In October of 2014, a man with vascular dementia filed a denied disability claim lawsuit against Unum, alleging that the company wrongfully denied his disability insurance benefits.

The Unum lawsuit states that Plaintiff Steven K. suffered from a disorder called vascular dementia. Vascular dementia is a disorder caused by damage to the blood vessels that feed the brain. As the name implies, the disorder is similar to the more Alzheimer’s disease. However, the underlying causes are different and as such, vascular dementia typically sets in much more quickly, rather than slowly building as Alzheimer’s disease does.

There are no known or FDA-approved treatments for vascular dementia, making recovery or improvement unlikely. According to his Unum lawsuit, Steven suffers fatigue and incontinence due to the disease. Prior to the onset of the disease, Steven worked as a partner in a global accounting firm and earned more than $85,000 per year.

According to the Unum lawsuit, Unum actually hired third-party surveillance of Steven. During the week Unum paid for the investigators, Steven only left his house three times for short durations. The Unum lawsuit states that the investigators’ report actually supports the allegation that Steven is disabled. The Unum lawsuit further alleges that Unum refused to acknowledge that their surveillance actually supported the ultimately-denied disability claim.

Additionally, the Unum lawsuit states that Unum claimed that three short trips outside of the home meant that Steven could continue to work. The Unum lawsuit holds that these action were a matter of bad faith, enabled by the conflict of interest inherent to a situation where Unum gets to decide if the plaintiff is truly disabled or not.

Unum Accused of Bad Faith Insurance Denials

Bad faith is a legal term that means that one party is trying to get out of their legal obligations under a contract. In this context, bad faith insurance denials mean that an insurance company is attempting to wrongfully deny a legitimated disability benefits claim in order to avoid paying out.

Unum is the world leader in disability benefits insurance. Unum controls more than 40% of the market for disability benefits throughout the world. However, the disability benefits insurance market is declining. Between 2009 and 2013, long-term disability benefit coverage has declined 6%. One reasons suggested by analysts is continued bad press regarding alleged bad faith insurance denials, as well as a 2002 segment on the television newsmagazine 60 Minutes that investigated Unum.

The 60 Minutes exposé found former Unum employees that claimed they were fired for not denying legitimate disability benefit claims. Additionally, it surfaced that the company had “denial quotas” for their agents, and even a now-infamous “hungry vulture award” given to the employee that denied the most disability insurance claims.

These revelations led to an onslaught of bad faith insurance lawsuits against Unum, accusing the company of breaching its contract with policyholders by improperly denying their disability insurance claims.