Unum Loses Bad Faith Lawsuit in Court

New York, NYIn yet another Unum life insurance bad faith case, a man who suffers from advanced colon cancer has had his day in court after launching a lawsuit against Unum Provident for denial of claims according to the provisions of his Unum long-term disability policy.

First Unum—formerly Unum Provident, has had a long history of allegedly delaying, and ultimately denying claims. While the Unum web site and corporate marketing promote Unum as a proud company, with great employees and great products, stories of denied claims and various stalling tactics are legion. Former Unum employees have spoken of monthly quotas, whereby claims specialists were encouraged at one time—even expected—to get claims off the books.

Hardly surprising that Unum carries a Best's Financial Ratings of A-, which is considered excellent.

In this particular case the plaintiff, John McCauley, sued First Unum for bad faith insurance after the senior vice president and tax attorney at Sotheby's Service Corporation was diagnosed with advanced colon cancer in April of 1991.

At the time, First Unum was Sotheby's disability insurer under an Employee Retirement Income Security Act-governed plan. He sued First Unum in the US District Court for the Southern District of New York, alleging bad faith denial of his claims under an original and conversion policy.

While the US District Court ruled in favor of First Unum, the Second Circuit Court reversed the decision on appeal, and found in favor of the plaintiff. The Second Circuit Court, in a decision written by Circuit Court Judge John M. Walker Jr. for a three-judge panel, ruled that First Unum was in conflict of interest as it was operating as both the claims administrator, and payer of benefits.

The Second Circuit Court cited the US Supreme Court's new standard for assessing the impact of a plan administrator's potential conflict of interest as outlined in the Metropolitan Life Insurance Co. decision of 2008.

Ruling in December, the Second Circuit Court sent the matter back to district court to enter summary judgment in the plaintiff's favor, and to calculate benefits going all the way back to 1995—a span of 13 years—together with costs and attorney's fees.

When the decision was handed down, Unum's response was to fault the court's reliance on outdated articles and television programs to be in error, and believed that the court overlooked key facts and law.

One would assume judges are above basing decisions on re-runs of Perry Mason.

It is a sad reality that in most cases, insurance companies will automatically assume the policyholder has erred in making what is in most cases a fair, and justified claim. True, there are fraudsters out there who will attempt to take advantage and file false claims. However, it is widely held that those instances are the exception rather than the rule, and that most claims are justified and necessary.

Given that policyholders have paid their premiums in good faith, diligently and for many years, they deserve respect, rather than automatically presumed guilty until proven innocent.

If you have been frustrated, and stymied in a justified attempt to make a Unum life insurance, or Unum long-term disability claim it is in your best interest to seek the advice of a lawyer. Unum Provident is known for resisting claim payouts, regardless of how fair, honest and needed they are. Many have suffered financial ruin and lifelong hardship as the result of losing that safety net without just cause. Don't make that same mistake.