NEW YORK (Dow Jones) – A group of ailing workers filed a lawsuit claiming UnumProvident Corp. (UNM), the largest disability insurer in the U.S., has orchestrated an “elaborate corporate scheme” to deny their long-term disability claims.
The suit, which seeks class-action status, claims UnumProvident gives bonuses and promotions to its employees based upon the numbers of claims they can deny.
UnumProvident also provides financial incentives to in-house physicians who “rubber stamp” the denial or termination of disability claims, according to the suit.
UnumProvident saves money and increases its profit by canceling claims, the plaintiffs say. “The unfolding evidence of UnumProvident’s scheme is staggering,” the plaintiffs contended din the suit, which was filed late Monday in Manhattan federal court.
Plaintiffs in the suit include Theresa Keir, a former analyst with real estate company Cushman & Wakefield Inc., who says her claims were denied despite chronic pain from breast cancer surgeries. Another plaintiff, attorney Michelle Lynn Washington with Schulte Roth & Zabel, LLP, says she was denied benefits despite suffering from a heart condition.
An UnumProvident spokesman wasn’t immediately available to comment on the suit.
UnumProvident has already been accused of wrongfully terminating benefits in cases that have resulted in jury verdicts of millions of dollars.
In October, the NBC news program “Dateline” aired a piece on the accusations against the company. In advance of the story, UnumProvident issued a statement saying it was “proud of its record” and emphasized that it paid out $3.6 billion in disability-related claims in 2001.
Our firm, representing the plaintiffs, said the latest suit is the first to accuse UnumProvident of violating the Employee Retirement Income Act, or ERISA, the 1974 law that regulates employers’ welfare-benefit plans. Often, long-term disability insurance – which provides income to ill or injured workers – is part of a company’s welfare-benefit plan. After purchasing the insurance, an employer will routinely allow insurers like UnumProvident to administer the plan and make critical decisions. UnumProvident “has thrown out the window any and all concerns for the victims and disregarded it fiduciary obligations while at the same time, watching like a hawk its bottom line, its profits, and its stock price,” said our partner.
The plaintiff seeks a court order that would force UnumProvident to change its practices and possibly reverse claim decisions. The suit was filed on behalf of thousands of employees whose long-term disability claims have been handled by UnumProvident since June 1999, when Unum Corp. and Provident Cos. merged.
Evan S. Schwartz
Founder of Schwartz, Conroy & Hack
800-745-1755
ESS@schwartzlawpc.com