Unum Life Insurance of America has become one of America’s most infamous insurance companies, due to their alleged mishandling of disability claims.  The company has been featured in numerous lawsuits, reports, and even the TV documentary show, “60 Minutes.”

With the amount of publicity the company has received, many legal experts try to unravel when exactly the claim denial epidemic started, and why it has persisted for so long.

Research reveals that around the early 1990s, insurance companies began denying claims more frequently, and had become obtuse for their reasoning. Experts state that by understanding how the claim denial behaviors started, customers may know what to expect due to habitual procedures the insurance companies may have adopted.

Historical evidence indicates that disability insurance companies, such as Unum, had aggressively marketed and sold “own occupation” insurance policies in the 1980s.  This insurance essentially covered the policyholder from disabilities they have gained through their occupation.

Insurance companies also sold “preferred professional” policies, which could be invested in to earn substantial returns. Both of these policies were advertised and sold during the time of economic security and high interest rates.

However in 1994, Unum and other insurance companies were faced with the harsh economic downturn, and had lost a lot of money from the policies sold in the 1980s.  At the beginning of the 1990s, the interest rates dropped and claims had flooded insurance companies.

To make up for this significant financial loss, Unum and the other insurance companies made a collective effort to come up with a system for denying claims.  It is alleged that the insurance companies collaborated different ways to deny insurance claims, so they would not have to give the policyholder any money.

Former Unum Senior Vice President of Risk Management, Tom Heys, said that Unum’s largest pitfall with the insurance policies, was that they were poorly underwritten, underpriced, and sold without any regard for the possible claims they would need to pay.

A key figure in this claim-denial establishment was Senior Vice President of Claims, Ralph Mohney, who was appointed to that position in late 1994 by Unum Provident’s CEO at the time, Harold Chandler.

Together, Chandler and Mohney strategized a way for the company to retain its remaining financial stability, while rebuilding its wealth.  Two objectives were developed – the first was to increase the number of claims terminated and to sharpen its legal defenses.

This strategy was allegedly designed to buy them time to gain profits without losing any money during, leading to the needed construction in the empire. However, in this claim denial system, Chandler and Mohney knew that questions would arise, so they also focused on sharpening their legal team and prepped defenses and justifications for the inevitable lawsuits.

The strategies worked. By 1998, Unum had regained its financial losses and became the biggest disability insurance company in North America and continues to grow.

Several major insurance companies merged with Unum during the 1990s, due to the collaboration of claim denial tactics.

Additionally, the insurance company had compiled a task force, which was specifically designed to come up with reasons to deny claims. These task forces often consisted of third-party medical experts, whose jobs were finding reasons to contradict a policyholder’s medical justification or were told to come up with a different prognosis.

Overview of Unum Claim Denial Tactics

These tactics still exist today and continue to be a problem for lawyers and policyholders across the country. The tactics most commonly pointed out in Unum lawsuits include:

• Improperly investigating the claim and obtaining opinions from unqualified witnesses
• Misreading medical records, often by their independent medical examiners
• Demanding repeated requests for independent medical examinations or denying a claim without any medical examination
• Refusing to acknowledge their disability, especially mental disorders, fibromyalgia and chronic fatigue syndrome
• Use of detectives, friends, co-workers and neighbors in an attempt to discredit the disability