http://www.yourlawyer.com/topics/overview/unum_provident_fraud Sat, 21 Nov 2009 03:26:27 -0800 pixel-app en http://www.yourlawyer.com/articles/read/11857 Sat, 10 Jun 2006 00:00:00 -0700 http://www.yourlawyer.com/articles/read/11857
Louis Garzone, of Louis Garzone Funeral Home in Kensington, and his brother, Gerald Garzone, of Garzone Funeral Home in Juniata Park, closed their funeral homes effective Wednesday, said Basil Merenda, commissioner of the department's Bureau of Professional and Occupational Affairs.

Over an 18-month period before September 2005, the two "may have permitted the removal of certain body parts, including bone and tissue from bodies [destined] to be buried or cremated," according to agreements they signed. Neither admitted wrongdoing, the State Department said.

Louis Garzone's funeral home has been linked to illegally sales of body parts and entire bodies to now-closed Biomedical Tissue Services of Fort Lee, N.J., the Philadelphia Daily News has reported. Merenda would not comment on whether Gerald Garzone's funeral home also allegedly sold body parts to Biomedical Tissue Services, saying he did not want to compromise the Philadelphia District Attorney's Office's criminal investigation of the two brothers.

A spokeswoman for the District Attorney's Office could not be reached last night. Messages left for the Garzones and their attorneys were not returned late yesterday. A crematorium co-owned by the brothers, Liberty Cremation Inc., near the Kensington funeral home, was not affected, Merenda said.]]> http://www.yourlawyer.com/articles/read/10878 Sat, 29 Oct 2005 00:00:00 -0700 http://www.yourlawyer.com/articles/read/10878
The lawsuit filed Friday in Superior Court by policyholders seeks class-action status. It comes less than a month after the company was ordered to pay an $8 million fine to settle similar charges against the company by state insurance regulators.

The lawsuit seeks billions of dollars in premium refunds and damages for denied claims. The suit also names UnumProvident subsidiary Paul Revere Life Insurance Co.

The lead plaintiff in the case is former Berkeley chiropractor Joan Hangarter, who won a unanimous $7.7 million federal jury award after she became disabled by tendinitis and Paul Revere denied her benefits.

An attorney said he expects the settlement with state officials to boost his case against the Chattanooga, Tenn.-based insurer, which settled similar allegations with 48 other states last year.

But UnumProvident spokesman Mary Clarke Guenther said the previous California settlement should foreclose the new claims.
]]> http://www.yourlawyer.com/articles/read/9653 Mon, 25 Apr 2005 00:00:00 -0700 http://www.yourlawyer.com/articles/read/9653
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.]]> http://www.yourlawyer.com/articles/read/9173 Mon, 03 Jan 2005 00:00:00 -0800 http://www.yourlawyer.com/articles/read/9173
The Chancery Court action was brought by Patrick Leonard.

The 49-page complaint is filed against former officer Harold Chandler and current officers Thomas R. Watjen and Robert C. Greving.

It also names directors Hugh O. Maclellan, A.S. "Pat" MacMillan, William Pollard, Ronald Goldberry, Lawrence Pugh, John Rowe, Jon Fossel, Michael Caufield, Thomas Kinser, William Ryan, William Armstrong, George Mitchell, Cynthia Montgomery, James Moody Jr., Steven Reinemund, Burton Sorensen and Lois Rice.

The suit says the firm concealed illegal contingent commissions paid to brokers, while "subjecting the company to enormous fines and penalties totaling potentially tens if not hundreds of millions of dollars."

It says during the relevant period that Mr. Watjen was paid $2,003,648 in 1999, $1,106,800 in 2000, $4,237,085 in 2001, $1,049,140 in 2002 and $2,534,189 in 2003. He sold 47,137 shares of stock for $1,247,245.

It says Mr. Chandler was paid $5,853,648 in 1999, $2,306,800 in 2000, $2,552,266 in 2001, $1,107,234 in 2002 and $17,630,242 when he left UnumProvident. He was granted options to buy 500,000, 675,000, 550,000 and 550,000 shares of stock.

The suit says Mr. Greving, the executive vice president since May 2003 and chief financial officer since May 2002, was paid $509,548 in 2001, $379,649 in 2002 and $495,413 in 2003. During the period, he sold 2,700 shares of stock for $78,698.

It says during the period, Mr. Maclellan sold 814,000 shares of stock for $12,770,773.

The suit says Mr. Pugh sold 2,978 shares for $43,359.

The suit claims that during the period UnumProvident financial statements were false and misleading and violated generally accepted accounting practices.

The suit says UnumProvident directors receive annual retainers of $80,000. Chairs of standing committees get an additional $7,500. Directors receive $2,000 for each special meeting and $500 for each conference call meeting and committee meetings.

It says Mr. Pugh and Mr. Pollard "as the co-chairs of the office of the chairman of the board, receive an additional quarterly retainer of $50,000."

The suit says as of March 26, 2004, several of the defendants owned millions of UnumProvident shares. It says Mr. Goldberry had 19,547, Mr. Maclellan had 12,217,084, Mr. Pollard had 52,895, Mr. Pugh had 40,488, Mr. Rowe had 8,500 and Mr. Watjen had 476,103.]]> http://www.yourlawyer.com/articles/read/8888 Fri, 19 Nov 2004 00:00:00 -0800 http://www.yourlawyer.com/articles/read/8888
The settlement, which includes a $15 million fine, stems from concerns that three UnumProvident subsidiaries unfairly evaluated the medical conditions of people making a disability claim and relied too heavily on in-house medical staff to deny, terminate or reduce insurance benefits.

The probe, which was joined by all 50 states and the District of Columbia, also found that UnumProvident failed to evaluate the ''totality'' of a claimant's medical condition and placed an ''inappropriate burden'' on them to justify their eligibility to collect benefits.

Chattanooga-based Unum-Provident is the largest provider of group and individual disability insurance in North America, providing coverage to more than 25 million people. The subsidiaries involved in the settlement are Unum Life Insurance Company of America, The Paul Revere Life Insurance Company and Provident Life and Accident Insurance Company.

Under terms of the settlement, UnumProvident will send written offers to reassess an estimated 215,000 disability claims denied or terminated nationwide since Jan. 1, 2000. The company also will reassess upon request any claims similarly handled between 1997 through 1999.

UnumProvident also agreed to enhance its claims handling procedures and implement new corporate governance measures to provide additional oversight of those operations. The company said it anticipates recording a $127 million loss to implement the changes, pay the fine and set aside reserves for claims that are reassessed.

Questions about UnumProvident's handling of claims have been raised in hundreds of private lawsuits filed by policyholders who allege their benefits were unfairly denied or terminated. UnumProvident has denied any wrongdoing in those cases and noted yesterday that the states' examination did not find that the company violated any laws or regulations.

''UnumProvident is committed to handling customers' claims in a fair, thorough and objective manner,'' UnumProvident President and Chief Executive Officer Thomas Watjen said in a statement. ''We have committed significant resources over a number of years to build a sound claims process.''

UnumProvident said it paid $4.1 billion in disability claims in 2003, more than double any other insurer.

Tennessee Commissioner of Commerce and Insurance Paula Flowers said she did not believe UnumProvident intentionally sought to unfairly deny customers' disability claims, an area of insurance she said is difficult to operate within.

''This is a complex process for these claims to be reviewed compared to something like auto insurance,'' Flowers said. ''In this instance, a claimant over a period of time may submit boxes and boxes of medical information. It's very labor-intensive.''

Complex or not, Flowers said, UnumProvident's way of handling claims was flawed.

''The concerns we saw were at a level we felt the system may not have treated claimants fairly,'' Flowers said.

Flowers could not provide an estimate of how many Tennesseans might be eligible to have their claims reassessed.

Customers can also opt to pursue their own cases via the courts.

Tennessee, Maine and Massachusetts had lead roles in the multi-state case because the Provident, Unum and Paul Revere are domiciled in those states, respectively. Tennessee launched a so-called market conduct examination of UnumProvident in late 2002. All 50 states and the District of Columbia eventually joined the probe and can participate in the settlement.

The settlement is contingent on participation from two-thirds of the states. Flowers said Tennessee's share of the $15 million fine is likely to be about $600,000.]]> http://www.yourlawyer.com/articles/read/8881 Thu, 18 Nov 2004 00:00:00 -0800 http://www.yourlawyer.com/articles/read/8881
The company estimates the settlement will cost it $100 million in restitution to policyholders and in enacting required changes.

The company, based in Chattanooga, Tenn., and five subsidiaries had been accused of wrongly denying claims for long-term disability policies.

The subsidiaries covered by the settlement are the Unum Life Insurance Company of America, the Paul Revere Life Insurance Company, the Provident Life and Casualty Insurance Company, Provident Life and Accident Insurance Company and the First Unum Life Insurance Company, said Eliot Spitzer, New York attorney general.

Benefits were inappropriately denied in individual and group long-term disability insurance policies, said Gregory Serio, Insurance Department superintendent.

]]> http://www.yourlawyer.com/articles/read/8678 Wed, 20 Oct 2004 00:00:00 -0700 http://www.yourlawyer.com/articles/read/8678
Insurance regulators in at least three states have joined Spitzer's probe, which is rapidly expanding to include all lines of insurance and all types of businesses, including consultants who advise buyers of insurance.

Spitzer contends that anti-competitive and even criminal behavior in the industry has helped inflate insurance rates paid by companies and individuals.

Last week, the attorney general filed a civil lawsuit against Marsh & McLennan, charging that the nation's largest insurance broker duped its customers by faking and rigging bids for insurance contracts and favoring insurers that paid higher incentive commissions. Insurance giants American International Group, Hartford Financial, Ace and a division of Germany's Munich Re were among those implicated in the scheme.

The scandal shows no signs of abating. Aetna, Cigna and UnumProvident, the largest provider of group and individual disability income protection insurance, all acknowledged Tuesday receiving Spitzer subpoenas the best evidence yet that his inquiry is moving beyond property and casualty insurers and brokers, and now also covers life and medical insurers.

Also summoned by Spitzer, MetLife, the largest life insurer, acknowledged Tuesday that it paid brokers $25 million in finders fees last year to attract new clients but never gave a "fictitious" quote when selling insurance.

Marsh & McLennan saw its share price hit again Tuesday the stock is down 48% since the scandal broke but has still not rescheduled a conference call with investors originally set for Monday.

Marsh & McLennan "Chairman Jeffrey Greenberg's reluctance to face the 'what did you know and when did you know it' line of grilling from aggrieved analysts is disappointing," Gimme Credit analyst Kathy Shanley wrote clients. "We see no evidence to suggest the situation has bottomed out." Marsh had no comment.

At the heart of the investigation are fees offered to brokers by insurers - so-called contingent payments - for insurance business, and fictitious bids made at the expense of corporate and municipal clients. Spitzer's office is also scrutinizing tying, in which brokers require that insurers buy reinsurance in exchange for receiving better primary insurance contracts.

The probe is quickly becoming national in scope. Insurance regulators in California, Pennsylvania and Connecticut said Tuesday they were examining allegations raised by Spitzer's lawsuit.

John Garamendi, California's insurance commissioner, wants to outlaw incentive commissions and intends ]]> http://www.yourlawyer.com/articles/read/8679 Tue, 19 Oct 2004 00:00:00 -0700 http://www.yourlawyer.com/articles/read/8679
Shares of UnumProvident sank on the news, sliding 10.6 percent, or $1.43, to $12.09 on nearly three times its average volume in recent New York Stock Exchange trading.

UnumProvident said it will continue to fully cooperate with the inquiry and plans to review its broker compensation structure, which is the focus of Attorney General Eliot Spitzer's sweeping crackdown on the insurance industry.

"In addition to promoting full disclosure, we will further review our compensation policies and procedures to be sure that we appropriately compensate our brokers but do not create any actual or perceived conflict between the broker and the customer," president and chief executive Thomas R. Watjen said in a statement. "As this review is underway, UnumProvident will not enter into any new compensation agreements until this review is completed."

In June, UnumProvident was among a number of insurance companies to receive subpoenas from Spitzer's office for information regarding broker compensation and commission rates.

Spitzer launched his attack last week by suing insurance giant Marsh & McLennan Cos., alleging the firm paid out excessive incentive fees to brokers who steered profitable clients its way. The probe has since extended to several other major insurance firms. ]]> http://www.yourlawyer.com/articles/read/8372 Sat, 07 Aug 2004 00:00:00 -0700 http://www.yourlawyer.com/articles/read/8372
In June of this year, UnumProvident received a subpoena from Spitzer's office requesting documents and information relating to compensation and commissions paid by the company and its subsidiaries to insurance brokers.

Officials from Spitzer's office declined to comment, and said that subpoenas aren't open to the public. A UnumProvident spokesman didn't return a call for comment.

UnumProvident said in the filing that it's cooperating with Spitzer's office and is in the process of gathering and providing information in response to both requests. The company, which is based in Chattanooga, Tenn., is the latest of at least nine insurance companies to acknowledge having been subpoenaed by Spitzer's office about compensation and commissions paid to brokers. Spitzer is investigating whether there is a conflict of interest in insurers paying brokers who steer clients to the insurers, Dow Jones reported Thursday.

Other companies that have reported receiving subpoenas connected to Spitzer's probe include Aon Corp., Marsh & McLennan Cos., Willis Group Holdings Ltd., Chubb Corp., Cigna Corp., Aetna Inc., Hartford Financial Services Group Inc. and MetLife Inc.

UnumProvident drew the attention of Spitzer's office last year, as well. According to the UnumProvident's quarterly filing, it received a letter in September from the New York State Attorney General's office indicating that it was reviewing the disability claims-handling procedures of the company and its insurance subsidiaries.

Insurance officials in Maine, Massachusetts and Tennessee are also investigating claims handling by UnumProvident Corp. The company has been fined by regulators and sued by policyholders and investors. The three states each regulate parts of UnumProvident's domestic business, and rather than have numerous investigators auditing how claims are handled, regulators will coordinate their findings into a single report to the National Association of Insurance Commissioners. The investigation began last summer, and is expected to be concluded this fall.

UnumProvident officials have said they are confident the state investigations will validate the insurer's performance. UnumProvident says it has about 30 percent of the nation's disability insurance business.

The company was fined $1 million in 2003 by Georgia insurance regulators after an investigation of its claims handling. Georgia State Insurance Commissioner John Oxendine said UnumProvident had a corporate mentality of "looking for every technical legal way to avoid paying a claim."]]> http://www.yourlawyer.com/articles/read/7979 Sat, 17 Apr 2004 00:00:00 -0700 http://www.yourlawyer.com/articles/read/7979
Former Unum "customer care specialist" Linda Nee claims that she was fired 18 months ago after bringing reports of wrongdoing to the attention of her supervisors. She is joined in the suit by California consumer advocate John Metz.

They are believed to be the first to sue an insurance company under a whistle-blower-type law in the state's insurance code. Typically, insurance companies use the law to sue over fraudulent claims.

Although insurance companies have sued to recover money paid to fraud mills under the statute, "recently, cases started being brought against insurers," said Gary Cohen, general counsel for the California insurance commissioner's office.

Nee's suit alleges that Unum, a Chattanooga, Tenn.-based insurance conglomerate with a regional office in Glendale, engaged in a pattern of delaying, denying and terminating benefits without regard to the merits of the claims.

In order to meet monthly or quarterly financial targets, the suit alleges, Unum convened periodic "round-table" claims review meetings with claims handlers, doctors, nurses and other consultants to improperly deny benefits. The suit also accuses the company of delaying claims determinations in order to manipulate the setting of reserves and statements of the insurer's financial condition.

Unum had not yet been served with the suit, which was filed in July but not unsealed until Thursday in Los Angeles County Superior Court.

Company executives Friday denied the nature of its allegations. They also said Unum's record contradicted allegations that it engaged in a pattern of improper benefit denials.

Glenn Felton, a senior vice president and deputy general counsel for Unum, said Nee was fired for poor performance after repeated warnings. He added that Nee withdrew her claims filed with the U.S. Labor Department and the state of Maine that alleged she was fired in retaliation for reporting alleged misconduct at Unum.

The company has been hit with a series of multimillion-dollar awards by juries in California and other states in suits alleging that the company cheated policyholders out of disability benefits. Insurance commissioners across the country, including in California, are investigating similar complaints. Allegations in Nee's suit are similar to other cases filed against Unum.

Nee's suit was filed under seal, as required by law, to give the state insurance commissioner an opportunity to review the case and decide whether to prosecute it.

Ultimately, state Insurance Commissioner John Garamendi passed on the Unum suit, but not because of the merits of the case, Cohen said.

"We have not yet intervened in any of these types of cases," Cohen said. "We're looking at them."

Another reason Garamendi passed on the case, Cohen said, is that the Department of Insurance was well along with its own investigation into complaints about Unum's claims handling.

Unum is under fire in several states for allegedly taking advantage of a federal law that exempts employee benefits, such as disability insurance, from state regulation. Insurance lawyers say they believe that Unum has exploited the federal shield in its handling of employer-provided long-term disability coverage, and that the company has routinely cut off employee benefits to workers with heart disease, AIDS, Meniere's syndrome, Crohn's disease and other disabilities.

Although federal law prevents Garamendi from investigating disputes that involved claims for disability benefits obtained through employers, he pledged to investigate Unum's claims handling in policies bought by self-employed workers.

The Insurance Department has completed its Unum investigation, Cohen said, and is preparing to share its findings with the company and to take action, which could include imposing fines and other remedies.

"I am very interested, and the commissioner is very interested, in coming up with a resolution that really will prevent any problems we found from occurring in the future," Cohen said.]]> http://www.yourlawyer.com/articles/read/6249 Tue, 08 Jul 2003 00:00:00 -0700 http://www.yourlawyer.com/articles/read/6249
The plaintiffs in each of the suits charge that the insurance company routinely refused to pay disability claims, forcing policyholders to go to court and appeal before they could receive a payment.

UnumProvident tried to be dismissed as a defendant in the cases by arguing that it was simply the parent company and not directly responsible for the decisions. But those requests were denied by U.S. Magistrate Judge Margaret Kravchuk in Portland.

UnumProvident has been fined and investigated in several states for what critics allege is a practice of avoiding payment of medical claims. Hundreds of individuals have sued the company in courts all over the country.]]> http://www.yourlawyer.com/articles/read/6170 Fri, 20 Jun 2003 00:00:00 -0700 http://www.yourlawyer.com/articles/read/6170
The company, one of Portland's biggest private employers, has been fined by regulators and sued by policyholders and investors. It has major business operations in the three states.

"What we're trying to accomplish here is a coordinated approach," said Eric Cioppa, deputy superintendent of the Maine Bureau of Insurance. "Hopefully this is good for everyone involved, in that we can go in and find out what's going on in an efficient manner."

The states each regulate parts of UnumProvident's domestic business, said Cioppa. Rather than have numerous investigators auditing how claims are handled, he said, regulators will coordinate their findings into a single report to the National Association of Insurance Commissioners.

The insurer welcomed the effort, said Linnea Olsen, UnumProvident spokeswoman.

"We are very pleased that they're doing this," she said. "From our standpoint, we have nothing to hide and we would prefer that they're doing it this way. It's a more efficient way to do exams."

Olsen said investigators visit UnumProvident frequently because it's the responsibility of state regulators to audit insurers every few years or so. After much-publicized claims were made against UnumProvident last year, Olsen said, there was increased interest in doing audits.

"State regulators felt it was their responsibility to see if there's any merit to these allegations," she said. "The three states have decided it's more efficient to do it this way."

Tom White, UnumProvident's vice president of corporate relations, said company officials are confident the investigations will validate the insurer's performance. UnumProvident says it has about 30 percent of the nation's disability insurance business.

The company was fined $1 million in March by Georgia insurance regulators after an investigation of its claims handling. Georgia State Insurance Commissioner John Oxendine said UnumProvident had a corporate mentality of "looking for every technical legal way to avoid paying a claim."

Chris Goetcheus, a spokesman for the Massachusetts Division of Insurance, said that agency started its review of UnumProvident early this year. "It's a work in progress," he said.

Paula Wade, a spokeswoman for the Tennessee Department of Commerce and Insurance, said Tennessee is looking at the company "in the context of what other folks have found. We're looking at the potential patterns of conduct."

She said the states plan a unified report "fairly soon."

Hundreds of lawsuits have been filed by policyholders who contend the company routinely denies claims and requires its medical employees to support the denials.

UnumProvident also has been hit with lawsuits from shareholders who claim it made misleading statements about its finances.

The company is searching for a successor to chief executive J. Harold Chandler, who was ousted in March. White said the search is continuing.

UnumProvident and its subsidiaries have about 13,000 employees, including about 3,600 in Portland, about 3,000 in Chattanooga and about 800 in Worcester, Mass.]]> http://www.yourlawyer.com/articles/read/5949 Tue, 20 May 2003 00:00:00 -0700 http://www.yourlawyer.com/articles/read/5949
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. ]]> http://www.yourlawyer.com/articles/read/5722 Wed, 30 Apr 2003 00:00:00 -0700 http://www.yourlawyer.com/articles/read/5722
Judge Denise Cote on Tuesday issued a 7-page memorandum that keeps alive the claim by a group of workers who allege the firm had a scheme to deny disability benefits. UnumProvident has denied the charge.

The judge also declined to remove from the case J. Harold Chandler, who was recently ousted as UnumProvident CEO.

The suit seeks class-action status.

It said UnumProvident at one time gave bonuses and promotions to workers who were aggressive in denying claims.

Judge Cote wrote that "these plaintiffs have standing to press these claims."

The judge said the workers "are not seeking benefits. They are seeking reforms to (UnumProvident's) disability claim process."

The action is brought on claims dating back to 1999 when Unum and Provident merged.

Attorney Richard J. Quadrino said the case "seeks to reform the manner in which the company conducts its business, so that claims will be decided on the merit, rather than in accordance with a monthly financial target," Quadrino said.

Regarding defendant Chandler, the judge said a corporate office is liable "for any breaches of fiduciary duty which he personally commits." ]]> http://www.yourlawyer.com/articles/read/5274 Thu, 03 Apr 2003 00:00:00 -0800 http://www.yourlawyer.com/articles/read/5274
The jury ordered the award, including $79 million in punitive damages, on Wednesday after concluding that two UnumProvident subsidiaries and another insurer, General American, acted in bad faith in its handling of a claim by Scottsdale, Ariz. cardiologist Joanne Ceimo.

The verdict is the largest award so far in an onslaught of lawsuits that accuse Chattanooga, Tenn.-based UnumProvident of brushing aside legitimate injury claims as part of a long-running campaign to boost profits.

Evidence from previous policyholder cases against UnumProvident, the nation's largest disability insurer, helped pave the way for the latest verdict, said Steve Dawson, Ceimo's attorney.

"As more of this story sees the light of the day, there is no way these practices will be condoned," Dawson said.

UnumProvident plans to appeal the verdict, said spokesman Thomas White. The company believes the jury was prejudiced by General American documents that had nothing to do with the way UnumProvident's subsidiaries, Paul Revere and Provident Life, processed claims.

General American sold the policy to Ceimo and then hired the UnumProvident subsidiaries to manage claims. The companies later worked out an arrangement that required Paul Revere to cover 80 percent of the claims with General American paying the remainder, Dawson said.

Under her policy, Ceimo was entitled to a monthly benefit of $12,000 for the rest of her life if she became permanently disabled. She had to curtail her activities as a cardiologist after a neck injury caused her hand to shake, preventing her from performing delicate procedures such as angioplasty.

The jury verdict continues a long stretch of adversity for UnumProvident, including hundreds of policyholder lawsuits that have attacked the company and prodded insurance regulators in several states to investigate its practices.

Georgia fined UnumProvident $1 million last month for its claims handling practices.

UnumProvident raised new worries last week by warning that it will restate its earnings for the past three years to resolve Securities and Exchange Commission concerns about its investment disclosures.

The headaches contributed to the firing of UnumProvident's chief executive, Harold Chandler, earlier this week.

The Arizona verdict followed a bit of good news for UnumProvident from California. In a decision released earlier this week, a Marin County Superior County judge reduced a $31.7 million verdict against UnumProvident to $6.1 million.

In her decision to lower the amount due an injured eye surgeon, Judge Lynn O'Malley Taylor still scolded UnumProvident for setting up a system that appears to put more emphasis on company profits than policyholder claims.

"There is clear and convincing evidence that (UnumProvident's) bad faith was part of a conscious course of conduct firmly grounded in established company policy," O'Malley Taylor wrote.

UnumProvident hasn't decided whether it will pursue further appeals of that case, White said.

Randall Chapman, the Novato eye surgeon who sued after UnumProvident rejected his claim, plans to seek a new trial because the reduced damages ordered by the judge "represents a license to steal," said Arnold Levinson, Chapman's attorney. "If that is the highest penalty the company has to pay, then (management) will just keep doing what they have been doing."

If the verdict in her case withstands appeal, Ceimo plans to donate half the amount to students who need economic aid. "This was never about the money," she said. "It was always about stopping these insurance companies from intentionally hurting people." ]]> http://www.yourlawyer.com/articles/read/5176 Tue, 01 Apr 2003 00:00:00 -0800 http://www.yourlawyer.com/articles/read/5176
"By this action, the board is reaffirming its commitment to further strengthen the company's financial position, improve the consistency of its performance, and restore investor confidence," the company said in a statement.

Shares of the Chattanooga-based company rose 25 to close at $9.80 on the New York Stock Exchange.

Chandler's firing comes a week after UnumProvident said it would reduce earnings by $29.1 million for 2000, 2001 and 2002 to resolve concerns of the Securities and Exchange Commission related to its investment disclosures.

But the company continues to face hundreds of lawsuits from policy holders who charge their claims were routinely denied, and Tennessee is investigating the company's claims handling.

San Francisco attorney Ray Bourhis, who has won judgments against UnumProvident, thinks more changes will be needed.

"To make Harold Chandler into the fall guy and pay him off with a fat check so he doesn't turn against the company and create problems for people above him, including on the board of directors, isn't going to accomplish anything," Bourhis said.

Chandler will receive severance of approximately $8.5 million and pension benefits of approximately $8.5 million.

The company said these charges are expected to reduce its first quarter net income by approximately $9.8 million, or 4 cents per share.

Chandler could not be reached for comment Monday. A personal telephone number could not be found, and company communications officials said they could not provide a number for him.

The company's board appointed Thomas R. Watjen, currently vice chairman and COO, as interim president and CEO.

Watjen said in a statement, "While there's no question we face a challenging business environment, UnumProvident is a strong organization with a sound business model, supported by $3.4 billion in capital."

Outside directors C. William Pollard and Lawrence R. Pugh will serve as co-chairmen in a newly created Office of the Chairman of the Board, which will oversee activities between the board and senior management.

Last week, the company restated financial information, boosting previously reported net income for 2002 by $34.2 million and decreasing it by $38 million in 2001 and $25.3 million in 2000. Over that period, the company had reported net income of about $1.51 billion.

The change added 14 cents per share for 2002, following reductions of 16 cents per share in 2001 and 10 cents per share in 2000.

Two weeks ago, UnumProvident was fined $1 million by Georgia insurance officials in response to complaints about claims handling. Georgia State Insurance Commissioner John Oxendine said his agency's investigation showed the company had a corporate mentality of "looking for every technical legal way to avoid paying a claim."

Hundreds of policyholders have sued UnumProvident, contending the company routinely denies claims and requires its medical employees to support the denials.

In January, a California jury awarded $31.7 million to an eye surgeon who accused UnumProvident of denying benefits as part of a management scheme to boost profits.

F. Dean Copeland, currently senior executive vice president and general counsel, will assume the additional position of chief administrative officer.

UnumProvident, which claims about 30 percent of the nation's disability insurance business, has about 3,500 employees in Portland, Maine, and about 3,000 in Chattanooga among 13,000 overall. ]]> http://www.yourlawyer.com/articles/read/5022 Thu, 20 Mar 2003 00:00:00 -0800 http://www.yourlawyer.com/articles/read/5022
The fine is the largest ever levied against a company by Georgia, insurance officials said Wednesday.

Insurance Commissioner John Oxendine said in a statement that his agencys investigation showed that Chattanooga-based UnumProvident had a corporate mentality of "looking for every technical legal way to avoid paying a claim."

In addition to levying the fine, the state is putting four UnumProvident subsidiaries on probation for two years. The four are Unum Life Insurance Co. of America, the Paul Revere Life Insurance Co., Provident Life and Accident Insurance Co. and Provident Life and Casualty Co.

UnumProvident spokesman Tom White issued a statement describing the penalty as "an agreement with the Georgia Department of Insurance relating to that states ongoing market conduct examination."

"Commissioner John Oxendine and his team were very helpful in identifying areas in which we can better serve the citizens of Georgia," said Ralph Mohney, the companys senior vice president of Return to Work Services-Development.

The company, which claims about 30 percent of the nations disability insurance business, has said it processes 400,000 claims annually, distributing $3.6 billion in the process, and that the vast majority of policyholders are pleased with their treatment. The company insures about 25 million people.

Tennessee insurance officials who have said they are investigating complaints about UnumProvident could not be reached immediately for comment.

Hundreds of lawsuits have been filed by policyholders who contend the company routinely denies claims and requires its medical employees to support the denials. In January, a California jury awarded $31.7 million to an eye surgeon who accused UnumProvident of cutting off his benefits as part of a management scheme to boost profits.

In February, UnumProvident announced it had recorded investment losses of $93 million and was responding to a Securities and Exchange Commission investigation for information relating to its investment disclosures. Since then, some shareholders have gone to court claiming the insurer made misleading statements and improperly denied some claims to artificially inflate its stock price.

About 3,500 people work for UnumProvident in Portland, Maine, where the former Unum Corp. was founded. UnumProvident was created by the 1999 merger of the Unum Corp. and The Provident Companies, based in Chattanooga, where there are about 3,000 workers.

The companys statement said the Georgia investigation "covered a time immediately prior to and following the 1999 merger of Unum Corporation and Provident Companies, Inc."

"When companies merge, disruptions in service can sometimes occur," Mohney said. ]]> http://www.yourlawyer.com/articles/read/5000 Wed, 19 Mar 2003 00:00:00 -0800 http://www.yourlawyer.com/articles/read/5000
The fine comes as Unum faces investigations in at least two other states, California and Florida, and as it appeals two multimillion-dollar jury verdicts in cases that allege Unum targets policies for cancellation.

Georgia Insurance Commissioner John Oxendine says his order aims to change corporate policy.

''They were systematically looking for any possible shred of data or excuse to deny a policy,'' Oxendine said. ''They are going to be required to maintain a certain level of fundamental fairness.''

The order says Unum must not allow lesser-trained claims processors to overrule decisions made by more highly trained professionals including doctors, do a better job of telling policyholders of appeal rights when a claim is denied, and improve record keeping.

The Chattanooga, Tenn., company says it does not have a policy of targeting certain types of claims for cancellation.

Unum says it agreed to the settlement and is working cooperatively with Oxendine's office. In a statement Tuesday, Unum said it expects the changes required by Oxendine will make it a ''more service-oriented company.''

During the probation period, Oxendine says, his office will continue to investigate Unum's claims-handling process, including quarterly reviews of complaints and denied claims.

The order affects Unum, which includes Unum Life Insurance Co. of America, The Paul Revere Life Insurance Co., Provident Life and Accident Insurance Co., and Provident Life and Casualty Co. Unum has 25 million policyholders nationwide.]]> http://www.yourlawyer.com/articles/read/5011 Wed, 19 Mar 2003 00:00:00 -0800 http://www.yourlawyer.com/articles/read/5011
Glenn Allen, spokesman for Georgia's insurance commissioner, said Wednesday that the fine is the largest the agency has ever levied against a company.

Insurance Commissioner John Oxendine said in a statement that the department's investigation showed Chattanooga-based UnumProvident had a corporate mentality of "looking for every technical legal way to avoid paying a claim."

In addition to the fine, the state is putting on probation for two years four UnumProvident subsidiaries: Unum Life Insurance Co. of America, the Paul Revere Life Insurance Co., Provident Life and Accident Insurance Co. and Provident Life and Casualty Co.

UnumProvident spokesman Tom White issued a statement describing the penalty as "an agreement with the Georgia Department of Insurance relating to that state's ongoing market conduct examination."

"Commissioner John Oxendine and his team were very helpful in identifying areas in which we can better serve the citizens of Georgia," said Ralph Mohney, the company's senior vice president of Return to Work Services-Development.

The company, which claims about 30 percent of the nation's disability insurance business, has said it processes 400,000 claims annually, distributing $3.6 billion in the process, and that the vast majority of policyholders are pleased with their treatment. The company insures about 25 million people.

Tennessee insurance officials who have said they are investigating complaints about UnumProvident could not be reached immediately for comment.

Hundreds of lawsuits have been filed by policyholders who contend the company routinely denies claims and requires its medical employees to support the denials. In January, a California jury awarded $31.7 million to an eye surgeon who accused UnumProvident of cutting off his benefits as part of a management scheme to boost profits.

In February, UnumProvident announced it had recorded investment losses of $93 million and was responding to a Securities and Exchange Commission investigation for information relating to its investment disclosures. Since then some shareholders have gone to court claiming the insurer made misleading statements and improperly denied some claims to artificially inflate its stock price.

About 3,500 people work for UnumProvident in Portland, Maine, where the former Unum Corp. was founded. UnumProvident was created by the 1999 merger of the Unum Corp. and The Provident Companies, based in Chattanooga, where there are about 3,000 workers.

The company's statement said the Georgia investigation "covered a time immediately prior to and following the 1999 merger of Unum Corporation and Provident Companies, Inc."

"When companies merge, disruptions in service can sometimes occur," Mohney said.]]> http://www.yourlawyer.com/articles/read/5012 Wed, 19 Mar 2003 00:00:00 -0800 http://www.yourlawyer.com/articles/read/5012 Worsham filed for disability benefits from a policy she bought 10 years before. The insurer, Provident, made payments to Worsham for a year, then abruptly cut them off.

"They said she could go back to work at her old job," said her husband, Rick. "That was ludicrous. She couldn't go back to work for anybody, doing anything."

She later was diagnosed with fibromyalgia and then with Parkinson's disease. She filed a lawsuit against Provident four years ago, alleging a breach of contract. The case is scheduled to go to court-ordered mediation Monday.

The Worshams are among the Georgians who have complained to state regulators about practices of Chattanooga-based UnumProvident.

After a two-year investigation, state Insurance Commissioner John Oxendine said Tuesday that he has ordered four subsidiaries of UnumProvident to pay a penalty totaling $1 million. It is the largest fine ever levied by the Insurance Department, he said.

Unum said Tuesday that the company has agreed to pay the Georgia fine and in a statement said the settlement stems largely from delays by Unum in responding to requests for information early in the investigation.

Oxendine's order is part of a legal, regulatory and media whirlwind surrounding the company. Hundreds of policyholders nationally are reported to have filed lawsuits against UnumProvident, the largest disability insurer in the country, over allegations that the company wrongly canceled their benefits.

The Georgia order requires UnumProvident to change its claims-handling practices, and the company has been placed on two-year probation. During that time Oxendine's office will continue to investigate Unum practices, including quarterly reviews of Georgia claims denied by the insurer.

Oxendine said policyholders complained about disability claims being rejected or, once approved, being canceled later.

"People were being denied claims unfairly," Oxendine said. "We believe there was a corporate philosophy of pushing the envelope to the edge, of looking for every technicality possible to get out of paying the claim.

"We're focusing on completely changing the corporate philosophy of this company," he said.

Regulators in Tennessee and California also are investigating company practices.

A Unum executive said the Georgia investigation focused on the 1999 merger of Unum and Provident Cos.

"When companies merge, disruptions in service can sometimes occur,"' said Ralph Mohney, a UnumProvident senior vice president. "With Mr. Oxendine's guidance, issues have been identified around the way we communicate with people who file claims and the way we manage our tracking and availability of claim files that will make us a more service-oriented company."

UnumProvident said that last year it replaced $3.7 billion in lost income to help support hundreds of thousands of policyholders. In Georgia, the company insures nearly 1.2 million people. Last year it paid nearly $200 million in total benefits to more than 15,000 Georgia residents.

Cathey Steinberg, former state consumers' insurance advocate, said her office has tracked several complaints about Unum and supplied information to Oxendine's investigators. Atlanta attorney Pamela Atkins said Tuesday that she represents more than 30 Georgians who have claims disputes with Unum.

Company practices nationally were scrutinized in CBS "60 Minutes" and NBC "Dateline" segments last year. Former UnumProvident employees told "60 Minutes" that workers were encouraged to deny new claims and terminate existing ones.

A former employee also said there were company goals to cancel millions of dollars worth of claims.

A California jury recently awarded a surgeon $31.7 million after he accused UnumProvident of wrongly denying his disability payments. Unum has appealed.

And an eye surgeon won a $36.7 million jury verdict in Florida after making similar charges. After Unum appealed, the case was settled for an undisclosed amount.

UnumProvident said in a statement Tuesday that it "consistently does the right thing for customers."

The company added that of 421,000 new disability claims filed with the company in 2002, about 90 percent were paid and that less than 2 percent of the claimants were determined not to be disabled.

Other claims included individuals who were not covered. About 3 percent appealed.

Unum said less than one-half of 1 percent of all new disability claimants pursue litigation to resolve differences with the company. ]]> http://www.yourlawyer.com/articles/read/4973 Sun, 16 Mar 2003 00:00:00 -0800 http://www.yourlawyer.com/articles/read/4973
"The person who sold me this policy said it would keep a roof over my head should I ever be unable to work," says Hangarter, 54. "I lost the roof over my head."

She is one of hundreds of policyholders who have filed lawsuits against the nation's largest disability insurer, UnumProvident, alleging that it unfairly cut off their benefits by targeting certain policies for cancellation, particularly high-cost cases and policies offered through employers, which come with fewer legal protections.

The lawsuits and several recent large jury verdicts against Unum have heightened scrutiny of the disability insurance industry. They have also renewed debate about a federal law that limits policyholders' legal recourse in such disputes.

In February 2002, Hangarter won a $7.7 million jury verdict against Unum.

The company denies the allegations and is appealing her case and other recent multimillion-dollar verdicts.

"We do not set targets to close claims," says Tom White, vice president of investor relations for Unum. " Nor do we target categories of illnesses or injuries."

State investigations

But the company, which made Fortune magazine's "most admired companies" list for the third year last month, is under investigation in several states, including Georgia, Florida and California.

Georgia officials this week are set to announce a "significant" disciplinary action against Unum, culminating an 18-month investigation of the company, says Insurance Commissioner John Oxendine.

California is conducting a "market conduct study" of Unum.

"Unum, for the last several years, has had an internal policy of canceling insurance policies that are already in place," says California Insurance Commissioner John Garamendi.

In November, U.S. District Judge Robert Larsen in upholding Hangarter's verdict said Unum created "a comprehensive system for targeting and terminating expensive claims."

For its part, Unum says it pays all legitimate claims. Like all insurers, spokesman White says Unum must be vigilant for fraudulent claims, people who are not really disabled seeking to collect.

The company pays 90% of all claims filed, White says. Of the remainder, 2% are denied because the patient doesn't meet criteria for disability in their policies, he says, while 8% are deemed ineligible for other reasons or recover.

He declined to disclose how many claims are initially approved, then denied within a year or two.

In a couple of recent cases, policyholders had claims denied after a few months of receiving benefits. One involved former eye surgeon John Tedesco of Florida, who developed a hand tremor. He filed a claim with Unum, which paid his benefits for four months, then cut them. He was later diagnosed with Parkinson's disease, a degenerative disorder.

After suing Unum, Tedesco won a $36.7 million jury verdict in 2001. Unum appealed, then settled with Tedesco for an undisclosed amount. A California eye surgeon, Randall Chapman, sued Unum after it cut off his payments three months after he filed a claim saying he could not work because of phobia-caused hand tremors. A jury in January said Unum should pay $31.7 million to Chapman.

The doctor's phobia "was not visible to any of his patients. Nor was it detected by any of the physicians he worked with," says White, whose company is appealing the decision. White says his company has come under scrutiny for about three lawsuits over three years.

"That's a period of time where we've handled 1.2 million claims," says White. Unum insures about 25 million people, with 28% of the group disability sector and 43% of the individual policy market.

"Less than one half of one percent of all disability claims that we manage ever end up in litigation, and our record is that we win three of four cases," says White, who refused to say how many cases are pending against Unum. Plaintiff's lawyers, however, say the cases number in the thousands.

Federal law restrictions

Hangarter's case brings up another twist in disability insurance coverage.

For almost two years after her shoulder injury, Unum made monthly payments to Hangarter, who had been a self-employed chiropractor in San Francisco. But in March 1999, the insurer's medical examiner ruled that she could go back to work, seeing two patients a day.

When she protested, the insurer claimed that her policy was an employer-provided plan and therefore exempt from most state laws. Until she was able to get a judge's ruling that her plan was an individual policy covered by state law, she was unable to find a lawyer willing to take on her case because the expected payment under federal law would have been far lower than under state law.

Under federal law, policyholders who sue and win in cases where policies are unfairly terminated can collect only what was owed on policies, not economic losses or punitive damages. Most policies offered by employers fall under federal law rather than state law, which allows damage awards. "Even if you win (the federal cases), you've lost," says Frank Winkles of the Winkles Law Group in Tampa. "You've lost time, you've lost use of the money and maybe your house."

Disability insurance is not the only area affected by the federal law, the Employee Retirement Income Security Act of 1974, or ERISA. Designed to protect pensions, it has been interpreted by courts to also cover health insurance provided by many employers.

Protections debated

The hotly debated "patients bill of rights," which remains stalled in Congress, would have expanded patients' right to sue in disputes with health insurers. Opponents say the proposal would raise premiums and lead to lawsuits against employers over health care disputes.

Now, the issue is arising again over disability insurance. A San Francisco attorney who represented Hangarter says disability policies offered through employers should come with a warning. "Over 150 million Americans are being duped into buying employment-based health and disability policies that strip them of all protections against fraudulent insurance practices," says Ray Bourhis of Bourhis & Wolfson. He says state insurance commissioners should require such warnings.

But that very same federal law prevents commissioners from requiring a warning, says Garamendi from California.

Unum, then called Provident discussed ERISA in a 1995 memo, recently released by attorneys suing the firm.

"The advantage of ERISA coverage in litigious situations are enormous," the memo says, citing 12 claims that settled for $7.8 million in total. "If these 12 cases had been covered by ERISA, our liability would have been between zero and $0.5 million."

Unum's White says ERISA has helped hold down costs. "There is protection under ERISA because claims are not subject to punitive damages," says White. "Because of that, our prices are affordable and coverage is extended to many Americans."

Garamendi says ERISA needs to be amended. He doubts prices would go up if it were. "What good is an insurance policy that you're not able to collect on? Or one that the company will come back and take away your benefit?" he says. "That's not a very good policy no matter what the price."]]> http://www.yourlawyer.com/articles/read/4815 Wed, 26 Feb 2003 00:00:00 -0800 http://www.yourlawyer.com/articles/read/4815
At least two complaints seeking class-action status have been filed since the company announced Feb. 5 that it had recorded investment losses of $93 million and was responding to a Securities and Exchange Commission investigation for information relating to its investment disclosures.

The complaints filed in federal court in Chattanooga allege that UnumProvident, president and CEO Harold Chandler and chief financial officer Robert C. Grieving inflated the price of the company's securities to pursue an accelerated securities sale program.

''We find these complaints to be entirely without merit and we intend to defend these claims vigorously,'' said Becky Bumgardner, a UnumProvident spokeswoman.

The complaints allege UnumProvident, the nation's largest disability insurer, artificially inflated its stock price by failing to properly and promptly state losses to its investments and by improperly denying insurance claims.

''As with most securities suits, somebody told a lie,'' said Sam Rudman, a partner of New York-based Cauley, Geller, Bowman, Coates and Rudman, one of the firms that has taken action in the case.

Chandler and Grieving ''knew that by concealing UnumProvident's true financial results they could foster the perception in the business community that UnumProvident was a 'growth company,' '' according to the first complaint.

The second lawsuit also contends the company's ''forward-looking statements'' in financial disclosures aren't protected from litigation because UnumProvident officials knew they were false.

The filings cover a period beginning May 7, 2001, after UnumProvident announced earnings of $147.6 million after-tax operating income.

The company's stock rose $3.75 to reach $32.27 nine days later on the New York Stock Exchange. The day after the company announced its $93 million loss this month, shares closed at $14.45, a drop of 55 percent from the 2001 high. Shares of UnumProvident closed at $12.78 Tuesday.

UnumProvident, created by the 1999 merger of The Provident Companies of Chattanooga and the Unum Corp. in Portland, Maine, employs about 6,000. ]]> http://www.yourlawyer.com/articles/read/4666 Fri, 14 Feb 2003 00:00:00 -0800 http://www.yourlawyer.com/articles/read/4666
The suit is being handled by attorney Charles J. Piven of Baltimore, Md.

He announced that a securities class action has been commenced on behalf of shareholders who purchased, converted, exchanged or otherwise acquired the common stock of UnumProvident Corporation between May 7, 2001 and February 4, 2003, inclusive (the "Class Period").

The case was filed in the United States District Court for the Eastern District of Tennessee against UnumProvident and certain of its officers and directors.

The action charges that defendants violated federal securities laws by issuing a series of materially false and misleading statements to the market throughout the Class Period which statements had the effect of artificially inflating the market price of the Company's securities.

The attorney said, "No class has yet been certified in the above action. Until a class is certified, you are not represented by counsel unless you retain one. If you are a member of the Class, you may move the court no later than April 13, 2003 to serve as a lead plaintiff for the Class. In order to serve as a lead plaintiff, you must meet certain legal requirements. To be a member of the class, you need not take any action at this time, and you may retain counsel of your choice."

Attorney Piven has filed a number of similar class action lawsuits against corporations - including Rayovac, Mirant, hotel.com and Criti.

A San Diego, Cal., law firm filed a similar lawsuit here.]]> http://www.yourlawyer.com/articles/read/4451 Mon, 27 Jan 2003 00:00:00 -0800 http://www.yourlawyer.com/articles/read/4451
The jury in a state court in San Rafael said UnumProvident breached its duty of good faith and fair dealing and awarded Randall H. Chapman $1.7 million in past and future disability benefits and emotional distress and $30 million in punitive damages.

A spokesman for UnumProvident said the company strongly disagreed with the jury decision and that it planned to file motions for posttrial relief and, if necessary, an appeal.

The jury award comes as the claims practices of UnumProvident, the nation's largest disability insurer, are being scrutinized by state regulators in California, Georgia and Tennessee. Lawyers for policy holders who have sued the Chattanooga, Tenn., company contend UnumProvident has been overzealous in denying claims. In November, a federal judge in California said the company had "a comprehensive system for targeting and terminating expensive claims."

The insurer, which is appealing the California case, maintains that it pays all legitimate claims and that critics have distorted its approach, which is geared toward getting employees back to work.

In his complaint against the company, Dr. Chapman said that in 1999 he developed anxiety and tremors that prevented him from performing surgery.]]> http://www.yourlawyer.com/articles/read/4423 Fri, 24 Jan 2003 00:00:00 -0800 http://www.yourlawyer.com/articles/read/4423
The judgment, including $30 million in punitive damages, was handed down in Superior Court in Marin County, where the three-month-long trial was held.

Novato ophthalmologist Randall Chapman sued in 2001 after UnumProvident refused to pay him a $11,600 monthly benefit that he sought under long-term disability policies purchased during the 1980s.

Citing the opinions of his doctors, Chapman said a phobia had given him the shakes, preventing him from performing eye surgery. UnumProvident's internal doctors disagreed with the diagnosis, prompting the company to terminate his benefits in September 2000 after three months of payments.

The jury ruled that UnumProvident acted in bad faith, handing the Chattanooga, Tenn.-based company the latest setback in a widening legal tussle over its claims practices.

Messages left for UnumProvident officials were not returned after the verdict was announced Thursday.

UnumProvident, the nation's largest disability insurer, is facing hundreds of lawsuits filed by disillusioned policyholders who say the company puts its profits ahead of the seriously ill and badly injured people that it's supposed to protect.

A federal judge in San Francisco also concluded in November that UnumProvident had abused its policyholders to avoid paying legitimate claims.

About 3,500 people work for UnumProvident in Portland, Maine, where the former Unum Corp. was founded. UnumProvident was created by the 1999 merger of the Unum Corp. and The Provident Companies.]]> http://www.yourlawyer.com/articles/read/4320 Thu, 16 Jan 2003 00:00:00 -0800 http://www.yourlawyer.com/articles/read/4320
The memo, written in 1995, says Provident Corp., which merged with Unum Corp. in 1999, had formed a "task force" to identify policies covered by the Employee Retirement Income Security Act of 1974. "The advantages of ERISA coverage in litigious situations are enormous," reads the memo, written by Jeff McCall, at the time an assistant vice president in the claims department at Provident. " There are no jury trials. There are no compensatory or punitive damages."

UnumProvident said the memo was merely an attempt by the company to better comply with Erisa, which governs many of its claims practices. But the memo, a copy of which was reviewed by The Wall Street Journal, adds fuel to critics' complaints UnumProvident in some instances has been overzealous in denying claims.

The insurer says it pays all legitimate claims and that critics, including some former employees who recently have given sworn statements to plaintiffs' lawyers, have distorted its approach, which is geared toward getting employees back to work. The Chattanooga, Tenn., company's claims-handling procedures are being scrutinized by state insurance regulators in Georgia and California.

Erisa long has been a frustration for plaintiffs' lawyers. Under the law, a policyholder who sues an insurer alleging a claim was mishandled can't collect any court award other than restoration of policy benefits and in some cases attorneys' fees. Erisa doesn't allow awards for punitive damages.]]> http://www.yourlawyer.com/articles/read/3707 Sun, 15 Dec 2002 00:00:00 -0800 http://www.yourlawyer.com/articles/read/3707
The award, handed out by the company that became UnumProvident Corp., bore a ruthless motto: "Patience, my foot I'm gonna kill something."

The insurer scrapped the Hungry Vulture several years ago, but hundreds of unhappy policyholders allege the Chattanooga, Tenn.-based company still puts profits before the welfare of seriously ill and badly injured people.

The complaints come from people such as Loretta Hale, a once-successful San Francisco Bay area real estate broker who has been fighting to collect her disability benefits for the past 5 1/2 years while dying of cancer.

A Contra Costa Superior Court jury returned a $1.5 million fraud verdict against UnumProvident in July 2000, but the company is pursuing an appeal that may outlive Hale.

"It's a strange feeling knowing someone wants you to die because of money," said Hale, 49.

UnumProvident dismisses most of the allegations as the sour grapes of a relatively few duplicitous and uncooperative policyholders. The company maintains that customer complaints have been overblown by opportunistic lawyers and sensational news media accounts, including stories on CBS' "60 Minutes" and "Dateline NBC."

"We are 100 percent proud of our customer care organization," said Thomas White, the company's vice president of corporate relations.

However, a federal judge in San Francisco last month concluded that the company had engaged in a wide range of shady activity to avoid paying legitimate disability claims. U.S. Magistrate Judge James Larson criticized UnumProvident's business practices as he upheld a jury's $7.67 million penalty for mistreating former Berkeley chiropractor Joan Hangarter, and ordered the company to "obey the law."

Hangarter, 53, said UnumProvident left her bankrupt and suicidal after terminating her $8,150 monthly benefit for joint and muscle injuries that prompted her to stop treating her chiropractic patients in 1997.

UnumProvident and Hangarter have been fighting over the severity of her injuries since 1999.

The legal victories have done Hangarter and her two children little good so far.

A self-described "welfare millionaire," Hangarter commutes to her $12-per-hour bookkeeping job in a well-worn 1981 Volvo. Before she got hurt, Hangarter charged $350 per hour at her chiropractic practice, helping to lift her income to $110,000 in her best years.

"What [UnumProvident] is doing is fraud," Hangarter said. "The management deserves to be thrown in jail."

Much of the judge's stinging 62-page rebuke in Hangarter's case echoes the allegations of misconduct made against UnumProvident in lawsuits that have flooded the nation's courts over the past five years.

In a September court filing, UnumProvident listed more than 2,500 policyholder lawsuits accusing the company of fraud or breach of contract. The suits were filed between January 1997 and August of this year.

The biggest judgment against UnumProvident so far occurred last year when a jury in a Florida federal court awarded $36.7 million to John Tedesco. The former ophthalmologist alleged a UnumProvident-owned disability carrier refused to pay his benefits after Tedesco was diagnosed with Parkinson's disease and a herniated disk.

A federal lawsuit filed last month in New York seeks to represent tens of thousands more UnumProvident policyholders as part of a class-action complaint against the company. Insurance regulators in California, Georgia and Tennessee also say they will investigate policyholder complaints.

UnumProvident says the complaints represent a small fraction of the roughly 400,000 disability claims it processes annually. The company says it rejects less than 2 percent of those claims.

"Disability is UnumProvident's primary business, so integrity in claims paying and helping people return to work is essential to the company's long-term economic success," the company said in a statement.

Most of the suits against UnumProvident revolve around expensive long-term disability policies sold to affluent doctors, lawyers and small-business owners during the 1980s and early 1990s. Although expensive, the policies proved popular because they couldn't be canceled and the premiums couldn't be raised, assuring injured or ill workers income comparable to what they made before a career-debilitating setback.

A confidential 1994 company memo produced in one of the court cases said that these policies "were poorly underwritten and underpriced."

The company, then known as Provident, sold more than 600,000 of these "own-occupation" policies and consistently made money on them until the early 1990s, the memo said.

With its losses mounting in 1993, the company set aside $275 million to cover future claims on the noncancelable policies.

Provident's intensifying concerns about its disability losses coincided with the November 1993 hiring of a former South Carolina banker, J. Harold Chandler, to revive the company.

Chandler engineered a turnaround that has produced $1.4 billion in profits since 1999. While recovering, the company became an even bigger force in disability insurance by buying two of its major rivals, Paul Revere and Unum Corp.

For his efforts, Chandler collected $43.9 million in salary, bonuses and gains from exercising stock options from 1998 through 2001, according to documents filed with the Securities and Exchange Commission.

UnumProvident's shareholders haven't fared so well. UnumProvident's shares have been trading in the $16 range, approximately 70 percent below their value in June 1999, when Provident joined forces with Unum.

With her cancer in remission, Hale is determined to live long enough to see UnumProvident punished. There are still days Hale can't muster the strength to get out of bed and she isn't certain her sickness is to blame.

"How many people can take the mental duress that it takes to fight a company like this?" she wondered. "Sometimes, I think this has been more stressful than cancer." ]]> http://www.yourlawyer.com/articles/read/3273 Tue, 26 Nov 2002 00:00:00 -0800 http://www.yourlawyer.com/articles/read/3273
The newsmagazine segment was "a misrepresentation of the facts," the company argues in a full-page advertisement run last weekend in several newspapers.

The ad, titled "UnumProvident Responds," was in the form of an open letter by CEO J. Harold Chandler. He addressed it to the company's "customers, friends and communities." The ad ran in the Maine Sunday Telegram as well as in papers in Worcester, Mass., and Chattanooga, Tenn.

According to Linnea Olsen, a UnumProvident representative, the ad ran in areas where the company has a lot of employees. UnumProvident is headquartered in Chattanooga, and has about 3,600 employees in Portland.

In the ad, UnumProvident asserted that it does not set targets or pay bonuses to close claims inappropriately.

"To suggest that the natural stresses of our business involve pressure of any kind to close claims inappropriately is absolutely false," the ad states.

A representative of the popular CBS program stood by the segment.

"We're confident that the months-long investigation we undertook of UnumProvident yielded a fair and accurate report of what goes on there," said Kevin Tedesco of "60 Minutes." "They're welcome to draw as much attention to it as they want."

Olsen said the company plans to run more such ads in trade publications, but not in daily newspapers. Olsen said it decided to run the ad following comments by UnumProvident employees who were "pretty vocal and pretty upset about the accusations that have been made."

"We wanted to make sure the communities understand that these accusations are not true, they're false," said Olsen. "I think that because we did not go on-camera for the show that people expressed concern that we didn't defend ourselves. We knew there was no upside to going on the show."

Olsen said the company has an entire section of its Web site (www.unumprovident.com/commitment) devoted to customer testimonials and other signs of support.

"60 Minutes" carried a story Nov. 17 that alleged UnumProvident set dollar targets for claims denials by its employees and tried to reach those goals even if it meant denying valid disability claims.

The show highlighted the case of an eye surgeon, whose claim for disability was denied after he developed a tremor in his hand. UnumProvident subjected the surgeon to surveillance, saying it videotaped him playing football in his back yard. The man in the tape was the doctor's 23-year-old son.

The doctor eventually developed Parkinson's disease, sued UnumProvident and was awarded more than $36 million by a jury. To avoid prolonged appeals, he settled with the company for an undisclosed sum.

In the newspaper ad, UnumProvident said it never denied a claim for Parkinson's disease for the doctor.

UnumProvident's stock dropped more than 6 percent the day after "60 Minutes" aired the allegations that the insurer unfairly denies claims. The company's stock fell $1.15 on that day, closing at $17.40. It closed at $17.55 on the New York Stock Exchange on Monday. ]]> http://www.yourlawyer.com/articles/read/3151 Tue, 19 Nov 2002 00:00:00 -0800 http://www.yourlawyer.com/articles/read/3151
Everett Sinor, assistant commissioner for insurance in the Tennessee Department of Commerce and Insurance, said the department started its review following a report by NBC's "Dateline" last month.

Sinor said agency officials also saw a CBS "60 Minutes" report about the company on Sunday.

"We are going to fulfill our regulatory responsibility," he said.

Sinor said all investigations are confidential.

Georgia insurance officials also said they earlier started a review of complaints against the Chattanooga-based company and planned to have a report finished by the end of December.

UnumProvident executives in a statement Tuesday described the company as a "victim" of negative publicity. Lawsuits filed by a former employee and some customers contend the company routinely denies claims and requires its medical employees to support the denials.

"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," according to the UnumProvident statement.

UnumProvident's stock closed Tuesday at $17.74, up from a 6.68 percent drop to $17.31 on Monday.

The company, which insures some 25 million people, last month went on the offensive ahead of the television reports, predicting they would be unfair.

Sinor said there have been 35 complaints about UnumProvident among 3,643 complaints received by the agency this year. In 2001, there were 28 complaints against UnumProvident, among a total of 3,904, he said.

Dr. Patrick McSharry, who was dismissed as UnumProvident's medical director in January, sued the company in July. Several dozen policyholders have also sued, contending claim applications were unfairly denied.

UnumProvident spokeswoman Linnea Olsen previously said the company has "about 30 percent" of the nation's disability insurance business, with the next largest competitor having about 9 percent.

Olsen said UnumProvident last year handled about 400,000 claims and "about 2 percent were denied." Of those, "less than four-tenths" prompted lawsuits, she said.

About 3,500 people work for UnumProvident in Portland, Maine, where the former Unum Corp. was founded. UnumProvident was created by the 1999 merger of the Unum Corp. and The Provident Companies, based in Chattanooga, where there are more than 2,217 workers.

Olsen said UnumProvident employs about 100 doctors at claims offices in Chattanooga; Portland; Worcester, Mass., and Glendale Calif.]]> http://www.yourlawyer.com/articles/read/3274 Mon, 18 Nov 2002 00:00:00 -0800 http://www.yourlawyer.com/articles/read/3274
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 plaintiffs 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 companys 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 Parkinsons disease, a fact known by 60 Minutes. The first notice of Parkinsons was not sent directly to our company and was not made fully available until after Tedescos lawsuit had been filed. Once we received the definitive diagnosis of Parkinsons, 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 programs producers chose Mr. Garamendi to comment on the companys 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 nations largest disability insurance company, has been the victim of recent negative publicity surrounding claims handling practices. Behind the allegations are a handful of plaintiffs 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 companys 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 Parkinsons 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 Parkinsons disease. We denied benefits based on the back claim and requested a new claim for Parkinsons with the appropriate information. The records needed were not made fully available until after Dr. Tedescos lawsuit had been filed. Once we received the definitive diagnosis of Parkinsons, 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.]]> http://www.yourlawyer.com/articles/read/3079 Sun, 17 Nov 2002 00:00:00 -0800 http://www.yourlawyer.com/articles/read/3079
A number of people who worked at UnumProvident, the giant of the disability insurance business, whose clients include CBS, told us that the companys management puts tremendous pressure on claims handlers to deny new claims and shut down existing ones. And that many UnumProvident policy holders- who are obviously disabled are left out in the cold.

UnumProvident is the largest disability insurance company by far, providing disability insurance to 17 million Americans. One of them was Dr. John Tedesco. Today, Dr. Tedesco does part-time diagnostic work, but he used to be a successful eye surgeon. Then, four years ago, he developed a tremor in his right hand:

I knew that if I tried to operate on somebody, I might hurt them. I might blind them, Tedesco says. So he stopped operating.

For six years, Dr. Tedesco had paid for an insurance policy that guaranteed him a decent income if he could no longer do surgery. He filed a claim with UnumProvident, and the company paid his claim for four months. Then a claims handler sent Dr. Tedesco a letter.

Basically, the letter said Were cutting off your benefits. We dont think youre disabled. And youre not entitled to any benefits, says Tedesco. As far as he knows, the company did not talk to his doctors. Nor did they come to see him.

UnumProvident had a cameraman secretly follow Dr. Tedesco for six days and shoot videotape. The company said it showed Dr. Tedesco playing football in his backyard looking anything but disabled. However, there was just one problem. It actually showed his 23-year-old son.

Three years ago, Dr. Tedesco was diagnosed with Parkinsons Disease. He found he couldnt keep his hands steady enough to do routine eye exams, let alone surgery. Three physicians said he was too disabled to operate. The company still didnt start paying him.

It almost sounds ridiculous an insurance company refusing a disability from an eye surgeon who has a hand tremor and Parkinsons Disease. How do you explain that? Bradley asks Tedesco.

I cant explain that. Theres not a person on this earth who would say that a person with Parkinsons Disease could do eye surgery, Tedesco says.

What happened to Dr. Tedesco came as no surprise to the UnumProvident employees we spoke to. Diane McGinnis started working at UnumProvident three years ago. When Bradley interviewed her she was working as a claims handler at the companys headquarters in Chattanooga. She says that the company told its workers they had to shut down enough claims to meet monthly targets in the millions of dollars.

At the beginning of each month the projections would come down from the directors or above, who would give a number as to the amount of money we would have to come up with at the end of the month in closures, she says.

Bradley: These were like targets you had to meet?

McGinnis: Right

Bradley: And did the people who set the targets know that there were a certain number of claims that deserved to be terminated before they set the target?

McGinnis: I dont think it was about whether they deserved to be closed. They had to be closed. They needed to make those projections.

Bradley: So you would go into these meetings once a month with a target, a dollar figure, which you had to save the company and that dollar figure had nothing to do with the validity of the claims that were out there. It had nothing to do with the legitimacy of the claims that were out there?

McGinnis: Right. The claim reps would go looking for claims that they could shut down and the consultants would be right behind them helping them go through files to look for those numbers that they needed.

Bradley: And did the claims handlers ever shut down claims that they knew were legitimate in order to meet a monthly target?

McGinnis: Yes, many times thats happened, many times.

Bradley: You say that without any hesitation.

McGinnis: Because Ive seen it for three years.

UnumProvident declined to talk to 60 Minutes on camera, but top executives repeatedly denied that the company sets any targets whatsoever for saving money by closing claims. The executives also told us the company processes 400,000 claims a year and occasionally makes a mistake, which, they say, UnumProvident is quick to remedy once the company is aware of it.

As for Diane McGinnis, she resigned eight weeks ago. UnumProvident questions her integrity, citing several instances of dishonesty in her personal life. But more than a dozen current and former UnumProvident employees, including former vice presidents of the company, confirmed some or all of McGinnis allegations.

Angelique Brackett was a claims handler in the companys headquarters in Chattanooga.

About the middle of the month, theyd let us know if we were on track to meet our dollar amount for the month, and if we wouldnt, theyd really start pushing us to find more or to get the ones we thought we could get closed, she said.

Gina Hartley worked for five years as a claims handler in the companys headquarters. She resigned a month ago.

Bradley: And if they would say to us that there were no targets, no money targets that we were aiming for each month, you would say

Hartley: It was well known to each individual, each one of us and to every department. It was standard, I mean day in day out there were targets. There were goals.

Bradley: So youre saying the company is lying?

Hartley: Thats what Im saying.

Bradley: and were these targets just suggestions or guidelines?

Hartley: oh no it was set. I mean this is the amount. We were given the exact dollar amount that we were targeting, and toward the end of the month, if we were far behind, we would whats called a blitz in the orthopedic area where everybody would come in on Saturday and wed go through our claim files. If theyd been gone through 20 times and reviewed 20 times by managers, consultants, we would still go through our claims, our co-workers claims, other departments claims, trying to find something that might just even if was a technicality something we could close that claim on. And the pressure on the claims representatives was so intense that we felt we had to go in to close that claim.

Bradley: You knew of people who were really disabled and their claims were terminated because in terminating those claims UnumProvident would save money.

Hartley: Oh yes, oh yes

Bradley: No doubt about it?

Hartley: No doubt about it.

Bradley: And did your supervisors know that you were terminating legitimate claims?

Hartley: They had to give the approval to, before we could. As a claims handler, we did not have the power or the authority to close the claim ourselves. It had to be signed off on by our consultant and our manager.

Bradley: And how much money are we talking about. What were they looking to shut down every month?

Hartley: Anywhere from 7 to 14 million. If another department needed help, they would bump it up to 14 million a month.

UnumProvident told us the claims handlers had no financial incentive to terminate the claims of disabled policyholders. Michelle Payne, a former administrative assistant, says thats not true:

Michelle: The ones that knew how to do what was asked of them, theyre the ones that got the bonuses.

Bradley: And what was asked of them?

Michelle: Close the claims.

Bradley: You say that without any hesitation.

Michelle: I saw it on a daily basis.

Hartley: there were staff meetings that we sat in and the manager would say so and so just closed 2 million claim today and everybody would give them a hand and 2 or 3 weeks later, low and behold, that person would end up being presented with a bonus, a check, money.

It wasnt just claims handlers who were under pressure to deny claims:

I saw the same thing, says Dr. Fergal McSharry worked for UnumProvident for nearly two years as an in-house physician reviewing disability claims. Dr. McSharry says the company pressured him and other doctors to go along with the claims handlers decisions to terminate claims:

McSharry: The decision was nearly always made and we were to not upset the apple cart and give this opinion which was contrary to everybody elses.

Bradley: Didnt the company give you the option to request more tests, more medical information about the claimant?

McSharry: Yes, the option was there, but whenever I did it I got into trouble.

Bradley: why would that get you in trouble?

McSharry: It would blow the target way back, and the team were very dependent on me as the physician to support their achieving the goal.

Bradley: Of meeting that target, the dollar figure?

McSharry: Yeah, so I was getting a lot of upset people coming into my office saying: Youre not helping us, doc!

At first, Dr. McSharry says he did change his medical opinion once or twice to please his supervisor. Then, he decided he could no longer do that. Six months ago, UnumProvident fired Dr. McSharry. He is now suing the company for wrongful termination.

Bradley: Unum Provident says that the issue with you was productivity; that you were slow to sign off on your claims.

McSharry: I wouldnt sign off, yes. I wouldnt. I refused.

Bradley: Were other doctors in the claims department pressured to sign off on terminations?

McSharry: We all were. And some doctors did and some doctors didnt.

Hartley: We knew what doctors to send it to and what not to. If we wanted that claims closed, wed send it such and such doctor.

Closing those existing claims or denying new ones - has led to nearly 3,000 lawsuits against UnumProvident in the past five years. Gina Hartley says the companys lawyers warned claims handlers to be extra careful about denying claims in certain states:

Hartley: We would get guidance as far as what state you might be able to close this claim in. That may not give us trouble in the courts. What state would be, okay this is a tougher state, theyve strong insurance commissioners, theyve got strong courts, theyve got courts that favor the insured. Better not mess with this one too much.

Bradley: Tell me what you think the philosophy of
this company is:

Hartley: Their philosophy was close it if you can close it. If there was any way possible to close it. That was the bottom line.

Garamendi: Every insurance department in this nation ought to be taking a hard look at this situation

Last week, John Garamendi was re-elected to head the California Department of Insurance.

Bradley: How can an insurance company decide in advance the percentage of claims that should be terminated?

Garamendi: How can they? Well, they can if they want to break the law, if they want to go against the normal practice, and if they want to get big lawsuits. It is not the thing to do.

Bradley: Providents adjusters appear to be under pressure to increase terminations.

Garamendi: Exactly.

Bradley: On the face of it, whats wrong with that.

Garamendi: This kind of thing will lead to problems. Itll lead to fraud by the insurance company against the consumer, against the policy-holder.

Bradley: Do you see a pattern here? What does it say about this company?

Garamendi: Theres been successful lawsuits against this company in which federal courts by unanimous verdicts have issued punitive damages for this kind of activity. Thats another, not a warning sign, thats a clear siren out in the streets saying What is going on here.

Tedesco, the eye surgeon with Parkinsons Disease, sued the company, and a jury awarded him 36 million dollars. To avoid a lengthy appeal, Dr. Tedesco settled with UnumProvident for an undisclosed sum.

Bradley: If this company knows that theyre going to be hit with these lawsuits and theyre going to lose some of them, that theres going to be bad publicity, why would they do this?

Garamendi: Its an equation, an economic equation. How many will we lose? How much business will we lose? Versus how much will we gain by denying these claims. So theyre doing that economic equation and theyre saying, Well run the risk of the lawsuits. Well run the risk of the bad publicity, and probably the departments of insurance are asleep anyway. So lets go!

While the great majority of lawsuits against UnumProvident are settled out of court, and the company says it wins most of those that do go to trial - this week it lost a big one. A federal court in San Francisco upheld a $7.5 million judgment against UnumProvident saying it showed bad faith in targeting a claim for closure, and that it employed biased medical examiners and improperly destroyed medical and other reports. The court issued an injunction ordering the company to stop those practices. ]]> http://www.yourlawyer.com/articles/read/3068 Sat, 16 Nov 2002 00:00:00 -0800 http://www.yourlawyer.com/articles/read/3068
U.S. Magistrate Judge James Larson ordered Chattanooga, Tenn. based UnumProvident Corp. to "obey the law" in a scathing 62-page injunction that found the company in violation of California's unfair insurance practices and unfair competition acts.

The injunction, issued earlier this week, may intensify policyholder attacks on UnumProvident, which is facing similar allegations of misconduct in dozens of civil lawsuits filed across the country.

In the California ruling, Larson concluded UnumProvident shredded medical records and used the demographic profiles of policyholders to target claims for possible rejection.

Larson also found UnumProvident didn't assure its employees understood California's legal definition of total disability.

UnumProvident "strongly disagreed" with Larson's ruling and will appeal, said Thomas White, the company's vice president of corporate relations.

Larson's order also upheld a $7.67 million jury verdict against UnumProvident for mistreating one of its policyholders, former Berkeley chiropractor Joan Harngarter.

The jury award includes $5 million in punitive damages for Harngarter, a single mother who wound up on welfare after losing her disability benefits for joint pain that prevented her from returning to her chiropractic practice.

California's newly elected insurance commissioner, John Garamendi, said the allegations against UnumProvident are pervasive enough to warrant an intensive investigation after he takes office in January.

"There isn't just smoke here. There is clearly a fire here," Garamendi said Friday. "This has become a matter of serious concern to me."

Most of the policyholder complaints involve expensive, noncancelable disability policies that UnumProvident aggressively sold during the late 1980s and early 1990s to mostly affluent self-employed professionals.

Faced with mounting losses, UnumProvident's predecessor company, Provident, brought in a former banker, J. Harold Chandler, as its chief executive in 1993.

Attorneys representing policyholders allege Chandler imposed a system to deny a greater number of disability claims to boost profits. As an incentive, UnumProvident began to hand out a "Hungry Vulture" award to recognize top-performing employees.

UnumProvident believes the recent wave of lawsuits isn't surprising, given that it provides about 30 percent of the nation's disability insurance, covering about 17 million people.

The company says it processes 400,000 disability claims annually, distributing $3.6 billion in the process. UnumProvident says the vast majority of policyholders are pleased with their treatment.

But the lawsuits filed by unhappy policyholders paint a sordid picture of UnumProvident. The complaints depict a cutthroat company that spied on the disabled and refused to make payments to injured and ill policyholders, including terminal cancer patients.

UnumProvident believes most of the lawsuits are baseless. The company prevailed in three-fourths of the cases that went to trial last year, White said.]]> http://www.yourlawyer.com/articles/read/3058 Fri, 15 Nov 2002 00:00:00 -0800 http://www.yourlawyer.com/articles/read/3058
In a 62-page verdict issued this week, Magistrate Judge James Larson ruled that a predecessor of UnumProvident violated the state's Unfair Competition Act.

Larson said Paul Revere Life Insurance now owned by giant UnumProvident of Tennessee acted in bad faith in denying a disability claim by Joan Hangarter.

Hangarter is a Berkeley chiropractor who had to stop practicing because of back and arm pain.

In February, a jury awarded Hangarter almost eight (m) million dollars for past and future benefits, emotional distress, attorney's fees and punitive damages.

Larson upheld that verdict -- and ordered the company to obey the law.

Hangarter's attorney, Ray Boursis, said UnumProvident tried to increase profits by systematically denying some disability claims.

The insurer denied the charge.]]> http://www.yourlawyer.com/articles/read/3059 Fri, 15 Nov 2002 00:00:00 -0800 http://www.yourlawyer.com/articles/read/3059
A number of people who worked at UnumProvident, the giant of the disability insurance business, whose clients include CBS, say that the companys management puts tremendous pressure on claims handlers to deny new claims and shut down existing ones. They also say that many UnumProvident policy holders- who are obviously disabled are left out in the cold.

UnumProvident provides 17 million Americans with disability insurance privately or through their employers. It is the largest disability insurance company by far. Of Americas largest corporations, 22 percent, including CBS, use it. UnumProvident declined to talk to 60 Minutes on camera, but its executives repeatedly denied any targets were set for saving money by closing claims. They said the company occasionally makes mistakes, as it processes 400,000 claims a year.

Former Unum Provident workers accuse the company of cheating disabled people in an effort to save money. One worker says bonuses were awarded to some managers who closed especially large claims. Bradleys report on the UnumProvident Insurance Company will be broadcast on 60 Minutes Sunday, Nov. 17, at 7 p.m. ET/PT.

Among those who had a policy with the company was Dr. John Tedesco. Today, Dr. Tedesco does part-time diagnostic work, but he used to be a successful eye surgeon. Then, four years ago, he developed a tremor in his right hand.

I knew that if I tried to operate on somebody, I might hurt them. I might blind them, he says. So he had to stop.

For six years, Dr. Tedesco had paid for an insurance policy which guaranteed him a decent income if he could no longer do surgery. He filed a claim with UnumProvident, and the company paid his claim for four months. Then a claims handler sent Dr. Tedesco a letter.

Basically, the letter said Were cutting off your benefits. We dont think youre disabled. And youre not entitled to any benefits. says Tedesco.

Three years ago, Dr. Tedesco was diagnosed with Parkinsons Disease. He found he couldnt keep his hands steady enough to do routine eye exams, let alone surgery. Three physicians said he was too disabled to operate. But the company still wouldnt provide him with benefits.

Tedesco sued the company, and a jury awarded him $36 million. To avoid a lengthy appeal, Dr. Tedesco settled with UnumProvident for an undisclosed sum.

One former employee, Gina Hartley, says each department had monthly savings goals set for them, which they had to reach by closing cases. She says the pressure to reach these goals often led to the termination of legitimate policies. Hartley was one of five former employees who agreed to go on camera.

Bonuses were apparently awarded for successfully closing a big claim, Hartley says. There were staff meetings that we sat in, that the manager would say, 'So-and-so just closed a $2 million claim today,' and everybody would give them a hand and, two or three weeks later, lo and behold, that person would end up being presented with a bonus, a check, money, Hartley says.

More than a dozen current and former employees of UnumProvident confirmed some or all of Hartleys allegations. In the last five years, UnumProvident has been sued almost 3,000 times over closed claims. ]]> http://www.yourlawyer.com/articles/read/3060 Fri, 15 Nov 2002 00:00:00 -0800 http://www.yourlawyer.com/articles/read/3060
The company is UnumProvident, the nation's largest disability insurance provider, which came under fire last month from a national television news program for its benefit termination practices. "The company strongly disagrees with the court's finding and will be filing a notice of appeal," UnumProvident said in a release issued Thursday.

Joan Hangarter, 53, of Novato used to have a chiropractic office on Solano Avenue; she bought an "own-occupation disability" policy from Paul Revere Life Insurance Co. in the 1980s for insurance should she be unable to continue working.

She was diagnosed in 1996 with cervical disc disease and tennis elbow, and she began collecting disability payments in 1997. But Revere stopped her $8,150 monthly payments in 1999, leaving the single mother of two, bankrupt and dependent on food stamps.

A seven-person federal jury returned a verdict in February including $5 million in punitive damages against the insurance company, which is now owned by Tennessee-based UnumProvident.

In a post-trial motions ruling issued this week, U.S. Magistrate Judge James Larson said the insurance company developed "a comprehensive system for targeting and terminating expensive claims like Plaintiff's."

The jury heard enough evidence to support punitive damages, Larson found "the use of a biased medical examiner, failing to advise plaintiff of benefits to which she was entitled, and then terminating her benefits when she remained totally disabled."

Larson also upheld the jury's award of future policy benefits.

"Why should Dr. Hangarter have to submit to future physical examinations to prove her continued disability when the jury has already found that the insurance company cannot be trusted to deal fairly with her?" he wrote.

Television newsmagazine "Dateline NBC" aired a segment last month examining UnumProvident's halt of benefits payments to two other policyhol-ders; that story quoted many of the same documents and sources Hangarter's attorneys used at trial.

In response, UnumProvident Chairman, President and CEO J. Harold Chandler acknowledged mistakes were made regarding the two policyholders featured in the news program. But those mistakes are "exceptions to a record which otherwise shows consistent care and concern for our customers," he insisted, denying the company sets targets for closing valid claims.

In its release, UnumProvident insisted it doesn't engage in the practices of which it was accused by the Hangarter. "UnumProvident and its subsidiary companies will abide by the law and the proud tradition of serving its policyholders as it has done for the past century and will continue to do for the next century."]]> http://www.yourlawyer.com/articles/read/3027 Thu, 14 Nov 2002 00:00:00 -0800 http://www.yourlawyer.com/articles/read/3027
In a sharply worded, 62-page verdict, Magistrate Judge James Larson of the Northern District of California said the Paul Revere Life Insurance Co. now owned by giant UnumProvident of Tennessee had acted in bad faith in denying a disability claim by Joan Hangarter, a Berkeley chiropractor who became unable to practice because of back and arm pains.

In February, a jury awarded Hangarter $7.67 million for her past and future benefits, emotional distress, attorney's fees and punitive damages. Larson upheld that verdict and ordered the insurer to obey the law.

Hangarter's attorney, Ray Boursis of San Francisco firm Boursis & Wolfson, had said UnumProvident tried to increase profit by systematically denying some disability claims, including going after long-term, high-payment claims. The insurer denied that charge.

Larson appeared to agree that the company had engaged in such practices. His decision enjoined it from future violations, including "targeting categories of claims or claimants, employing biased medical examiners, destroying medical records, and withholding from claimants information about their benefits."

"This is the first time to my knowledge that any court has found it necessary to issue an injunction against an insurer to order them to start obeying the law," Boursis said.

UnumProvident could not be reached for comment. ]]> http://www.yourlawyer.com/articles/read/3057 Thu, 14 Nov 2002 00:00:00 -0800 http://www.yourlawyer.com/articles/read/3057
The segment will be titled "Did Insurer Cheat Disabled Clients?, according to CBS.

The investigative piece comes on the heels of one by NBC on its Dateline program.

UnumProvident officials have denied the charges, saying that a large majority of claims are paid, though mistakes may have been made on a few cases.

CBS said this about the upcoming program that will air at 7 p.m.:

Former workers at the nations largest disability insurer accuse their former employer of cheating disabled people out of the money entitled to them in a companywide effort to fatten the bottom line.

One worker tells Ed Bradley that bonuses were awarded to some managers who closed especially large claims. Bradleys report on the UnumProvident Insurance Company will be broadcast on 60 Minutes Sunday, Nov. 17, at 7 p.m. ET/PT.

Among the former employees is Gina Hartley, a claims handler who resigned recently from the firms Chattanooga headquarters. Hartley says each department had monthly monetary savings goals set for them, amounts they had to hit by shutting down claims. Hartley says the pressure to reach these goals often led to the termination of legitimate policies. No doubt about it, she says.

Some of the terminations apparently resulted in bonuses for the staff who shut down those claims. There were staff meetings that we sat in, that the manager would say,'So-and-so just closed a $2 million claim today,' and everybody would give them a hand and, two or three weeks later, lo and behold, that person would end up being presented with a bonus, a check, money, Hartley tells Bradley.

More than a dozen current and former employees of UnumProvident, including vice presidents, confirmed some or all of Hartleys allegations. Closing claims has resulted in nearly 3,000 lawsuits against the company in the last five years alone. Hartley says the company was savvy about closing policies in certain states, however. We would get guidance as far as what state you might be able to close this claim inThis is a tougher state, theyve stronger insurance commissionersstrong courts, courts that favor the insured. Better not mess with this one too much," Hartley says the companys lawyers warned.

UnumProvident provides 17 million Americans with disability insurance privately or through their employers. Of Americas largest corporations, 22 percent, including CBS, use it. UnumProvident declined to talk to 60 Minutes on camera, but its executives repeatedly denied any targets were set for saving money by closing claims. They said the company occasionally makes mistakes, as it processes 400,000 claims a year]]> http://www.yourlawyer.com/articles/read/2852 Wed, 06 Nov 2002 00:00:00 -0800 http://www.yourlawyer.com/articles/read/2852
The suit, filed in Manhattan federal court, charges UnumProvident Corp. ''has illegally victimized, and continues to victimize, many thousands of disabled Americans.''

UnumProvident has already been sued by a former doctor at the company, who leveled similar allegations, and by numerous policy-holders with denied claims.

The new lawsuit claims nonmedical personnel at UnumProvident routinely determine which claims should be denied, and then use their own medical staff to create a ''paper trail'' to justify the decision.

The suit charges UnumProvident and its subsidiaries ''operate long term disability denial factories, efficiently denying claims, not on the merits of an individual claim but, rather, to satisfy the self-interested financial goals of UnumProvident and other group insurers.''

The suit seeks unspecified monetary relief, and asks the courts to order UnumProvident to re-evaluate all of the claims it has denied in recent years.

Company spokesman Tom White declined to comment on the suit because UnumProvident had not yet seen the court papers. UnumProvident has previously called the charges ''absolutely false.''

The company has said it handles 30 percent of the nation's disability insurance business, and rejected about 2 percent of disability claims in 2001.

About 3,500 people work for UnumProvident in Portland, where the former Unum Corp. was founded. UnumProvident was created by the 1999 merger of Unum Corp. and The Provident Companies, based in Chattanooga, Tenn., where there are more than 2,217 workers.

UnumProvident employs about 100 doctors at claims offices in Chattanooga; Portland; Worcester, Mass., and Glendale, Calif.]]> http://www.yourlawyer.com/articles/read/2853 Wed, 06 Nov 2002 00:00:00 -0800 http://www.yourlawyer.com/articles/read/2853
The suit claims UnumProvident has been systematically denying claims for long-term disability insurance by thousands people too sick or too injured to work.

The suit says the firm violated its duty under federal insurance laws by paying bonuses to its workers based on the number of claims they denied and that it operated "long-term disability denial factories," where in-house doctors rubber stamped decisions made by non-physicians.

UnumProvident has denied the charges.

Dr. Patrick McSharry, a former UnumProvident medical director, filed suit here.

He was among former and current UnumProvident employees appearing on a recent Dateline report on NBC TV about alleged abuses at the firm.

Disability insurers have started focusing their claims handling strategies to root out fraud. During economic downturns UnumProvident and other disability insurers have to watch for customers who may try to stretch their benefits or file fraudulent claims, insurance industry analysts said.

`Dateline' Broadcast

The suit follows a report last month on General Electric Co.'s NBC about improper denials of coverage by UnumProvident. McSharry was among several ex-employees who were interviewed in the ``Dateline'' broadcast.

A UnumProvident spokesman, Thomas White, said the company hadn't seen the suit and couldn't immediately comment. Shares were down 45 cents, to $20.58, at 3:09 p.m., in trading on the New York Stock Exchange.

In a statement issued about two weeks before the ``Dateline'' broadcast, the company said it paid more than $3.6 billion in disability-related claims last year.

``The company is proud of its record in paying claims and of the more than 3,000 people who work in the company's claims area,'' the statement said.

The class action lawsuit was filed in federal court in New York.

It asks that UnumProvident be ordered to review claims it denied and to change its practices. It does not seek damages. ]]> http://www.yourlawyer.com/articles/read/2839 Tue, 05 Nov 2002 00:00:00 -0800 http://www.yourlawyer.com/articles/read/2839
The suit, filed in Manhattan federal court, charges UnumProvident Corp. "has illegally victimized, and continues to victimize, many thousands of disabled Americans."

UnumProvident has already been sued by a former doctor at the company, who leveled similar allegations, and by numerous policy-holders with denied claims.

The new lawsuit claims non-medical personnel at UnumProvident routinely determine which claims should be denied, and then use their own medical staff to create a "paper trail" to justify the decision.

The suit charges UnumProvident and its subsidiaries "operate long term disability denial factories, efficiently denying claims, not on the merits of an individual claim but, rather, to satisfy the self-interested financial goals of UnumProvident and other group insurers."

The suit, filed by four people whose disability claims were denied by UnumProvident, seeks unspecified monetary relief and asks the courts to order UnumProvident to re-evaluate all of the claims it has denied in recent years.

Company spokesman Tom White declined to comment on the suit because UnumProvident had not yet seen the court papers. UnumProvident has previously called the charges "absolutely false."

The company has said it handles 30 percent of the nation's disability insurance business, and rejected about 2 percent of disability claims in 2001.

About 3,500 people work for UnumProvident in Portland, Maine, where the former Unum Corp. was founded. UnumProvident was created by the 1999 merger of the Unum Corp. and The Provident Companies, based in Chattanooga, Tenn., where there are more than 2,217 workers.

UnumProvident employs about 100 doctors at claims offices in Chattanooga; Portland; Worcester, Mass., and Glendale, Calif. ]]> http://www.yourlawyer.com/articles/read/2740 Tue, 15 Oct 2002 00:00:00 -0700 http://www.yourlawyer.com/articles/read/2740
What if your disability benefits were suddenly cut off?

A Dateline NBC Investigation

Insurance, we buy it for peace of mind to cover our homes, our health, our lives. Millions of Americans have disability insurance to help replace lost income in case of a serious illness or injury. If you cant work, those benefits may be crucial for you and your family. But what if, suddenly, unexpectedly, your benefits were cut off? Thats what happened to the people in this story. We found some startling charges against the biggest disability insurance provider in the country. Correspondent John Larson reports in this Dateline Investigation.

IT BEGAN ON a stretch of Interstate 40 in Albuquerque, New Mexico in February of 1998, a car salesman swerves to avoid some rocks, and the world suddenly turns upside down.
The nurses and all the physicians they were saying, Do you have any feeling? Can you move your legs? says John Montano. And I kept telling them, I cant feel anything from the chest down.

The accident had severed John Montanos spinal cord. Although he was spared some limited use of his arms, hes considered a quadriplegic paralyzed for life.

And what lay ahead could hardly have looked worse. Unable to work or support his family, Montano faced losing everything. But like millions of Americans, he had prepared for just such a disaster. He had paid $59 a month for disability insurance, which promised if he was ever too sick or too injured to keep working, it would help replace his lost income. The checks began arriving as promised, but after two years he got a shocking letter. His disability benefits were being cut off.

I was scared, says Montano. I was frightened. I go, Well, theres got to be a mistake.
But there was no mistake. Montanos insurance company had decided that despite his paralysis he no longer deserved benefits. So what was going on? Sources tell Dateline that what happened to john Montano may have been part of something much larger. a dateline investigation into whether the largest disability carrier in the United States, Unum provident launched a company-wide effort to cut costs aggressively, and in the process, unfairly denied benefits, selling out people it promised to protect.
They just basically cut me off and that was it, says Montano.

In Montanos case, UnumProvident claimed to have good reason. It said it had surveillance tape, that Montano had improved immensely and he should go back to work selling cars.
Was there any way that Montano was faking his quadriplegia?

Absolutely not. Theres no way, says Dr. Jonathan Burg, Montanos doctor.
He says the records are clear, Montano is a quadriplegic.

John Larson: Did you tell the company, look Ill take any test you want me to take?

John Montano: Yes.

John Larson: And so did they do that? Did they evaluate you?

John Montano: No, I didnt hear back from them.

The disability and life insurance industry says it faces $1.5 billion in fraudulent claims every year. So you can understand why it might investigate Montanos claim. But when UnumProvident finally shared its surveillance tape Dr. Burg says it showed nothing new, just John Montano driving his specially-equipped van, demonstrating what everyone already knew:

Montano had a limited use of his upper arms. In a letter to UnumProvident, Dr. Burg stated by all standards this man is completely and totally disabled.

Meanwhile, his benefits cut off, Montano spiraled towards bankruptcy. His wife had divorced him after the accident. Now faced with losing his home and his children, he says he became suicidal.

John Larson: It sounds like it was pretty close.

John Montano: Yes, yes.

So how could something like this happen? Some people say they know.

These three former UnumProvident employees tell a disturbing story of a company obsessed with finding excuses to cut off benefits.
They have to literally fight to get their benefits, says one.

John Larson: Did you feel pressure to close claims?

Former employee: Absolutely.

They asked Dateline to conceal their identities because theyre afraid of reprisals.

Former employee: Find ways to close claims. Just look so very carefully to find anything that will disqualify them from the claim.
Former employee: They even gave incentives.
John Larson: Incentives how?

Former employee: Incentives for closing claims. If we projected that we were going to close 30, if we get to 30 well have a pizza party or well have an ice cream party.

Would the company pressure employees to terminate claims? Financial reports show that in 1993, the company was losing millions. Then came new management and a complete reversal. It began making millions. How did they do it? UnumProvident says by restructuring and making smart business decisions.

But internal documents suggest the company had a new game plan to help it deny as many claims as it could.

Dr. William Feist, was one of Providents two staff physicians when new management took over in 1993. He left the company two years later. Here in a deposition, he describes under oath how the company changed.

Dr. Feist said: There was no concern for the individual. It was just bottom line. If we can terminate this file, were going to do it.
Dr. Feist says the company first began targeting the policyholders who were costing the company the most money at meetings called roundtables.
The object of the roundtable was to cut off the high dollar claims, says Feist.

UnumProvident urged Dateline not to believe Dr. Feist, saying his knowledge of the company is outdated, and that he has twice signed affidavits which included false information. Dr. Feist says they were simple mistakes. And remember, Dr. Feist isnt the only one speaking out.

It became a witch hunt, says one.
These people say they encountered similar roundtables years later.

Former employee: It was all looking for loopholes to close the claim.

John Larson: And if you cant do it, we have a team of experts here to figure out how you can.
Former employee: It was mandatory. Even if you didnt have a claim, youd better find one.

They say most vulnerable were policyholders with so-called subjective illnesses, illnesses that dont show up on x-rays or MRIs, like mental illness, chronic pain, migraines or even Parkinsons.

Former employee: So theyre fatigued. Prove it. So theyve got achy joints. Prove it. Why cant they work?

John Larson: And if they cant prove it?

Former employee: Theyre out of there.

John Larson: Denied.

Former employee: Denied.

And they are not the only ones saying this. In all, ten Unumprovident employees agreed to speak with Dateline, but only if we promised not to reveal their names. We can tell you this about them their jobs range from claim representatives all the way up to vice presidents. Some left the company on their own, some were fired, and some still work at Unum provident.

But all have described the same atmosphere one of intense pressure coming from management down to employees pressure to cut off benefits to policyholders.

Dateline also searched thousands of pages of internal corporate documents and court records and found evidence that appears to back up what they say.

This is a series of internal monthly reports that show company savings seem to be growing the result of cutting claims terminated claims have reached a record level.

And we found evidence that suggests the company set goals for cutting claims, deciding ahead of time how many claims should be denied. Like this 1995 top-level memo. It spells out a company-wide goal to terminate $132 million in claims.
An internal e-mail from last year alerted a group of adjusters they have one week to close 18 more claims to meet our projections. These people say if they didnt meet their projections, theyd have what they called fire drills intensive efforts to find claims to close.

John Larson: The image is of a fire drill. A bell goes off. Everybody rallies to a cause. What was the cause?

Former employee: The cause was looking for opportunities to close a file.

John Larson: Deny claims.

Former employee: Deny claims.

Unum Provident would not agree to an on-camera interview, but vehemently denies that it sets goals to terminate claims. In a letter to Dateline, it says it does estimate claim results to project a business plan into the future which may have been mischaracterized or misinterpreted by others. Also, it says that it will pay 3.6 billion in benefits...this year. And that of all the people who filed claims with UnumProvident last year, only 2% were found to be not disabled. And, it says it has a consistent record in paying claims.

UnumProvident is more than just claims people and managers, its also doctors, over 100 of them doctors sworn to do no harm. Wouldnt a Unum Provident doctor stop the company from cutting off disabled people? Not according to this policy holder.

If I could have every wish in the world, Id wish that I could teach again and see my kids get older. Two wishes, says Rosemary Wright.
Once a healthy, vibrant school teacher from Illinois, Rosemary Wright began suffering from a progressive, fatal form of emphysema. Even the smallest activity can leave her gasping for breath.

Her doctors say the kind of emphysema Wright has is genetic, its not from smoking. The same disease had already killed her younger brother and now its killing her.

When Wright became too sick to teach, Unum Provident began paying her disability benefits. But two years later, just as in John Montanos case, the company cut her off.

I opened that letter and I couldnt believe it, says Wright. I thought, Why? I mean this must be a mistake.

Unum Provident based its decision on the opinion of a UnumProvident staff doctor who not only never examined Wright in person, but disregarded the opinions of Wrights two doctors both lung specialists who had examined her and found her totally and completely disabled.
So how could a UnumProvident doctor help cut her off? Dr. Fergal McSharry, who doesnt know Rosemary Wright, worked for Unum Provident for a year and a half. He says it is more about the system than the doctor.

John Larson: Doctor, were they interested in your honest, objective medical opinion?
Dr. McSharry: No.

McSharry says doctors at UnumProvident were pressured to write narrow medical reports to help the company deny benefits.

Dr. McSharry: We were a means to an end.

John Larson: And the end was?

Dr. McSharry: The end was denial.

And if too many of their opinions favored the claimants, McSharry says doctors would be reprimanded in his case, by his boss.

Dr. McSharry: I was told I had fallen off the career path.

John Larson: What did you feel you had to do to get back on their career path?

Dr. McSharry: You know I was just going to have to do more of what the claims people wanted me to do.

John Larson: And what was that?

Dr. McSharry: That was to make it easy for them to deny the claim.

Dr. McSharry says like other doctors who work at UnumProvident, he succumbed to the pressure.

John Larson: Did you ever change a medical opinion because you were being pressured?
Dr. McSharry: Yes. I did.

John Larson: These were cases where in your best medical opinion, you thought these people were either sick or impaired, or disabled. You reversed your own best judgment?

Dr. McSharry: I did that. I didnt want to lose my job. I didnt want to upset everybody around me and I tried to play within the rules.

McSharry says he did it only a couple of times and vowed never to do it again. Even so, if what hes saying is true, they got his medical soul.
Yes. Im only human, he says. I you know, I gave in. Once or twice. I just hope I didnt hurt somebody too badly.

UnumProvident says it doesnt pressure doctors to terminate claims. So what happened to Dr. McSharry? He was fired from Unum Provident for what the company calls poor performance. It also says Dr. McSharry was forced to resign from other jobs for similar reasons.

But McSharry says that losing those other jobs had nothing to do with his performance, and the real reason he was fired from UnumProvident was that he began standing up to the company, refusing to play along.

In fact, five of Datelines sources back up Dr. McSharrys story specifically that doctors were pressured to help cut off benefits. Dr. McSharry is now suing UnumProvident.

Dr. McSharry: I dont have a problem with people setting targets as long as those targets are reasonable and dont hurt people.

John Larson: Were these targets reasonable?
Dr. McSharry: No, not at all.

John Larson: Did they hurt people?

Dr. McSharry: They hurt people every day.

They didnt just take the money away from me, says Rosemary Wright. But they took a sense of dignity away from me.

After Unum Provident ended her disability payments, Rosemary Wright says she was forced to begin spending money she had saved for a lung transplant just to cover living expenses. Wright sued the Unum Provident, which suddenly reversed itself, reimbursed her back benefits and began paying her again. But Wright has not dropped her lawsuit, and says the stress took its toll.
I wasnt sleeping, says Wright. You know I was a wreck and yes, last year was the sickest year Ive ever had. I believe they robbed me of a whole year of my life.

As for John Montano, the quadriplegic, he also filed suit against Unum Provident and the company settled with him for an undisclosed amount of money.

John Larson: In the end what was this companys promise worth?

John Montano: To me, nothing. Their word, the way they operated, theyre totally unethical.

UnumProvident says it regrets how it handled the cases of Wright and Montano, but says they are exceptions. It also says it handles 400,000 new claims a year and it does on occasion, make a mistake.

Yet, in the eyes of at least one insurance commissioner, it may be more than an occasional mistake.

There are some substantial problem areas, says the Georgia Insurance Commissioner John Oxendine.
He told Dateline that he began investigating UnumProvidents disability practices more than a year ago. He says his investigation should be complete by the end of the year.

Unless something radical changes, there probably will be some disciplinary action based on what we have already found, he says.
Unum Provident says any problems in Georgia represent a small percentage of their overall claims, and it will do what is necessary to correct these issues.

In the end, both Montano and Wright say no one should be treated the way they were treated cut off, abandoned by a company that had promised if the worst ever happened, it would be there for them.

Its like stealing, says John Montano. They should be held accountable for that.]]> http://www.yourlawyer.com/articles/read/2480 Sun, 13 Oct 2002 00:00:00 -0700 http://www.yourlawyer.com/articles/read/2480
The Chattanooga and Portland, Maine-based insurer says it doesn't scheme to deny disability claims. Well tonight, Dateline NBC shared its findings with the country.

UnumProvident handles 400,000 new disability claims every year. And, the vice president says of last year's claims, the company only found 2% of claimants not to be disabled. But, according to former employees interviewed in tonight's Dateline NBC story, UnumProvident tries to find reasons to reject claims.

Dateline says Dr. Fergo McSherry used to be on UnumProvident's payroll. He says the world's largest insurer encouraged him and nearly a hundred other doctors to find reasons to deny disability claims. When he didn't go with the flow, McSherry says his boss scolded him.

"You know, I was just going to have to do more of what the claims people wanted me to do. That was to make it easy for them to deny the claim," alleges Dr. McSherry.

McSherry says for awhile he followed his boss' orders. And, when he stopped the doctor claims he was fired.

"They hurt people everyday," says McSherry.

"They didn't just take the money away from me, but, they took a sense of dignity away from me," says Rosemary Wright.

The Dateline report told her story as well. Wright suffers from a progressive, genetic, fatal form of emphysema. She says UnumProvident paid her benefits for two years and then cut her off. Wright sent the insurer letters from two lung specialists saying she's completely disabled from her condition. But, a UnumProvident doctor, who never examined her, said her claim was without merit.

Wright says after she filed a lawsuit, UnumProvident reversed its decision, paid her back benefits and resumed her coverage.

UnumProvident Vice President Tom White said in an interview with NewsChannel 9 last week he doesn't deny that mistakes have been made in the past when handling claims. But, there is no conspiracy to rip off customers.

"Our company manages over 400,000 disability claims a year. To take one or two or three and to try to build a theme around that, we think is absolutely wrong," says White.

UnumProvident faxed NewsChannel 9 this response to the Dateline story. Here it is in its entirety.

"We were aware over the past few weeks that Dateline NBC had been preparing a story on our company. We cooperated with their representatives with the intent to provide a balanced portrayal of the services we provide to our 25 million policyholders.

Although not unexpected, they chose to air two extreme situations for which we share a sense of regret for their outcome. However, they are not representative of our deep commitment to our business and our customers.

We strongly disagree with the statements and conclusions made in the Dateline story.

UnumProvident has earned a significant leadership position in the disability insurance market as a result of our consistent record in paying claims to policyholders."

A UnumProvident spokesperson will sit down with NewsChannel 9 for an interview tomorrow. So, stay tuned to NewsChannel 9 for the latest on this developing story.]]> http://www.yourlawyer.com/articles/read/2489 Sun, 13 Oct 2002 00:00:00 -0700 http://www.yourlawyer.com/articles/read/2489
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 companys 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

Lady Jackson
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. ]]> http://www.yourlawyer.com/articles/read/2302 Sun, 06 Oct 2002 00:00:00 -0700 http://www.yourlawyer.com/articles/read/2302
Hundreds of lawsuits from the Bay Area to the East Coast claim that insurance giant UnumProvident deliberately terminated disability payments to customers who were debilitated. As a result, the suits say, people suffering from brain damage, cancer and other critical ailments that prevented them from working were sometimes left destitute.

"It's a real tragedy because these are people who bought insurance believing it would be there if they got sick, and instead the promise was broken," said Jamie Court, executive director of the Foundation for Taxpayer and Consumer Rights, a Santa Monica nonprofit that studies the insurance industry.

Among the policyholders who say their claims were wrongly denied is child psychiatrist Stuart Gluck of Cupertino, who has AIDS and underwent a triple bypass for an unrelated heart condition. After he started suffering severe memory lapses, he realized and his doctor concurred that he could no longer see patients.

But after several months of payments, UnumProvident said he was able to return to work and stopped sending checks.

"My reaction was horror," he recalled. "I feared for the loss of my house, loss of my car, my ability to support myself and my son."

Gluck, like others who have sued UnumProvident, believes the company terminated his coverage as part of a practice to selectively target customers who were receiving long-term, high-end stipends.

Court testimony and internal company documents offer some corroboration for the charges.

But UnumProvident categorically denies that it deliberately terminated claims to save money.

"We pay all legitimate claims," said Tom White, vice president of corporate relations for the Chattanooga, Tenn., company. "We review claims thoroughly, objectively and fairly. We apply significant medical resources to assist claimants in returning to work."

Formed from the 1999 merger of Unum Corp. and Provident Companies, UnumProvident also owns the Paul Revere Corp., another insurer. (Many of the lawsuits name its predecessors as defendants.) No. 205 in the Fortune 500, the company had 2001 profits of $994.7 million on sales of $9.4 billion.

White said UnumProvident has one-third of the entire U.S. disability insurance market. With 25 million customers, he said, it is not surprising that some cases are disputed.

Still, the number of lawsuits and the personal anguish they catalog paint a disturbing portrait.

There was the San Francisco court reporter, Susan McGregor, who says she suffers from intense pain caused by repetitive stress and cubital tunnel syndrome. UnumProvident terminated her benefits just before her husband was diagnosed with leukemia.

And there was the Berkeley chiropractor, Joan Hangarter, who said her debilitating back and arm pain prevented her from working. After her benefits were cut off, her car was repossessed, she was evicted, forced to declare bankruptcy and went on welfare.

Ray Bourhis, a partner in San Francisco law firm Bourhis & Wolfson, has represented dozens of UnumProvident customers whose benefits were denied, including Gluck, McGregor and Hangarter.

"You shouldn't have to sue to get an insurance company to pay the benefits they owe you," he said.

Bourhis said the company often claimed that clients were not entitled to benefits if they could perform part of their job. For example, he said UnumProvident claimed McGregor, the court reporter, was not disabled because she could still proofread, and that Hangarter was still able to be a chiropractor because she could do her office bookkeeping.

Chris Collins, senior vice president and deputy general counsel for UnumProvident, said that the company believed both McGregor and Hangarter were capable of returning to work and thus not disabled.

Among the thousands of pages of court documents from lawsuits against UnumProvident, some stand out.

A May 1995 memo laid out the trade-off between profits and claims in the dispassionate language of a bean counter. Ralph Mohney, now senior vice president in charge of return to work services, wrote to CEO and Chairman Harold Chandler, explaining that the company could save from $30 million to $60 million a year through new "claim improvement initiatives" which Bourhis and other opponents say is a euphemism for purposefully terminating benefits.

"A 1 percent decrease in benefit costs due to more effective claim management translates to approximately $6 million in annual savings," he wrote.

"We believe that aggregate improvements in the 5% -10% ($30 million-$60 million annually) range are possible."

UnumProvident's White said the memo referred to saving costs by consolidating claims management in a central location.

Two former medical executives with UnumProvident or its predecessors separately testified that the company had a practice of denying legitimate claims.

Dr. Patrick McSharry, a former medical director at UnumProvident, sued the company in June, alleging it denied valid claims and asked its staff doctors to justify those denials. The suit said he suffered retaliation for writing accurate reports contrary to that practice.

Collins of UnumProvident said the company completely rejects McSharry's allegations, which he called "preposterous." He said McSharry was fired in January for being "disruptive."

McSharry's lawsuit triggered a stampede among lawyers suing UnumProvident for denying claims. More than 60 lawyers have asked to depose him, according to press reports.

Dr. William E. Feist, who resigned as vice president and chief medical officer of Provident in 1996 after 14 years with the company, testified in Hangarter's lawsuit that the company held weekly "roundtables" to jettison claims.

"The whole goal of roundtable discussions was to do just that, to terminate claims," he said. ". To me, that is unethical."

Feist said the company played hardball, including seeking embarrassing information on clients. "Anything was fair game to try to terminate the claim - - surveillance or financial records, ex-wives, mistresses, whatever, anything was fair game," he said.

White denied those charges. "Dr. Feist slept through most of the roundtable meetings," he said. "Basically the man will say whatever the plaintiffs' bar asked him to say."

-- A court in one lawsuit ordered UnumProvident to provide a list of all lawsuits against it since 1997 in which a plaintiff alleged "breach of contract, breach of the implied covenant of good faith and fair dealing and/or fraud." The company responded with a hefty document listing 331 such suits in California and 2,200 in the United States.

Considering that the company handles 400,000 new claims a year (of which three-quarters are for short-term disabilities like a broken leg), that is a "microscopic subset of our claims," White said.

UnumProvident has embarked on an aggressive press campaign since word of a "60 Minutes" investigation got out, triggering a slide in its stock, which is down about 17 percent in the past month. It closed Friday at $17.95, down $1. 17.

The company has set up a special section of its Web site to point out that it pays $3.6 billion a year in claims and has 3,000 employees who work on processing claims. It has issued press releases and written to shareholders and stock analysts, saying the "negative" television profile misrepresents the facts.

For the individuals who became disabled after having bought insurance from UnumProvident or its predecessors, the story continues.

Gluck, Hangarter and McGregor all sued the company.

McGregor, the court reporter, prevailed at her trial and was awarded $1.2 million, but has yet to receive a dime while UnumProvident's appeal is pending.

Her husband died about seven months after the trial.

"I trusted these people; I thought they were honorable and they weren't," she said. "I paid for insurance to safeguard me in case I couldn't earn a living. They totally let me down."

Gluck, the psychiatrist, decided to go public with his story because he feels "what this insurance company has done to me and is doing to scores of other people is unconscionable," he said. UnumProvident has reinstated his monthly payments and says it has settled his case.

His decision to "become a crusader" meant he had to tell his 19-year-old son that he has AIDS. "It's tougher than anything I've ever done," he said.

Hangarter, the chiropractor, won at her trial in February. She was awarded $7.6 million, including $5 million in punitive damages. However, like McGregor,

she has not received any money while the insurance company appeals the decision.

Based on the award, she borrowed money, which allowed her to buy a car and rent a nice house in Novato. That money will run out in another couple of months.

She has a Hollywood scriptwriter interested in her story for a movie of the week, but she's pinning her hopes on a book she works on every day while her kids are in school. It's the story of her fight with UnumProvident. When asked the title, she pauses.

" 'Screwed,' " she said. ]]> http://www.yourlawyer.com/articles/read/2303 Fri, 04 Oct 2002 00:00:00 -0700 http://www.yourlawyer.com/articles/read/2303
The Chattanooga-based company, which insures some 25 million people, told stockholders Wednesday to expect a possible ''misrepresentation of the facts'' when the television show airs a segment on how the company handles disability claims.

The report, which the company expects will run either Sunday or Oct. 13, stems from a lawsuit filed in July by Dr. Patrick McSharry.

McSharry, who was dismissed as medical director in January after 14 months with the company, contends UnumProvident routinely denied disability claims and then turned to its medical advisers to ''provide language and conclusions'' to support the denials.

Several dozen policyholders also have filed lawsuits against the company, alleging their applications for claims were unfairly denied.

More than 60 policyholders seek McSharry's help in deciding their cases, his Chattanooga attorney Harry F. Burnette said.

On Wednesday, UnumProvident issued press releases, sent a video of remarks by the company's president to employees, wrote to shareholders and distributed a fact sheet to stock analysts in anticipation of the 60 Minutes report.

In a letter to ''employees, friends and co-workers,'' Harold Chandler, the company's chairman, president and chief executive officer, predicted that a ''negative story'' will be based on allegations by opposing lawyers and fired employees, including McSharry.

Kevin Tedesco, a spokesman for 60 Minutes, said the show has a policy of ''not commenting about stories we are still reporting on.''

After the company's announcement Wednesday, UnumProvident's stock fell nearly 10%, dropping $2.01 and closed at $19.26 a share. Trading volume was more than double the average daily amount.

Yesterday, the stock dropped again to $19.12 a share.

David Lewis, a senior financial analyst with SunTrust Robinson Humphrey in Atlanta, said the company was smart to head off a potentially damaging story rather than wait until after it airs, calling it ''proactive'' in easing investor reaction.

McSharry, who lives near Chattanooga, has an unlisted home phone number and could not be reached for comment yesterday.

His suit seeks back wages and a return to the job that paid ''six figures,'' Burnette said. It also seeks punitive damages.

Burnette said he was trying to get the case returned to state court, where it was originally filed.

''The bottom line is, what Dr. McSharry says happened, I see no evidence that it didn't. They are doing stuff that is illegal. I can understand them wanting to put their best face on that,'' Burnette said.

UnumProvident spokeswoman Linnea Olsen said the company has ''about 30%'' of the nation's disability insurance business; the next largest competitor has about 9%.

In 2001, ''we handled about 400,000 claims and only about 2% were denied,'' she said. Of those, ''less than four-tenths'' prompted lawsuits, she said.

Olsen said she did not have numbers available on the percentage of denials or lawsuits pending from previous years.

About 3,500 people work for UnumProvident in Portland, Maine, where the former Unum Corp. was founded.

UnumProvident was created by the 1999 merger of the Unum Corp. and The Provident Companies, based in Chattanooga, where there are more than 2,217 workers.

Olsen said UnumProvident employs about 100 doctors at claims offices in Chattanooga, Portland, Worcester, Mass., and Glendale, Calif.]]> http://www.yourlawyer.com/articles/read/2334 Fri, 27 Sep 2002 00:00:00 -0700 http://www.yourlawyer.com/articles/read/2334
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.]]> http://www.yourlawyer.com/topics/overview/unum_provident_fraud Fri, 27 Sep 2002 00:00:00 -0700 http://www.yourlawyer.com/topics/overview/unum_provident_fraud Unum Provident Fraud UnumProvident is the leading provider of group disability insurance in the United States has been accused of failing to pay claims. UnumProvident and its subsidiaries Colonial Life, Provident Life, and Paul Revere have all systematically denied claims for which policyholders should have been covered.

The number of denied claims by UnumProvident has become well publicized and was the subject of a dateline piece on October 13, 2002. Many policyholders have heard the same excuses as to why UnumProvident has denied their claims. Excuses have ranged from failing to receive documentation on time, failing to receive medical reports, ailment is not a covered disability and more.

The majority of victims are professionals including: doctors, lawyers, accountants, corporate executives as well as general employees. People who thought they were well protected in the event of disability are forced to unnecessarily file for bankruptcy and lose their homes, all while their health is deteriorating.

Many corporate and government employees have also, unfairly, been denied claims by UnumProvident and their subsidiaries.

Our law firm is aggressively prosecuting cases in which UnumProvident has failed to honor claims that should have been covered. If you have been denied a claim by UnumProvident, please fill out the form at the right for a free case evaluation by a qualified attorney.]]>