- In a case in which Quadrino Schwartz is co-counsel for the Plaintiff, a Vermont federal judge has denied Unum’s motion to dismiss the case — for a second time. The case must now proceed to trial.
- Unum tried to persuade the judge that punitive damages and emotional distress damages could not be awarded and thus Unum sought to have the court dismiss those portions of the case.
- The evidence in the case, Kelly v. Unum, 1:09-cv-00070 (U.S. District Court, Vermont) reveals that Unum has continued to use its budgets and targets scheme after its settlement with regulators of 49 States. In addition, the evidence shows that Unum has also violated the settlement agreements with the States’ regulators.
Supreme Court Finds that an
Insurer's Dual Role as Plan
Administrator and Payor Under the
Same Plan Can Create a Conflict
of Interest with Respect to
Disability Claims Denials
MetLife v. Glenn, 554 U.S.____, 128 S.Ct. 2343, 2351, 171 L.Ed.2d 299 (2008).
According to the Supreme Court in MetLife v. Glenn, a conflict of interest may exist when an insurer serves in a dual role of deciding the validity of a claim and paying out on that claim. The Court stated that such a possible conflict of interest should be considered when determining the legality and propriety of the insurer’s denial of claims.
The MetLife case involved the denial of disability benefits to Wanda Glenn, a long-time Sears employee and manager of its women’s department, who was covered by the company’s long-term disability plan. In 2000, Glenn took medical leave due to a heart condition and filed a disability claim under her ERISA plan. Under ERISA law, fiduciaries are obligated to “discharge [their] duties with respect to a plan solely in the interest of the participants and beneficiaries and . . . for the exclusive purpose of . . . . providing benefits to participants and their beneficiaries . . . .”
MetLife, the insurance carrier, approved the claim and told Glenn to seek social security payments, which could then be deducted from her MetLife payments. After an administrative law judge determined that Glenn was disabled and eligible for social security payments, MetLife decided Glenn was no longer eligible for disability benefits and stopped paying on her claim.
Glenn sued MetLife in district court based on the denial of benefits, claiming that MetLife’s dual role as evaluator of and payor on disability claims created a conflict of interest . Glen lost her case and appealed to the U.S. Court of Appeals for the Sixth Circuit, which reversed, finding in Glenn’s favor. In deciding the case, the Court of Appeals took into consideration MetLife’s dual role, finding that it created a possible conflict of interest. MetLife sought Supreme Court review, noting that the various circuit courts were split on the issue of whether such a potential conflict should be considered when determining the validity of the insurer’s disability entitlement decision.
The Supreme Court determined that there was sufficient evidence to demonstrate that a strong conflict of interest existed and affirmed the Court of Appeal’s decision in Ms. Glenn’s favor. According to the Supreme Court, when an employer both funds the plan and evaluates the claims, there is a conflict of interest that must be considered when reviewing a denial of benefits. While the Supreme Court’s decision makes clear that the dual role should be considered as a factor, it did not indicate the weight that should be attributed to that factor.
Vermont Federal Judge Orders Unum
to Face Trial for Bad Faith and
Unumprovident Settled with State
Regulators, Agrees to Reconsider
215,000 Denied Disability Claims
UnumProvident reached a settlement, as part of a multistate government investigation, to reconsider 215,000 denied disability claims. Quadrino & Schwartz began the fight against UnumProvident in November 2002 by filing the nation’s first class action seeking this type of relief for thousands of disabled individuals across the U.S. The time for an individual to participate in the government settlement expired in the spring of 2005.
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
Law Firm of Quadrino Schwartz
Announces Federal Court's
Rejection of UnumProvident's
Attempt to Transfer Class Action
UnumProvident’s Defeat on Key Legal Point Will Require Company to Face Hearing on Class CertificationNEW YORK, Jan. 11, 2005 (PRIMEZONE) — In one of the class actions pending against UnumProvident, a Federal Court in Massachusetts rejected a last-minute tactical maneuver by UnumProvident that sought to avoid a class certification hearing in the State’s Superior Court. In an extensive emergency Memorandum Opinion, Judge F. Dennis Saylor rejected UnumProvident’s attempt to transfer the case out of the State’s Superior Court and into the federal system just 45 minutes before a critical hearing on class certification. See Jewel v. UnumProvident, No. CV 04-40262. UnumProvident also tried to transfer the class action to Tennessee, where other class actions were previously transferred in September 2003.
`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).
Disability Investigation by 47
By BILL POOVEY, Associated Press WriterCHATTANOOGA, Tenn. – UnumProvident Corp., the nation’s largest disability insurer, will pay a $15 million fine and reconsider about 200,000 denied claims in response to a multistate investigation, company executives said Thursday.
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.