On September 2, 2003, a group of state insurance regulators formed a multistate examination to determine if the individual and group long term disability income claim handling practices of UNUM reflected "systemic unfair claim settlement practices" as defined in the Unfair Methods of Competition and Unfair Deceptive Acts and Practices in the Business of Insurance Model Act (1972) or NAIC Claims Settlement Practices Model Act (1990) pursuant to the procedures established by the NAIC Market Conduct Examiner’s Handbook. Contemporaneously with the Multistate Examination, the United States Department of Labor (DOL) was conducting an investigation of UNUM pursuant to Section 504 of ERISA.
In response to a number of the concerns raised by the Regulators and DOL, UNUM finalized an agreement on December 22, 2004 named the "Regulatory Settlement Agreement, Targeted Multistate Disability Income Market Conduct Examination" ("Agreement") to pay a $15,000,000 fine and enter a Plan of Corrective Action.
UNUM's Plan of Corrective Action requires it to:
a. provide an effective Claim Reassessment Process for an identified class of claimants going back to 1997 who seek review of the earlier decision by an experienced claim unit formed solely for the purpose to (i) perform a first impression review of the claims using past and current information that is relevant to the claim decision and (ii) apply the improved claim handling process in a fair way to remedy deficiencies that may have affected the earlier claim decision;
b. follow regulatory standards, use best practices, and comply with state and federal laws and regulations; and
c. provide for oversight and ongoing monitoring by the Regulators and DOL, to ensure UNUM’s compliance with the improved claim handling process.
UNUM's Plan of Corrective Action involves examination of its claim files for evidence of "reliance on lack of 'objective' data or 'objective' medical information as a basis for claim denial or termination of benefits. "When multiple conditions or co-morbid conditions are present, Company personnel will ensure that all diagnoses and impairments are considered and afforded appropriate weight in developing a coherent view of the claimant’s medical condition, capacity and restrictions/limitations."
In conducting all reviews, including but not limited to reviews conducted pursuant to the Claim Reassessment Process, UNUM must give significant weight to evidence of an award of Social Security disability benefits as supporting a finding of disability, unless UNUM has compelling evidence that the decision of the Social Security Administration was (i) founded on an error of law or an abuse of discretion, (ii) inconsistent with the applicable medical evidence, or (iii) inconsistent with the definition of disability contained in the applicable insurance policy. This deference to disability decisions by the SSA is consistent with federal case law holding that inclusion of the SSA determination is necessary for an informed judgement by the court.
In the event that UNUM fails to meet the Standard for Compliance for the Plan of Corrective Action, UNUM will be required to pay a fine of $145,000,000.
I will describe in a future posting the process I have been following to recover long-term disability benefits on behalf of my clients under UNUM's Plan of Corrective Action.
Alan C. Olson practices disability law from his offices in New Berlin, Wisconsin, and throughout the United States. AOlson@GetMyLTDbenefits.com
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