Unum Group Corp. has paid about $676 million in extra benefits to claimants in connection with a review of past claims decisions, officials say.

Unum, Chattanooga, Tenn., has paid the benefits in the course of completing a claims reassessment process required by the state insurance regulators that have been participating in a large, multistate examination of the company’s handling of disability claims.

In addition to reviewing past claims, Unum “has instituted policies and procedures to ensure its claimants are treated fairly going forward,” Massachusetts Insurance Commissioner Nonnie Burns says in a statement.

Massachusetts has been one of the 4 states helping to lead the multistate exam process. The other lead states are Maine, New York and Tennessee. Those states and the U.S. Department of Labor negotiated the multistate settlement agreement with Unum in 2004.

The agreement, endorsed by 48 states and the District of Columbia, required Unum to review claims processed between January 1997 and 2004, improve procedures for handling future claims and strengthen quality control systems.

Unum ended up mailing reassessment notices to about 291,000 long-term disability insurance and individual disability insurance claimants, and more than 79,000 of the notice recipients decided to participate in the claim reassessment process, according to lawyers who prepared a report on the multistate settlement outcome for the participating states.

About 23,000 of those claimants, or 29%, completed a reassessment information form.

When claim reviewers looked at the claims of individuals who submitted reassessment forms, they ended up reversing about 9,700, or 42% of the total, in whole or in part, according to a team of independent examiners led by J. David Leslie, a Boston lawyer, who helped regulators grade Unum’s efforts to comply with the settlement agreement.

The error rate in the claims reassessment process was well under the 7% “maximum tolerance standard” set by the settlement agreement, the examiners write in a report prepared for state regulators.

Unum and its subsidiaries also seem to have complied with settlement terms concerning matters such as changes in corporate governance and claim organization and procedures, the examiners write.

Unum President Thomas Watjen has welcomed regulators’ announcement that the company has complied with the terms of the 2004 settlement agreement.

The announcement “validates the steps we have taken to improve our processes for the benefit of our customers, and at the same time, set a standard for the rest of our industry,” Watjen says in a statement.

The results described in the examiners’ report “are consistent with the positive feedback we have continuously received from our customers and claimants, as well as third-party research in which Unum’s claims satisfaction compares very favorably with the rest of the industry,” Watjen says.

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GRAPHIC

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Kicker: The Results

Effects Of The Claim Reassessment Process

- 290,903 claimants received reassessment notices.

- 79,396 claimants participated in the reassessment process.

- 23,190 claimants completed reassessment information forms.

- Claim reviewers changed 9,672 of the claim

- 8,911 long-term disability insurance claimants received $559 million in additional benefits, or about $63,000 in additional benefits per claimant.

- 761 individual disability insurance claimants received $118 million in additional benefits, or $155,000 in additional benefits per claimant.

Source: Unum Multistate Market Conduct Examination Report