Spitzer and Serio Announce Settlement with Nation's Largest Disability Insurer

New York State Attorney General Eliot Spitzer and New York State Insurance Superintendent Gregory V. Serio today announced that their offices, together with other state insurance regulators, reached a landmark settlement with UnumProvident Corporation ("UnumProvident") and five of its subsidiaries - Unum Life Insurance Company of America, The Paul Revere Life Insurance Company, Provident Life and Casualty Insurance Company, Provident Life and Accident Insurance Company and First Unum Life Insurance Company.

The settlement resolves issues relating to investigations into UnumProvident's claims handling practices conducted by the New York State Attorney General's Office, the New York State Insurance Department, state insurance regulators conducting a multi-state examination led by Massachusetts, Maine and Tennessee on behalf of all the other states, and the United States Department of Labor. The investigations focused on assertions that UnumProvident had inappropriately denied claims for benefits under individual and group long-term disability insurance policies. These investigations and the resulting settlement are unrelated to the separate investigations into the payment of contingent commissions, steering and bid-rigging in the insurance industry.

The settlement announced today requires UnumProvident and its subsidiaries: (1) to reassess approximately 200,000 claims that previously had been denied; (2) to completely restructure their claim handling procedures to ensure objectivity and fairness; and (3) to pay a $15 million fine. An outline of the specific terms of the settlement is attached.

"This settlement sends a strong message to disability insurance companies that improper denials of disability claims will not be tolerated," said Attorney General Spitzer. "These claim denials involved vulnerable workers - those whose illnesses and injuries prevented them from continuing their employment. I am very pleased that these individuals will have their claims reviewed, and that UnumProvident will now implement the structural reforms necessary to ensure that future claims are handled appropriately."

"This settlement agreement gives thousands of current and former policyholders an opportunity to have their denied claims reassessed as part of a process over which regulatory authorities will have strict oversight," Superintendent Serio said. "Today's agreement also requires the parent company and its subsidiaries to implement the management and corporate reforms necessary to ensure that future disability claims are handled properly."

The reassessment process covers the vast majority of persons whose claims for group or individual long-term disability benefits were terminated or denied after January 1, 2000. UnumProvident and its subsidiaries are required to provide notice to those individuals of their rights under the agreement.

In addition, individuals whose disability claims were denied between 1997 and 2000 can also apply to participate in the claim reassessment process. Spitzer and Serio urged these individuals to contact UnumProvident at 1-866-278-4641 and ask that their claims be reassessed.