Multistate UnumProvident Settlement Approved; $15 Million Fine Levied

At least 40 states have approved a settlement in an investigation of UnumProvident Corp., requiring the disability giant to reconsider about 200,000 claims and pay a $15 million fine, insurance officials involved in the deal said.

Approval of the settlement in the claims-handling investigation requires the nation’s largest disability insurer to notify affected policyholders within 15 days.

“We have 40 signed agreements in hand and three states who have asked for extensions,” said Paula Flowers, Tennessee’s commissioner of Commerce and Insurance.

The settlement provides for a $145 million fine if the company fails to meet the terms.

Insurance regulators in Tennessee, Maine and Massachusetts, the lead states in the investigation, signed the agreement in November, as did officials in New York and with the U.S. Department of Labor.

Unum Life Insurance Co. of America, Paul Revere Life Insurance Co., Unum National Insurance Co., and Provident Life and Accident Insurance Co. will have to notify affected customers that their denied or closed claims can be reassessed.

Those claims were denied or closed since Jan. 1, 2000, for reasons other than settlement, death or reaching maximum benefits.

Insurance officials in Virginia, Missouri and Wisconsin received requested extensions, officials said.

While regulators in California and Montana chose to not approve the deal, individual policyholders are not affected by whether their states agree and are eligible to have claims re-examined.

UnumProvident insures more than 25 million people.

The investigation began last year in response to customer complaints. Georgia’s insurance commissioner, John Oxendine, in March 2003 imposed a $1 million fine on UnumProvident and its subsidiaries over the claim payment issue. Flowers has said investigators saw a “lack of diligence in the claims personnel” and insufficient training.

Regulators will re-examine the company’s claims handling after two years.

The company is to hire an additional 75 employees as part of the settlement.

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