Unum Group Faces Another Lawsuit

Martinsburg, WVYet another lawsuit has been filed against Unum Group (formerly UnumProvident) claiming that the insurance company breached its contract with a policyholder and violated the Unfair Claims Settlement Practices Act of West Virginia.

According to the lawsuit, the plaintiff waited almost a year between the time her husband died and the time that she received payment from Unum. The plaintiff claims that during that time she suffered financial hardship. The suit, which seeks compensatory and punitive damages, was filed in February.

Back in 2005, John Garamendi, California Insurance Commissioner was quoted in the Los Angeles Times as saying, "UnumProvident is an outlaw company. It is a company that for years has operated in an illegal fashion." The quote came while talks were going on between UnumProvident and the State of California in order to reach a settlement regarding UnumProvident's illegal activities. UnumProvident violated state law in almost one-third of the 1,000 claims investigated by officials. It was also investigated by, and reached settlements with, many other states.

Among UnumProvident's questionable practices that were investigated by Garamendi:

• A 24-month limitation on benefits for mental and nervous conditions, which resulted in UnumProvident wrongly putting claimants in those categories to reduce its payments;
  
  
• Knowingly applying the wrong legal definition of disability when denying claims;
  
  
• Purposely targeting high-cost claims for denials; and
  
  
• Misuse of claimants' medical records.

Unum has been accused of using a number of tactics to avoid paying policyholders' claims. The company has denied legitimate claims, underpaid policyholders, claimed that policyholders were covered by another disability plan, retroactively changed a policy, and claimed that policyholders were never disabled.

Furthermore, policyholders claim that their benefits were unfairly cut off or targeted for cancellation by Unum in order to increase the company's profits. These are all examples of bad faith insurance practices, practices in which an insurance company unreasonably denies a policyholder's benefits. Essentially, bad faith insurance happens when a company simply looks for reasons not to pay a claim, rather than thoroughly investigating the claim.

In some cases, class action lawsuits can be an appropriate means to receive compensation for damages caused by bad faith insurance. They are appropriate when a large number of people have claims dealing with the same breach of law committed by the same company. Judgments in a bad faith class action lawsuit are binding to all parties, meaning that all members of the class action share the settlement, although the exact amount given to each person may differ depending on specific circumstances. Members of a class action lawsuit may also receive punitive damages, which are awarded to deter the company from continuing its bad faith practices.

If you have had an insurance claim from Unum (or UnumProvident) denied and you feel they were practicing bad faith insurance, try to get as much in writing from Unum as you can, and take detailed notes of any communication you have with the company. That includes times, dates, and the names of people you communicated with. Talk to a lawyer to discuss your options.