UnumProvident announced in mid-January that as part of a rebranding effort the company's name would be changed to Unum Group. The name change is part of an effort by the company to shed the controversy that has surrounded it lately.
Despite the new name, it is doubtful that Unum will make any major changes to how business is done. After all, in a settlement with insurance regulators in Maine, Massachusetts and Tennessee UnumProvident agreed to change how it handles claims but did not admit to any wrongdoing in denying claims.
UnumProvident has had to boost its reserves by $325 million because of the cost of reviewing over 200,000 denied claims that date back to 2000. The company has been under pressure from the Department of Labor to reassess claims that were denied or closed for any reason other than settlement, death, or reaching benefit maximums. Basically, UnumProvident has been practicing bad faith insurance.
Bad Faith Insurance
Bad faith insurance occurs when a policy-holder's claim is unjustly denied, unreasonably delayed or intentionally underpaid. It can also include an insurance company not adequately investigating a claim. In any case, bad faith insurance is actually a breach of contract; it is the insurance company's duty to uphold its end of an insurance policy. In order to prove that an insurance company has acted in bad faith, the plaintiff must show that the insurance company has not honored a contract and did not pay the policy-holder what was due.
UnumProvident has faced many lawsuits arguing that it practiced bad faith insurance. Many claims against the company argue that claims are denied based on financial targets for the company, rather than on the merits of each individual claim.
In November 2002, a San Francisco court upheld a judgment against UnumProvident because the company used bad faith to deny customer claims. The judge also found that medical examiners were pressured and documents were destroyed in order to deny claims. That lawsuit cost the company $7.5 million.
Also in 2002, the TV series 60 Minutes ran a story about UnumProvident and its shady practices. The segment featured interviews with former employees of UnumProvident who claimed that company management put pressure on agents to deny new claims and terminate existing ones, regardless of whether or not the claims deserved to be closed, in order to meet monthly targets. Additionally, some former employees claim that UnumProvident gave them bonuses for closing down a certain number of claims.
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Protecting yourself from Bad Faith Insurance
One of the best things you can do is know and understand your insurance policy. That will make it much more difficult for your insurance company to offer you an unreasonably low settlement or deny your claim. Also know the insurance laws in your state. Every state has different laws and systems for overseeing insurance companies. Knowing these laws will help to protect you.
If you have been the victim of bad faith insurance from companies like UnumProvident, you can seek compensation for your losses. Courts can not only provide restitution but also punitive damages if it can be proven that the insurance company's wrongdoing was malicious. Contact a lawyer to discuss your options.