$ 4.2 Million Bad Faith Award
Leavey v. Unum/Provident, et al., No. CV-02-2281-PHX-SMM (D. Ariz. May 26, 2006).
A federal appeals court in Arizona upheld a bad faith verdict and significant awards to a Brett Leavey, a disabled dentist victimized by Unum/Provident Corporation and its subsidiary Provident Life and Accident Assurance Company. Although portions of the damages awards were reduced by the trial judge post trial, Dr. Leavey still recovered $3 million in punitive damages and $1.2 million for emotional distress and other damages.
In 1990, while working as a dentist, Dr. Leavey, purchased an “own occupation” disability insurance policy from Provident, a subsidiary of Unum/Provident Corporation, in 1990. In 1998, Dr. Leavey became “totally disabled” under the terms of the policy due to chemical dependency and filed a claim for benefits. Provident initially approved Dr. Leavey’s claim and provided him with a monthly cash benefit. In 2001, Provident discontinued payments claiming that based on its own, independent investigation, Dr. Leavey did not qualify for benefits.
Leavey brought suit seeking benefits and punitive damages claiming that Provident acted in bad faith by discontinuing his benefits. He was able to do so because Arizona permits a claimant to seek more than just the monthly disability benefits. The court heard evidence demonstrating that Unum//Provident “instituted termination goals and used various tools to reach them, such as ‘top-ten’ lists of high-dollar claims to terminate and roundtable reviews, and [that the insurer] targeted psychiatric claims because of the subjectivity in assessing them.”
In ruling in Leavey’s favor on his entitlement to disability payments, the jury also awarded him $15 million “bad faith” punitive damages and $4 million in compensatory damages for emotional distress and other harm. The court found that Unum/Provident acted “not only in bad faith but also ‘with an evil mind’”, and that Unum/Provident had tried to influence the opinions of independent medical examiners and misrepresented the examiners’ opinions. In imposing punitive damages, the court considered Unum/Provident’s various schemes to improperly deny valid benefits claims and the company’s utter disregard of Leavey’s vulnerability and illness.
Certain legal principles impose a limit on the size of these awards so that the trial judge reduced the punitive damages recovery to $3 million and the compensatory damages recovery to $1.2 million.
The Leavey case is a further example of Unum/Provident’s use of unfair, deceptive and illegal practices in order to deny valid disability claims.