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Holding Unum Responsible For Its Actions

The attorneys at Pillsbury & Coleman, LLP, stand up for California policyholder rights when they have been denied the benefits for which they have paid. We tackle long-term disability (LTD) insurance claims appeals in ERISA and non-ERISA lawsuits against Unum. Unum's policies include those issued by Paul Revere, Provident, UnumProvident and Colonial Life.

Our firm obtained one of the biggest jury verdicts in the country against Unum (that particular case was a non-ERISA claim) for its mishandling of a long-term disability (LTD) claim, in Chapman v. UnumProvident. In the process, we learned first-hand about the unfair claims handling practices of Unum and other insurers. Read more about that in the story below.


UnumProvident Unfair Claims Handling Practices: The Back Story

Evidence in the Chapman v. UnumProvident case exposed UnumProvident and its predecessor companies' schemes to deny legitimate disability claims.

In the 1980's, disability insurers such as Provident (later UnumProvident and now Unum) aggressively marketed "preferred professional" policies, which insured certain occupational specialists, like lawyers, doctors and executives against disabilities. These policies commanded higher premiums, which could then be invested to earn substantial returns in an era of high interest rates.

In the 1990's, however, interest rates dropped and some of those insured professionals began to make disability claims. Provident suffered heavy losses. Looking back, Provident's Senior Vice President of Risk Management, Tom Heys, explained in a confidential memo that the problem was that Provident sold policies without regard to the claims it would ultimately need to pay.

While many policies sold during this period were poorly underwritten and underpriced, Provident was in a worse predicament than some other firms. Provident had the largest share of business in certain high-growth states, such as California, and it had been slow to recognize and take action on this deteriorating area of business. Many of the poor risk cases went to Provident.

According to evidence submitted in court, beginning in 1994, a number of insurance companies (including Unum and Provident) made a concerted effort to reverse their financial losses by denying more long-term disability claims.

Documents revealed that the primary architect of the claim denial scheme was Provident's Senior Vice President of Claims, Ralph Mohney, a man with essentially no knowledge of how to process a disability insurance claim. He enacted new, aggressive claim handling procedures designed to deny and terminate a much larger number of claims.

The new procedures were so successful in achieving a high rate of denied claims that by 1998, Provident had reversed its huge losses. In 1999, Provident merged with Unum Life Insurance Company to become UnumProvident, by far the largest disability insurer in the country.

The claims initiatives developed by Mohney included:

  • Increased use of surreptitious surveillance of insureds
  • Increased use of supposed "independent medical examinations"
  • The development of a "network" of IME (independent medical examiner) physicians who specialized in "forensics" instead of physicians who had an actual clinical practice
  • Increased scrutiny of psychiatric claims which it considered "subjective" and the direct targeting of psychiatric claims for termination

Special units were created to handle specific claims. Supposedly the members of each of these units would specialize in the specific types of injuries and sicknesses presented. Yet, all too often the claims adjusters had no special training, education or experience at all. Many times the claims staff failed to understand appropriate claims handling procedures and were not trained to evaluate and understand the medical records which often are the backbone of the disability claim.

Claims adjustors were instructed how to document the file with information which allegedly undermined a claimant's with a treating physician's certification that his patient is disabled. If they agreed with the treating physician's conclusion that an insured was disabled, they were not allowed to write that conclusion in the file.

Instead, they were instructed to focus on gathering information which suggested that the claimant could return to work. Consultants and in-house medical staff were hired to manage and supervise these claims and their performance was evaluated upon the number of claims terminated or denied.

In fact, many of the in-house medical doctors actually had stock options and other benefits tied to the profitability of the insurance company, giving them an incentive to look for ways to deny claims.

Dr. Patrick McSharry, an in-house medical consultant with UnumProvident, reviewed claim files from throughout the country. In a deposition, Dr. McSharry explained that the role of an in-house medical consultant was to write reports in such a way that the claims personnel could deny the claim.

Dr. McSharry testified that his superiors at UnumProvident repeatedly criticized him for expressing his actual medical opinion rather than the opinion preferred by the claims department which could support a denial or termination.


It's clear from this experience that insurance companies have extensive systems in place to deny even very legitimate disability claims. If you have experienced a claim denial with an employer-provided policy, call our San Francisco office at 415-655-1549 or send us an email to schedule a consultation with an attorney who can help a disability claim appeal.