When the case was filed — 5 years ago — Evan Schwartz and Richard Quadrino could hardly have predicted the course of events in their first-in-the-nation class action against UnumProvident, the disability industry giant. They knew this: the case was a serious and ground-breaking lawsuit that had a great chance to help thousands of disabled Americans. What they didn’t know was how many twists and turns there would be until that critical moment in the case: class certification

In late 2002 and early 2003, the case was on a fast track in a federal court in Manhattan. A custom crafted evidence preservation order was obtained to preserve critical emails, yet as the order was being signed, emails were being destroyed. Those events culminated in a unique and important trial on evidence destruction in which Partner Richard Quadrino and a team of lawyers at Quadrino Schwartz took on one of the nation’s powerhouse law firms. The trial ended with critical findings of wrongdoing by UnumProvident and a massive effort to have thousands of emails restored for future use in the case.

The legal theories and approaches in the case were approved by the court when UnumProvident tried to get the case dismissed. The Court approved the method designed by Quadrino Schwartz to allow a class action aimed at reforming the practices of a Fortune 200 Company to comply with the law and stop its illegal use of financial budgets and targets in the claims process.

Another unprecedented move by Quadrino Schwartz was the seizure of files from the desks, credenzas and drawers of all of the company’s top officers to prevent further evidence destruction. A massive effort was ordered, as requested by Quadrino Schwartz, to box up and ship out 1,500 boxes of critical information to be preserved and used in the class action.

After the case was transferred to Tennessee and joined with a series of other similar cases filed in other parts of the country at a later date, the court in Tennessee tried on numerous occasions to get UnumProvident to engage in serious settlement discussions. The company refused, and the case dragged on for years.

Quadrino Schwartz never gave up the fight, however. The pressure applied by the case and the publicity from CBS 60 minutes and other media prompted a government investigation. That investigation culminated in a 48-State settlement in which UnumProvident agreed to some reforms of the company and it mailed notices to thousands of people to have their denied claims re-assessed.

The deal had significant shortcomings, however, and Quadrino Schwartz continued to push for the appropriate relief for all victims of the company’s bad faith practices. Even after many Plaintiffs settled and walked away, Quadrino Schwartz and its clients stayed in the fight, believing that a better day was ahead and that persistence in seeking justice would see its rewards.

Now that a class is certified, Quadrino Schwartz will move into the next and critical chapter of this drama, undeterred and with a determination to see to it that complete justice is achieved for all disabled victims of UnumProvident’s profit-driven scheme.

The original lawsuit drafted and filed by Quadrino Schwartz in New York was adopted and used as the basis for all of the class actions that were merged into one case in Tennessee. The Court quoted substantially from that Quadrino Schwartz Complaint, and based the class certification decision on the legal theories and claims contained in that Complaint. The Court agreed to define the class of disabled victims as a very broad group of people who have had their claims denied or terminated by Unum’s subsidairies that have issued group policies and allegedly engaged in various unlawful claims practices. The class of people who may receive relief from this class action is defined as follows:

All plan participants and beneficiaries insured under ERISA-governed long-term disability insurance policies/ plans issued by UnumProvident and the insuring subsidiaries of UnumProvident throughout the United States who have had a long-term disability claim denied, terminated, or suspended on or after June 30, 1999 by UnumProvident or one or more of its insuring subsidiaries after being subjected to any of the practices alleged in the Complaint.

Quadrino Schwartz represents 4 of the 7 individual plaintiffs in the case who are now class representatives. Those 7 plaintiffs will now represent the interests of thousands of people across the country whose claims were terminated or denied by Unum’s alleged illegal scheme.

In the decision, Judge Curtis Collier, the Chief Judge in the Eastern District of Tennessee, detailed the many allegations of unlawful conduct alleged in the Complaint, including allegations that Unum sought to save money by budgeting the claims process, rewarding company employees, including in-house doctors, through compensation and bonuses for denying or terminating as many claims as possible, and creating secret documents which predicted in advance when claims would be terminated.

Important Links:

• 09/04/07- Judge Collier Certifies Class Action
  Click Here to Read the Judge’s Decision
• 09/04/07- Associated Press
  Class Action Status OK’d for Unum Suit

If you are a victim of UnumProvident and did not participate in the government settlement you will now be part of the class action being prosecuted by Quadrino Schwartz, which was certified by a federal judge in Tennessee on September 4, 2007.

UnumProvident’s disability insurance divisions operate under the following names:

• Paul Revere Life Insurance Company
• First Unum Life Insurance Company
• Unum Life Insurance Company of America
• Provident Life and Accident Insurance Company
• Provident Life and Casualty Insurance Company

If you would like a free telephone consultation to find out if you are a potential member of the UnumProvident class action being prosecuted by Quadrino & Schwartz, fill out our inquiry form.

`UnumProvident must now face the hearing on class certification,” said Richard J. Quadrino, one of the attorneys representing Plaintiffs and the class members in the suit. “The federal court acted on an emergency basis because Plaintiffs and the class members are also seeking emergency relief in the Massachusetts Superior Court regarding the notices that are being sent to disabled claimants under UnumProvident’s recent Regulatory Settlement Agreement (’RSA’).” That Agreement between UnumProvident, most of the States, and the U.S. Department of Labor requires notices to be sent to all UnumProvident claimants whose claims were denied or terminated in the last four years. In the Massachusetts class action, known as Jewel et al. UnumProvident et al., No. 03-2391-B, the Plaintiffs are seeking a court order requiring UnumProvident to send additional notices to the claimants, who are potential members of the Jewel class action, letting them know of the existence of the case. These additional Notices will enable the claimants to make an informed choice as to whether to participate in the RSA or wait to see if they can obtain more effective and comprehensive relief in the Jewel class action.

A hearing in the Massachusetts Superior Court is now scheduled for Wednesday, January 12, 2005 to address the requests for relief on behalf of Plaintiffs and the class members.

Plaintiffs and the class members in the case are represented by the law firms of Mansfield Tanick & Cohen of Minneapolis, Minnesota (mansfieldtanick.com), Gilman & Pastor of Saugus, Massachusetts (gilmanpastor.com), Sandals & Associates of Philadelphia, Pennsylvania (sandalslanger.com) and Quadrino & Schwartz of Garden City, New York (http://www.disabilityinsurancelawyers.com; and http://www.unumprovidentclassaction.net).

The company estimates the settlement will cost it $127 million in restitution to policy holders and in enacting required reforms.

Insurance regulators in Tennessee, Maine and Massachusetts, the lead states in the investigation, signed the agreement, as did officials in New York and the U.S. Department of Labor, spokeswoman Mary Clarke Guenther said.

In trading Thursday on the New York Stock Exchange (news - web sites), UnumProvident shares fell 36 cents to close at $13.73. They soared nearly 7.5 percent, or $1.02, in late trading after the settlement was announced.

The company insures more than 25 million people and has about a quarter of the disability insurance market.

Paula Flowers, commissioner of the Tennessee Department of Commerce and Insurance, said that while problems were noted in a very small percentage of claims there were enough that “corrective action was warranted.”

Guenther said insurance regulators in states that sign the agreement would get a share of the fine. She said individual customers would not be affected by whether their states agree.

Final approval of the settlement depends on regulators in two-thirds of the 47 remaining states agreeing. Officials in some states plan to continue their own market conduct examinations.

The investigation started last year in response to customer complaints. Georgia’s insurance commissioner, John Oxendine, in March 2003 imposed a $1 million fine on UnumProvident and its subsidiaries, saying his investigation showed a mind-set of looking “for every technical legal way to avoid paying a claim.”

Flowers said the investigation raised “concerns” that included the company relying “solely on their in-house physicians” to decide whether to deny or terminate some medically disputed claims, basing denials on “very narrow interpretations” and failing to consider both physical and psychological conditions in some cases.

She said the agreement calls for “at least 200,000″ denied claims to be re-examined under the continuing scrutiny of regulators. She said regulators would again examine the company’s claims handling after two years.

If the company does not meet the settlement requirements after two years, there is a possible “contingent fine’” of up to $145 million.

UnumProvident executives previously said disputes represent a small fraction of the roughly 400,000 disability claims the company processes annually.

Guenther said an additional 75 employees would be hired as part of the settlement.

UnumProvident, formed with the 1999 merger of Provident Cos. of Chattanooga and Unum Corp. of Portland, Maine, has more than 13,000 employees worldwide.

In a stinging and thorough opinion, a federal judge in Massachusetts awarded disability benefits to a law firm that had brought a claim on behalf of one if its former employees. In the decision, the Court noted that:

“First Unum’s conduct in denying Doe’s claim was entirely inconsistent with the company’s public responsibilities and with its obligations under the Policy. This is not the first time that First Unum has sought to avoid its contractual responsibilities, and an examination of cases involving First Unum and Unum Life Insurance Company of America, which like First Unum is an insuring subsidiary of Unum Provident Corporation, reveals a disturbing pattern of erroneous and arbitrary benefits denials, bad faith contract misinterpretations, and other unscrupulous tactics. These cases suggest that segments that have run in recent years on “60 Minutes” and “Dateline,” alleging that Unum Provident “regularly declines disability claims as a way of boosting profits,” may have been accurate. See Edward D. Murphy, Unum Corp. Retirees Feeling a “Sense of Loss,” Portland Press Herald, Apr. 29, 2003, at 1C. This Court cannot tell whether First Unum and other Unum Provident companies are considered pariahs in the industry, or whether their ability to retain customers is a result of low prices, market inefficiency, or other factors. In either case, employers have a duty to select insurers for their employees with care, and to avoid hiring insurers with reputations for shoddy and hostile claims administration, although it may well be that suits based on violation of this duty are preempted under ERISA.”

The Court reviewed and surveyed many of the cases from around the United States in which judges have harshly criticized UnumProvident and its subsidiaries for flagrantly engaging in bad faith claims practices.

The Court also stated, as part of its decision, that:

“In this case, First Unum’s denial was flagrant. The company adopted a patently unreasonable interpretation of the Policy and reached a decision that was plainly contrary to the facts in the record before it. First Unum’s conduct also resulted in years of delay in distribution of Doe’s benefits, and it is by no means clear that First Unum can be trusted fairly to adjudicate Doe’s claim on remand. Even if the Court could trust First Unum, and even if the company had acted in good faith, further delay would merely have added to the injustice that Doe has already suffered.”

In awarding legal fees to the Plaintiff, to be paid by UnumProvident, the Court said:

“As this Court has described, First Unum acted in bad faith in denying benefits to Doe, and while First Unum’s position was entirely without merit, Radford’s was essentially correct. The company can well afford to pay a fee award, and the awarding of fees against insurers acting in bad faith would deter similar conduct by other insurers in the future. The Court has no information before it as to whether the Policy is still in effect for Hawkins employees, but to the extent that other participants and beneficiaries exist, the decision that has resulted from the bringing of this case ought certainly change First Unum’s practice of denying valid claims based on an erroneous and highly restrictive interpretation of the Policy. Moreover, participants and beneficiaries in other plans, particularly those administered by First Unum, will tend to benefit in a similar manner from this lawsuit.”

California is one of the few States in the country that allows plaintiffs to pursue punitive damages against an insurer for a bad faith claim denial.