Chattanooga: Jury finds Unum violated law in 2 out of 7 claims

Chattanooga-based Unum, the nation’s largest disability provider, has violated federal law by asking a policyholder to file for disability benefits with the Social Security Administration before Unum would pay its insurance benefits, a jury has ruled.

A federal jury in Boston found in favor of a plaintiff this week on two claims that Unum violated the False Claims Act.

A news release by the plaintiff’s attorneys, Phillips & Cohen, states that Unum threatened to cut disability benefits unless policyholders filed false Social Security claims, even though Unum knew the holders were not eligible for the benefits.

Unum officials said the news release is inaccurate and misleading.

“This is a blatant attempt by Phillips & Cohen to try to influence public opinion in a situation where they were unable to claim victory in a court of law,” said Chris Collins, senior vice president and general counsel for Unum US. “Phillips & Cohen was already chastised by the judge at the beginning of this case for issuing an improper news release, so their credibility is at question.”

Court records show the jury reviewed seven insurance claims. In four of those claims, the jury said Unum acted appropriately. Of the remaining three, the jury was unable to reach a unanimous verdict on one and ruled in favor of the plaintiff in the other two.

Officials said the total amount of damages was less than $3,000.

“We are pleased that the jury sided with Unum on the majority of the claims, which we believe substantially supports our position that working Americans who pay Social Security premiums have a right to have a disability claim reviewed by the Social Security Administration,” Mr. Collins said. “This verdict goes a long way in protecting those rights.

“It also substantially discredits the plaintiff’s assertion that simply requesting someone to ask the Social Security Administration to assess their claim is fraudulent behavior,” he said.

Unum officials said they are unsure what the difference was between the claims the jury found in favor of the defendant and those found in favor of the plaintiff.

The case was brought on behalf of “whistleblower” Patrick Loughren, a Pittsburgh-based personal injury attorney.

“Unum’s conduct in threatening people to apply for Social Security under penalty of losing a significant portion of their private disability benefits is wrong,” Mr. Loughren said in a prepared statement. “After five years of intense litigation during which Unum refused to admit it was defrauding the United States, I am gratified that a Boston jury has called them to account.”

Unum officials claimed they never threatened to reduce benefits or asked claimants to make false statements to Social Security.

Unum has had claim problems in the past. In 2003, Georgia Insurance Commissioner John W. Oxendine hit UnumProvident Corp., the company’s former name, with a $1 million fine and placed the company on two years’ probation for its claims-handling practices.

“(Unum) was looking for every technical legal way to avoid paying a claim,” Mr. Oxendine said at the time.

In a three-month period in late 2002 and early 2003, Unum was hit by two multimillion-dollar judgments by California juries.

A $31.7 million judgment was given in 2003 to an eye surgeon who accused the disability insurer of wrongly cutting off benefits. In November 2002, a judge upheld a $7.67 million verdict against Unum in which a chiropractor said the company wrongly denied her benefits when she could no longer work.

Jim Sabourin, a Unum spokesman, said the Boston lawsuit is unrelated to those past problems.

“There is no relationship to past issues,” Mr. Sabourin said. “We would argue that this was someone trying to capitalize on past issues.”

Records show Mr. Loughren has filed similar lawsuits against other insurers. Unum was the first of the pending lawsuits to go to trial, officials said.