Verdict Against Disability Benefits Insurer Upheld
One of the more highly visibile disability rights cases in the media lately has been Hangarter v. Paul Revere/UnumProvident. The policyholder was a chiropractor for 18 years, until she developed a physical ailment that worsened after an auto accident in 1997 to the point that her physicians told her she could no longer continue in her career. Fortunately, she had been faithfully paying premiums to the nation's largest disability insurer for many years.
After about 18 months, the insurer concluded that she had recovered and terminated her benefits. Since she was still unable to work in her profession and had sold her practice, she depleted her savings to support herself and her children, and eventually was bankrupted and forced to go on welfare.
One day, she read a report about a dentist who was suing UnumProvident for arbitrarily denying his disability benefits, and she contacted the lawyers who were handling that case. They agreed to accept her case on a contingency basis, and a Federal jury unanimously agreed that the insurer had wrongfully denied her benefits and awarded her a total of 7.7 million US dollars, including 5 million in punitive damages.
The insurance company appealed, and in November of 2002, a Federal judge issued a 62- page document that upheld the verdict, and ordered UnumProvident to refrain from using biased doctors, from spying on policyholder's activities, and from shredding any more claims information. [Shades of Enron....] There is a detailed write-up about the case at the attorney's web site: www.bourhis-wolfson.com/hangarter_unumprovident.htm and quite a contrasting viewpoint from the insurer at www.disability.com/commitment/tedesco.asp.
Among the interesting tidbits from this case were the revelations of the doctor who was the medical director for the insurance company from 1980 until 1996. He testified that after a new president took over the company in the late 1990s, he became so distraught over the unethical conduct of the insurer that he resigned. Other former employees testified that, when the stock market began to decline and the insurer's investment income decreased, management instituted "net termination ratio" guidelines. By 1997, the goal was to deny coverage for enough old claims so that the amount the company saved was equal to 124 percent of all new claims written that year.
UnumProvident has announced that they will now appeal to the Supreme Court, a process that may take several years. According to the Los Angeles Times, the plaintiff, has obtained a loan against whatever future settlement she ultimately receives, and as a result is no longer on welfare. She is also reportedly writing a book about her experiences.
In a related story, the Associated Press has reported that a 49-year-old real estate broker, who is dying of cancer, won a 1.5 million USD lawsuit against UnumProvident for similar conduct. The insurer is pursuing appeals, which is certainly their right, but the practical result is that the patient will likely die long before she collects a penny. According the the AP, a confidential memo written in 1994 admitted that these policies were "poorly underwritten and underpriced" when they were sold aggressively to affluent professionals in the 1980s and early 1990s. In 1994, this insurer honored those employees who cancelled the greatest volume of claims with the "Hungry Vulture" award, bearing the motto "Patience, my foot...I'm gonna kill something".
Thomas White, the company's vice president of corporate relations summarized UnumProvident's position on these matters with the following statement:
"We are 100 per cent proud of our customer service organization."