Pa. Commissioner Signs Regulatory Settlement Agreement Involving UnumProvident Corp.

Pennsylvania Insurance Commissioner Diane Koken on Tuesday announced that she has signed a Regulatory Settlement Agreement as part of a targeted, multi-state, disability income market conduct examination of UnumProvident Corp.

Under the agreement, UnumProvident will be required to change its claim practices and to reassess certain claims going back as far as
1997.

Last week, the chief insurance regulators of Maine, Massachusetts and Tennessee released their joint examination of the claim handling practices of three disability insurers headquartered in their states and owned by UnumProvident. The companies are Unum Life Insurance Co. of America, The Paul Revere Life Insurance Co. and Provident Life and Accident Insurance Co. The multi-state agreement was negotiated under the auspices of the National Association of Insurance Commissioners.

“This shows how critical the coordination of multi-state, insurance
regulatory action is in providing uniform, verifiable and effective state-
based actions for the benefit of all consumers,” said Koken, who also serves as president of the NAIC. “Our duty is to protect the policyholders who depend on these companies for disability benefits. By signing this settlement agreement, we are seeing that Pennsylvania consumers who may have been affected by these unfair disability claim practices will have a chance for proper review and action.”

Under the Pennsylvania agreement, UnumProvident will reassess any
individual or group long-term disability claim that was denied or closed since Jan. 1, 2000, except for specific categories of closures such as settlement, death or payment of maximum benefits.

There are 9,582 claims in the pool of Pennsylvania claims decided over the nearly five-year period that are eligible for reassessment. Pennsylvania’s share of the settlement for its affected consumers will be at least $800,000. Countrywide, the number is about 215,000
claims. The company will also accept requests for reassessment from other individuals whose claims were closed after Jan. 1, 1997, and through Dec. 31, 1999.

The agreement also requires significant changes in UnumProvident’s claim handling processes. Lead regulators will continuously monitor and assess the companies’ compliance with the terms of the agreements. The companies also will pay a fine of $15 million, which will be divided on a pro-rata basis among the participating states based on the long-term disability income insurance premium in each state as of Dec. 31, 2003.

If the companies fail to meet the terms of the Plan of Corrective Action set forth in the agreements, a fine of $145 million will be imposed.

Consumers who have not received the appropriate notice from UnumProvident and believe they were impacted should contact the company. UnumProvident has established a toll-free number for such claimant inquiries: (866) 278-4641. Consumers may also contact Department’s consumer services bureau at (717) 787-2317 or use the toll-free automated hotline at 1- (877)-881-6388.