sued the company.
UnumProvident had been expecting the national TV story and issued a press release Oct. 2, saying it anticipated that “at least one national news organization is preparing to produce a negative news story on aspects of the companyâ€™s claims handling process which management believes to be incorrect in its implications.”
UnumProvident told Dateline it paid out $3.6 billion in disability claims this year and turns down only two percent of claims.
In the wake of the expected report, shares of UnumProvident quickly fell $2.01, or 9.5 percent, to $19.26 on the New York Stock Exchange.
The story cited the case of a salesman who wrecked near Albuquerque, N.M., and was rendered a near quadriplegic. The man said he had been paying $59 a month for UnumProvident disability coverage, and he began receiving checks. But he said that after two years, he received a letter saying his benefits were cut off.
He said, “I was scared and frightened. I said this has got to be a mistake.”
He later sued the firm, and his payments were eventually restarted. UnumProvident said it had a video of the man driving a van. The show said he is able to drive using a specially equipped van, but cannot work.
The Dateline story said the case of the salesman in New Mexico “may be part of something much larger.”
It charged there was a “companywide policy of selling out people it promised to help.”
The story showed interviews with three UnumProvident employees whose faces were not shown and whose voices were distorted.
One worker said there were incentives for closing out claims, saying, “You get to 30 and you get a pizza party.”
Dateline said the firm in 1993 was losing millions of dollars, then it got new management and “began making millions.” It says the company claims that is because of restructuring and smart business decisions.
The story interviewed Dr. William Feist, who said the firm had “no concern for the individual” and worked “to cut off high-dollar claims.”
He said, “It became a witchhunt, all looking for loopholes to close out claims.”
Dateline said cases in which there were “so-called subjective claims,” such as mental problems, were a focus.
It says 10 UnumProvident employees agreed to speak with the show as long as their names were not given. It says they ranged from “claims representatives all the way up to vice president.”
Dateline said some of those employees still work at the company, while some had quit and others had been fired.
Employees said there was “intense pressure to cut off claims” and said that terminated claims reached a record level under the policy.
It said goals were set for cutting off claims.
The story said it examined thousands of pages of documents and found a reference to having a goal of cutting $132 million in claims and a statement of “we need 18 more (cut) to meet projections.”
It said the company had “fire drills” in which there was “an intensive effort to find claims to close.”
The story also focused on Rosemary Wright, a teacher from Illinois with a fatal type of emphysema. It says she began receiving UnumProvident payments, then they were cut off.
She said, “I opened that letter and I couldn’t believe it. They didn’t just take the money away from me. They took my dignity.”
She also sued and got the payments resumed. She has kept the lawsuit going, saying she believes the ordeal robbed her of a year of her life.
Dr. McSharry was interviewed, and he said UnumProvident pressured doctors to write opinions supporting claim denial.
He said he was pressed into doing so on one or two occasions, but later refused to do more and was fired.
Dr. McSharry said when he declined to write the denials, he was reprimanded, and “I was told I’d fallen off the career path.”
He said, “I vowed I’d never do it again. I just hope I didn’t hurt somebody too badly.”
The story also featured an interview of a Georgia insurance commissioner, who said he has been investigating UnumProvident.
He said he expects to bring disciplinary charges “based on what we have already found.”
UnumProvident on its website has this statement of its payment policy:
UnumProvident paid $3.6 billion in disability benefits last year, helping hundreds of thousands of families.
Our company paid out over $3.6 billion in disability related benefits last year.
We provided financial benefits following injuries or illnesses to approximately 500,000 individuals and families last year.
To our knowledge, no other insurance company in North America, or the world, pays more in disability claims. Over the past decade, disability claim payments and reserves for future payment of claims have increased in each year.
To meet our policyholder obligations, our Company maintains a sound balance sheet, including over $15 billion in statutory disability reserves, to meet our future obligations.
Since January 1, 2000, UnumProvident has paid $9.447 million
in disability claims to its customers.1
Senior Rehabilitation Consultant UnumProvident commits significant resources to ensure fair and consistent claim practices.
Within the claim operation, our Company employs approximately 100 physicians and 350 nurse case managers and vocational rehabilitation specialists.
In addition, this operation draws upon the approximately 1,000 nurses and vocational rehabilitation specialists of GENEX, a wholly owned subsidiary, for field-based case management and rehabilitation services.
We have consistently increased our investment in medically related services. In 2002, the Company will spend $60 million for such resources – primarily physicians, nurses, and rehabilitation specialists.
In order to better leverage this base of knowledge and resources, the claims management process includes an “impairment based” approach, with separate units handling such medical specialties as cancer, cardiac, maternity, orthopedic, psychiatric and general medical claims.
Our clinically rich claims management process approach is designed to develop the highest level of expertise in fairly evaluating claims, paying legitimate claims, and helping our insureds return to work.
To our knowledge, our Company has invested more in clinical resources to ensure fairness, accuracy, and consistency on behalf of our customers than any other disability provider.
J. Harold Chandler
Chairman, President & CEO
UnumProvident must be absolutely ethical to succeed in our specialized business.
Brokers and consultants, over 145,000 of them have recommended us to their customers. They recommend UnumProvident because of our reputation for fairness and our specialized expertise, making our Company the industry leader in disability income protection, with coverage for approximately one out of every four companies in North America.2
After due diligence on our Company and others, more employers including 22% of the Fortune 500 choose UnumProvident to help their employees protect themselves financially from disability than any other provider. On the advice of their broker or consultant, over 40% of individual purchasers of disability insurance have chosen our Company.
Disability is UnumProvident’s primary business, so integrity in claims paying and helping return to work is essential to the Company’s long-term economic success.
The facts prove UnumProvident consistently does the right thing for customers
Of the approximate 400,000 new disability claims filed with the Company in 2001, approximately 90% were paid. Of the remainder, approximately one-half were no longer claiming benefits when payments would have begun. Less than 2 percent were determined not to be disabled.
Of the disability claims closed in 2001, approximately 3 percent elected to appeal the decision indicating disagreement with our decision. Less than four-tenths of 1% of all of our new disability claims chose litigation to resolve differences with the Company.
For those few claims that resulted in a judgment last year, the courts ruled in favor of UnumProvident three out of every four times, further validating the accuracy of the process and appropriateness of the Company’s decision making.
Judgments against our Company represented one one hundredth of one percent of new claims.
The complaint ratio, as measured by the National Association of Insurance Commissioners, for our primary insurance entities in their primary lines of business, is below the national median (www.naic.org/servlet/cis.main).
Our business requires a determination of whether someone is disabled. While in most cases that determination is clear, in some cases it is not, and even reasonable people may disagree. Our claim decisions are made within the context of a sound, fair process that we have worked hard to build. Still, we can and do make mistakes. And when we become aware of an error on our part, we work urgently to correct the situation.
As the current numbers demonstrate and over a century of history supports, UnumProvident and its insurance entities have established a reputation for fairness and of serving our customers well.
1For illustration purposes only. This counter is based on the actual UnumProvident disability claim payments for calendar years 2000 and 2001 added to a projection based on an average annual rate of $3.6 billion for calendar year 2002.