Benefits April 19, 2004

Whistleblower Alleges Wrongdoing at Unum

April 19, 2004 (PLANSPONSOR.com) - A former UnumProvident Corp. customer care specialist alleges the disability insurer withheld benefit payments to pad the company's bottom line and that her discoveries resulted in her termination.
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In the suit, former Unum employee Linda Nee claims the nation’s largest disability insurer engaged in a pattern of delaying, denying and terminating benefits without regard to the merits of the claims. This was done to meet monthly or quarterly financial targets, which were facilitated with periodic “round-table” claims review meetings with claims handlers, doctors, nurses and other consultants to improperly deny benefits, the suit claims. Additionally, the suit accuses the company of delaying claims determinations in order to manipulate the setting of reserves and statements of the insurer’s financial condition, according to a Los Angeles Times report.

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Nee says when she brought reports of the irregularities to the attention of her superiors, she was terminated. She then used whistleblower protection claims to bring her suit to the Los Angeles County Superior Court. Unum had not yet been served with the suit, which was filed in July but not unsealed until last week, the Times report said.

Company executives denied the allegations, pointing to Unum’s record has contradictory proof. Glenn Felton, a senior vice president and deputy general counsel for Unum, told the Times that Nee was fired for poor performance after repeated warnings. He added that Nee withdrew her claims filed with the U.S. Labor Department (DoL) and the state of Maine that alleged she was fired in retaliation for reporting alleged misconduct at Unum.

This is not the first time such allegations have been made against Unum. Last April, a Manhattan federal judge refused to dismiss the lawsuit by workers who claim Unum committed Employee Retirement Income Security Act (ERISA) violations by giving bonuses and promotions to its employees based upon the numbers of claims they denied (See UnumProvident ERISA Violation Case Will Be Heard ).

Prior to that, Unum was accused of wrongfully terminating benefits in cases that have resulted in jury verdicts of millions of dollars. A $31.7-million verdict was handed down in January 2003 in one case involving an eye surgeon who was kept away from the operating table due to anxiety tremors (See Jury Slaps Insurer with $30 Million in Punitive Damages ).

Compliance April 16, 2004

Golden State Lawmakers Send Workers Comp Bill to State House

April 16, 2004 (PLANSPONSOR.com) - California Governor Arnold Schwarzenegger got his wish Friday as state lawmakers gave overwhelming approval to comprehensive workers' compensation reform heralded as a money saver for employers.
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>The bill, which Schwarzenegger has promised to sign into law on Monday, also reduces insurance benefits and treatment options for injured workers. The state Assembly voted 77-3 to adopt the measure and Senate followed suit with a 33-3 vote in favor, according to a Los Angeles Times report.

>In expectation of the bill’s passage, Schwarzenegger Thursday withdrew his workers’ compensation ballot measure that he had threatened to put before the voters in case the legislature had failed to act.

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>The Democratic leadership praised the workers’ comp bill, which was crafted after weeks of intense, closed-door meetings, as one that was more palatable than what was proposed in the Schwarzenegger’s ballot measure. However, Democrats and union officials warned that the measure failed to cap insurance company premiums and didn’t guarantee that insurance companies pass along any savings to employers.

>The reform legislation also cut some disability payments and benefits for workers who are able to return to work, even for light duty. Employers would also be allowed to create a network of doctors to treat injured workers and insurance companies would face fewer penalties for late payments.

Sources involved in crafting the bill have spoken about a “ballpark” estimate that the proposed reforms could cut $4 billion to $7 billion in costs out of the state’s $22-billion system for aiding injured workers.

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