A federal judge instructed a group of policyholders and UnumProvident Corp. to pursue settlement discussions in a dispute over the company’s handling of disability claims.
The suit, which seeks class-action status, was filed in November 2002 against UnumProvident, the largest disability insurer in the United States.
The plaintiffs claim Chattanooga, Tenn.-based UnumProvident gives bonuses and promotions to its employees based upon the numbers of claims they can deny.
U.S. District Judge Denise L. Cote in Manhattan, in an order issued earlier this week, said the parties should engage in settlement talks under the supervision of a magistrate judge. It’s not unusual for judges to prod parties toward settlement, especially in large or class-action cases.
A settlement conference has been scheduled for June 4 in front of U.S. Magistrate Judge Douglas Eaton.
Richard J. Quadrino, an attorney representing the plaintiffs, declined to comment. A UnumProvident lawyer and spokeswoman couldn’t immediately be reached.
The plaintiffs contend that UnumProvident saves money and increases it profits by canceling claims. The company has denied the allegations, calling them “outrageous.”
Lawyers for the plaintiffs have estimated that the case could encompass tens of thousands of workers and seek damages in the millions of dollars.
UnumProvident has already been accused of wrongfully terminating benefits in cases that have resulted in jury verdicts of millions of dollars.
The suit is the first to be brought as a class-action accusing UnumProvident of violating the Employee Retirement Income Security Act, or ERISA, the 1974 law that regulates employers’ welfare-benefit plans.