Unum settles allegations of wrongful claims handling

UnumProvident yesterday settled with California investigators for $8.6 million over allegations of improper claims handling.

California’s insurance department investigated the disability insurer for erroneous claims denials and benefit terminations for individuals with brain damage, spinal cord injuries, heart disease and AIDS.

The state contends the country’s largest provider of disability insurance wrongly applied the definition of “total disability.” It also claims the insurer improperly overruled claimants’ doctors’ opinions based on in-house reviews; improperly overruled the opinion of in-house medical personnel who supported a finding of disability; and wrongly used independent medical exams, portions of medical records, and other medical findings to the company’s advantage.

While it did not admit wrongdoing, UnumProvident agreed to alter policy language and has filed new group policies that will be marketed in California beginning Nov. 1 because, under the settlement, the company can’t continue selling existing policies after that date. Those who have an old policy with UnumProvident won’t have to write a new one, but the insurer will have to handle their claims under new guidelines in the settlement. UnumProvident insures 25 million people.

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