Case reviews fall short for hurt workers
Under landmark legal settlements reached in 2004 and 2005 between state regulators and UnumProvident Corp., one of the country’s largest disability insurers, the company was required to reopen hundreds of thousands of disability insurance claims that it had rejected.
But as Unum prepares to close the books on the claims-reopening process this year, the company says it will have reviewed fewer than 10% of the 290,000 claims eligible for a second chance, including 25,000 in California.
The company, now called Unum Group, said few cases were reviewed because most worker claimants chose not to reopen their cases, apparently accepting the company’s initial rejection.
But consumer advocates say workers’ belief that the claims-resolution process remains unfair has kept them from seeking a review. The accords, which involved regulators from California and several other states, were supposed to reform that process but have largely failed to do so, the advocates say.
As a result, legitimate claims from many policyholders with serious work-related injuries continue to be rejected, subjecting families to financial hardships and forcing some of those hurt to go back to work against the advice of their doctors, critics say.
Disability insurance is held by more than 50 million U.S. workers and represents a crucial safety net for middle-class families. Offered as a benefit by many employers, it usually replaces half or more of a worker’s income should he or she become disabled and unable to work.
Consumer advocates and many workers have long contended that, among other things, insurers use biased medical exams that deem someone fit to work even against the advice of treating physicians. And federal law doesn’t help, they say. In most cases, insurers are given wide latitude in determining whether to pay claims.
The settlements required Unum to change its medical review process by giving treating physicians’ opinions more weight, for example.
But the agreements failed to rein in the considerable power Unum and other insurers wield in handling claims, consumer advocates say.
Although state regulators hoped the settlements with Unum would entice other insurers to fall in line, there is no indication they did. When California insurance regulators tried to expand a key provision of the Unum settlement to other insurers, the industry sued and blocked the move.
Nonetheless, state regulators defend their efforts.
“I am not going to sit here and tell you we got everything we wanted and solved all the problems in the disability insurance field,” said Gary Cohen, general counsel at the California Department of Insurance, “but we have made tremendous progress.”
Cohen noted that the settlements did give a second chance to denied claimants who would not have had it otherwise. Unum said it expected to overturn about 9,000 cases nationwide and pay $478 million in claims.
“I think that gives some credibility to the process,” Cohen said.
Unum, which insures more than a quarter of the nation’s disability policies, says it is a changed company.
“It’s public knowledge that UnumProvident was the subject of regulatory scrutiny involving its claims-handling practices, and that our claims practices have changed as a result,” company spokesman Jim Sabourin said.
He said Unum paid the vast majority of disability claims, more than 90%, without incident.
But critics point out that even a small percentage of denied claims, especially if involving long-term benefits to highly paid executive-level workers, can save Unum millions of dollars.
Although agreeing with state regulators to change its medical review process, for example, Unum continued to defend its practices in courtrooms against individual claimants who had sued. In one case, Unum insisted that a man who had quintuple bypass surgery was fit to go back to his job at a stock brokerage firm, even though his doctors said the stress might kill him. In another, the company refused benefits to a man who had had multiple heart attacks.
In California, the company did agree to a third-party independent review of unresolved cases involving previously denied claims, but it refused to be bound by its findings.
That discretionary power discouraged many claimants from participating in the process, said Ray Bourhis, a San Francisco attorney and author of a book critical of the industry titled “Insult to Injury.”
More than two-thirds of the 290,000 denied claimants never responded to letters notifying them that they were eligible for a second review. They were insured by Unum subsidiaries including Unum Life Insurance Company, Provident Life & Accident Insurance Co. and Paul Revere Life Insurance Co.
“One can only assume that if a person did not take advantage of the reassessment process, he or she is not in disagreement with our initial decision,” Unum spokesman Sabourin said.
The company estimated that about half of the cases involved workers whose benefits had been canceled after they went back to work, meaning most likely they were no longer disabled. Sabourin said that others might have been “shots in the dark” from claimants who knew from the beginning that their claims of disability were weak, and that a handful might have involved fraud.
Critics of the company have other theories.
“What it proves is that if you wear down people long enough they eventually give up.... In some cases, they are so sick and tired, they don’t even have the ability to help us help them,” said Glenn Kantor, a Northridge attorney who is representing dozens of Unum claimants.
Marc Silver of Orange said he nearly gave up. The 66-year-old former sales executive battled Unum for five years.
“I can’t get rid of the bitterness I feel,” said Silver, who left his job as manager at a car leasing company after several heart attacks and a triple-bypass surgery. He was covered by Unum, but the insurer denied benefits, saying he was fit to work.
“I never saw a doctor from them,” Silver said. “No one even spoke to me except to tell me I’ve been turned down.”
Although Silver was eligible to have Unum review his case under the states’ settlements, he opted to continue his lawsuit.
Silver prevailed and won a judgment for $240,000 in February.
Critics of Unum worry that many haven’t been so lucky.
“These are people who are presumably disabled with little to no income,” plaintiffs’ attorney Kantor said. “They have a hard time just trying to survive, let alone go a second round with a big insurance company.”
Paul Kent of Studio City had his long-term disability claim denied by Unum in 2001. He was eligible for reassessment, but like Silver decided he’d have better luck in court.
“I had already fought these guys for years, and each step of the way they did everything they could not to pay me,” said Kent, 58, who has lost his home and now lives in a small one-bedroom apartment. “I wasn’t about to trust them with a whole new process.”
Decades of unhealthy habits and stressful jobs took a toll on Kent’s body, the divorced father of two said. By 43, Kent had had a quintuple bypass surgery and several stents put in to expand his clogging arteries.
When his health got worse and his doctors told him he should stop working, Kent, a compliance manager at the Los Angeles office of brokerage firm CIBC World Markets, sought to cash in on his employer-sponsored disability insurance.
“I loved my job too much, but my job didn’t love me,” said Kent, whose responsibilities included overseeing stockbrokers and making sure they were complying with company guidelines and legal requirements.
The federal government considers Kent disabled and pays him Social Security income. He is collecting workers’ compensation benefits because his employer agreed that his disability is partly job-related. CIBC continues to subsidize his health insurance.
Unum maintains that Kent is not disabled.
It bases much of that assertion on the opinion of its in-house medical expert, who says there are no definitive studies connecting stress and coronary artery disease. The medical expert never examined Kent.
The U.S. 9th Circuit Court of Appeals said Unum’s decision defied accepted medical science and reversed a lower court ruling in Unum’s favor. Kent is now awaiting a second ruling from the lower court.
Sabourin, the Unum spokesman, said Kent might have received a broader review under the states’ settlement agreements. But because he chose to continue his litigation, Kent had to be reviewed under the company’s old medical guidelines, the same ones Unum acknowledged it had to change even if not admitting wrongdoing.
Still, after initially taking a hard stance on Kent’s case, Unum said he might still be eligible for reassessment.
“Even though the deadline has passed, given the unique facts of his situation, we would be willing to reconsider his case,” Sabourin said.
Kent wasn’t impressed.
“Nothing ever prevented them from making an offer before,” he said. “They should talk to my lawyer.”
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