Individuals who pay for disability insurance premiums hope to be able to rely on the disability benefits if they are ever unable to work for any extended period of time. However, many times these employees’ claims are denied without any reasonable basis for denial. As in the case below, it is often abusive claims handling tactics by disability insurance companies that leads to disabled individuals being denied their benefits and forced to try and support their families in any way that they can.
John E. McCauley vs. First Unum Life Insurance Company (“Unum”)
Mr. John McCauley was a senior vice president for Sotheby’s Service Corporation when he was diagnosed with colon cancer in 1991. Unable to perform the duties of his occupation, McCauley submitted a claim for long-term disability benefits with Unum in 1994.
First Unum Life Insurance Company denied McCauley’s long-term disability claim in 1995, and stated they did not believe that his medical condition should prevent him from working. In 1996 he was also denied long-term benefits from a conversion policy he had purchased from Sotheby’s. McCauley filed an appeal with Unum and submitted additional medical support from his treating physician. McCauley’s physician explained that the combination of the cancer and the chemotherapy treatments prevented McCauley from being able to work.
First Unum Life Insurance Company disregarded this additional medical information, despite the fact that Mr. McCauley was clearly and without a doubt suffering from disabilities beyond his control. Mr. McCauley was left sick, without his disability insurance benefits and with no way to work and support his family. McCauley filed a lawsuit against Unum in the New York Federal District Court, however the court entered a decision in favor of Unum.
The Appeals Process and How First Unum Continued to Deny Mr. McCauley of His Rightful Benefits
After losing his case at the lower court level, McCauley appealed the lower court’s decision to the New York Second Circuit Federal Court of Appeals. The appellate court reversed Unum’s denial of benefits and found on December 24, 2008, “powerful evidence that First Unum’s denial of McCauley’s appeal was arbitrary and capricious.” The appellate court took into account “First Unum’s well-documented history of abusive tactics,” and remanded the case to the lower court, with the direction to find in favor of Mr. McCauley and to calculate the benefits owed him.
The Appellate court specifically stated the following with regard to Unum:
“[W]here an insurance company administrator has a history of biased claims administration.” First Unum is no stranger to the courts, where its conduct has drawn biting criticism from judges. A district court in Massachusetts wrote that “an examination of cases involving First Unum… reveals a disturbing pattern of erroneous and arbitrary benefits denials, bad faith contract misinterpretations and other unscrupulous tactics.” Radford Trust v. First Unum Life Ins. Co., 321 F. Supp. 2d 226, 247 (D. Mass. 2004), rev’d on other grounds, 491 F.3d 21, 25 (1st Cir. 2007).
That court listed more than thirty cases in which First Unum’s denials were found to be unlawful, including one decision in which First Unum’s behavior was “culpably abusive.” Also, First Unum’s unscrupulous tactics have been the subject of news pieces on “60 Minutes” and “Dateline,” that included harsh words for the company. First Unum has fared no better in legal academia. See John H. Langbein, Trust Law as Regulatory Law: The Unum/Provident Scandal and Judicial Review of Benefit Denials Under ERISA, 101 Nw. U. L. Rev. 1315 (2007).
In light of First Unum’s well-documented history of abusive tactics, and in the absence of any argument by First Unum showing that it has changed its internal procedures in response, we follow the Supreme Court’s instruction and emphasize this factor here. Accordingly, we find First Unum’s history of deception and abusive tactics to be additional evidence that it was influenced by its conflict of interest as both plan administrator and payer in denying McCauley’s claim for benefits.”
While Mr. McCauley finally received the justice and benefits he should have been entitled to all along, he suffered through 13 years of agony, fighting, and humiliation before he was finally paid disability benefits by Unum. Through the unreasonable denials and delays of Unum, Mr. McCauley was made to suffer before he was able to continue with his life, receiving the disability benefits he was entitled to. As a disability insurance attorney that represents disability insurance claimants throughout the country, I can tell you that claim denials happen all too often. However, more court case endings like McCauley’s will continue to expose the conduct of certain disability insurance companies, and hopefully prevent other disability claimants from experiencing unreasonable claim denials.