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Unum Group Appears as Innocent Bystander in Insurance Denial Lawsuit


. By Gordon Gibb

Unum Group is not isolated from incurring the wrath of policyholders having been denied what are thought to be legitimate claims. The insurance industry as a whole tends to view claims as nuisance, or false claims unless proven otherwise and either deny claims outright or simply stop benefits, allegedly without cause. Lawsuits alleging bad faith insurance have followed, including those launched against Unum after claimants have filed an Unum lawsuit alleging unfair treatment.

However, in one case it appears as if a denial of a Unum disability insurance claim may not have been done in bad faith, but rather may have been a meritorious denial given allegations of a breach of fiduciary duty on the part of Allied Building Corporation, the defendant in the lawsuit.

According to the Penn Record (10/04/17), an employee of Allied Building Corp. (Allied) was covered under group benefits through Unum Insurance. Eric Hoffman, an employee of Allied, is reported to have died in January of last year and was covered by life insurance in a group plan through Allied and issued by Unum Life Insurance Co. of America.

Hoffman’s widow, Brenda Hoffman, applied for benefits from Unum following the death of her husband. However, Hoffman was denied due to Unum’s assertions, according to the insurance denied lawsuit, that the claimant’s husband had been laid off from his job at Allied for a time, but that Allied had failed to inform them of the situation.

Allied, or so it is alleged in Hoffman’s lawsuit, also failed to inform their late employee Eric Hoffman of his capacity to convert the group policies under which he was covered, to individual policies.

Unum held that the layoff of Hoffman sufficiently changed the dynamic under the Unum Group insurance coverage within the group policies, thus disqualifying him from benefits.

Amongst the claims brought in the lawsuit, is the assertion that had Allied duly communicated the option of converting group policies to individual policies before Hoffman died, the decedent’s widow would have been in a better position to make a claim and collect on Unum life insurance in association with coverage on her late husband.

Plaintiff Brenda Hoffman, who hails from Weatherly near Wilkes Barre, Pennsylvania, holds Allied responsible for the oversight and filed a complaint in US District Court September 15 against Allied for breach of fiduciary duty. She seeks an order requesting the defendant pay benefits in the sum of $321,000 plus interest, court costs and any further relief deemed appropriate and granted by the Court.

The lawsuit is Hoffman v. Allied Building Corporation, Case No. 5:17-cv-04129, in the US District Court, Eastern District of Pennsylvania.

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