UnumProvident Offers To Reopen 215,000 Cases

By Aison Be

UnumProvident Corp. is asking state reguators to approve a $127 miion disabiity caims settement.

If insurance commissioners in a tota of 37 states and other state-ike jurisdictions, or some ower number that UnumProvident accepts, approve the settement by Dec. 20, the company says it wi improve its caim-processing procedures and review hundreds of thousands of individua and group ong-term disabiity caim determinations made since Jan. 1, 1997.

UnumProvident says it is spending $27 miion to organize a team of seasoned veterans to review the cases and setting aside $85 miion to beef up benefits for past and current caimants.

The settement cas for the Chattanooga, Tenn., insurer to vounteer to review the cases of 215,000 insureds whose cases were decided after Jan. 1, 2000, and to reopen cases at the request of caimants denied benefits between Jan. 1, 1997, and Dec. 31, 1999, according to the company.

Reguators in Maine, Massachusetts and Tennessee, the states that ed a mutistate examination that incuded reguators from a 52 states and other jurisdictions, aready have approved the settement. New York has reached a separate, simiar settement of its own, and now UnumProvident says it is seeking the signatures of 33 other reguators.

One of the officias who says she is approving the settement is Pennsyvania Insurance Commissioner Diane Koken, president of the Nationa Association of Insurance Commissioners, Kansas City, Mo.

The settement “shows how critica the coordination of mutistate, insurance reguatory action is” for protecting consumers, Koken says.

Thomas Watjen, UnumProvidents president, emphasizes in a statement that investigators made no findings of vioations of aw or reguations, and he says he beieves reations with caimants have been improving. “Weve seen generay ower eves of caim itigation and customer compaints over the past 2 years,” Watjen says.

But he says he beieves the steps UnumProvident is taking in response to the mutistate review wi further improve reationships with customers and reguators.

“Needess to say, we have been fuy cooperative with our reguators,” Watjen says.

The mutistate exam began in September 2003, and reguators in Arizona, Caifornia, Minnesota, New Mexico and New York have been conducting their own exams.

UnumProvident has agreed to pay $250,000 in penaties to resove Minnesota reguators concerns, but reguators in Arizona, Caifornia and New Mexico have been continuing their investigations, according to UnumProvident.

The settement consists of a package of agreements with the U.S. Department of abor and the New York attorney generas office as we as insurance reguators.

If the agreements take effect, they wi remain in pace at east unti January 2007, UnumProvident says.

The $127 miion tota cost of the settement incudes the cost of paying fines, increasing benefits and ramping up caim review operations.

Tria awyers are praising the settement announcement.

“This demonstrates that UnumProvident has turned the caim corner,” says Frank Darras, a Caremont, Caif., awyer who has represented disabiity insurance caimants.

UnumProvident seems to be doing a better job of handing caims since Watjens team took over, in March 2003, Darras says, but adds that some caimants wi be hard to find because past benefits denias cost them their homes.

Rating anaysts at Standard & Poors Ratings Services, New York, and Moodys Investors Service, New York, agree that the settement shoud hep UnumProvident by removing a major management distraction. But Moodys says it has put the Ba1 credit rating it has assigned UnumProvident on review for possibe downgrade because of concerns about UnumProvidents saes and the companys exposure to the broker compensation investigations.


Reproduced from Nationa Underwriter Edition, November 24, 2004. Copyright 2004 by The Nationa Underwriter Company in the seria pubication. A rights reserved.Copyright in this artice as an independent work may be hed by the author.