A former hospital director has filed a bad faith insurance lawsuit against Unum, alleging that the insurer failed to pay out his long-term disability benefits in violation of his policy contract.

When plaintiff Kevin Reed joined IU Health Methodist Hospital in Indianapolis as the Director of Clinical Operations, part of his benefit package included long-term disability (LTD) coverage under “The Plan” as provided by Unum, one of the largest insurance providers in the country.

However, he “stopped working on April 10, 2010, due to his conditions and applied for long-term disability benefits. After a period of payments, he was denied continuing benefits under the aforementioned insurance policy on or about May 1, 2013. That Plaintiff administratively appealed this denial, as he suffers from numerous physical impairments that qualify him for continuing benefits under the terms of the plan.”

Exhausting all options, Reed filed an Unum lawsuit on Jan. 21, 2014 claiming that Unum “has wrongfully refused to award Plaintiff continuing disability benefits and wrongfully withheld monies rightfully due Plaintiff as a disabled insured participant under his policy and the Plan.” Furthermore, Reed also states in his Unum complaint that the “defendant’s decision denying his disability benefits was arbitrary and capricious.”

Reed certainly isn’t alone. Hundreds of Unum bad faith lawsuits have been filed by policyholders who have stories very similar to his. In fact, there was even a CBS exposé that revealed Unum had written, bonus systems that rewarded employees financially who denied or lowered the payments of the highest paying claims.

Unum’s denials have been called wanton by a number of Unum victims. Policyholders like Reed are often facing big changes in their life, learning to live with a new disability and unable to work at all or part-time, and are sometimes facing mounting medical debt because of their situation. While Reed’s Unum claim doesn’t detail the extent of his disability, a lot of the time policyholders like him are also awarded Social Security Disability benefits so they’re considered long-term disabled by at least one other entity (the SSA).

Lengthy appeals processes required by Unum along with a precedence of denying claims without solid evidence, as showcased by CBS interviews of former employees, can mean that those like Reed are facing big challenges when it comes to simply getting the compensation they’re due, having paid into the plan.

In some cases, the policyholders have paid into the plan for several years or even decades before filing their initial claim. Reed says, “That as a result of Defendant’s conduct, Plaintiff has been denied benefits rightfully due him under the plan and has incurred Attorney fees in order to rectify the harm done to him.”

While, again, the details of Reed’s situation isn’t revealed yet, oftentimes policyholders have few other sources of income besides SSA and LTD benefits. This kind of financial burden can quickly spiral, especially when policyholders require ongoing medical care, prescription drugs, physical therapy and other treatments related to their LTD situation that they may not have faced to such a degree before.

Unable to work in the same capacity as they had previously, this puts not only financial stress but also emotional stress on a number of policyholders. Knowing that LTD coverage is part of their benefits package provided by their employer should provide peace of mind. A number of employers in the US depend on Unum to provide LTD coverage for their employees.

While he has filed an individual lawsuit, Reed may also qualify to join an Unum multi-district litigation (MDL) coverage in the future, as some lawsuits have been transferred to Unum MDLs in the past. Joining a class action lawsuit comes with certain benefits, including the fact that members may enjoy a quicker resolution for their claim while still getting a fair and unique trial. With an MDL, key items don’t need to be discovered again and again, such as the facts about Unum’s history.

After the Unum Appeals Fail

Reed claims that “Unum has a conflict of interest in that Unum must decide whether the claim should be paid, and then make the payments on the claim if it so chooses.” He attempted to get Unum to pay through the numerous appeals process, but each one failed. Like others, a lawsuit may be the only way to get Unum to start paying his LTD benefits.

The case is Kevin Reed v. Unum Life Insurance Company of America., Case No.: 1:13-cv-87, in the United States District Court Southern District of Indiana Indianapolis Division.