Jennifer Worsham was diagnosed with severe depression in 1995 and was unable to continue working as a human resources consultant.
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.