An Arizona woman has filed an insurance claim denial lawsuit against Unum over allegedly denying her disability benefits in bad faith.

In legal terms, “bad faith” means that a party in a contract is trying to avoid their contractual obligations. In the case of insurance claim denial lawsuits, it usually means that a lawsuit accuses an insurance company of denying a legitimate disability benefits claim in order to avoid paying out on the insurance policy.

In this disability insurance lawsuit, plaintiff Martha Judd alleges that she was covered by an Unum disability insurance policy and that Unum denied her disability insurance claim in bad faith.

According to her disability insurance lawsuit, when Unum issued the alleged bad faith insurance denial, they demanded more information and documentation, but did not respond to requests for information on what sort of specific supporting documentation they required for appeal.

Despite the fact that two different physicians stated that Judd should not work due to her disability, Unum ultimately denied her disability benefits claim.

Judd’s Unum lawsuit alleges that Unum only conducted a “paper review” of her claims. The disability insurance lawsuit states that no Unum physician ever examined Judd, and both of the physicians that examined Judd in person agreed that Judd was disabled and unable to work due to her condition.

Judd’s Unum lawsuit holds that Unum’s alleged bad faith insurance denial stems from a conflict of interest inherent in her insurance policy. Under the insurance policy, Unum has the last call on whether or not a policyholder is truly disabled or not.

Judd’s Unum lawsuit holds that this conflict of interest — that the party that would have to pay is the one to decide if they have to pay — is the real reason that Unum denied her disability benefits.

Under a federal law called the Employee Income Retirement Security Act, or ERISA, a policyholder in a disability insurance policy can file a claim denial lawsuit like Judd’s Unum lawsuit.

ERISA was originally designed to ensure that pensions were responsibly managed after a string of high-profile pension disasters in the 1960s. Under ERISA, a person has to formally exhaust any internal appeals an insurance company has.

According to Judd’s Unum lawsuit, Judd’s communications with Unum indicated that she has exhausted Unum’s appeals processes.

Further complicating the Unum lawsuit, Judd had life insurance through Unum. The life insurance policy included a clause that if a policyholder was disabled, they did not have to pay the premium on his or her life insurance.

The Unum Claim Denial Lawsuit is Martha Judd v. Unum Life Insurance Company of America, et al,, Case No. 8203, in the U.S. District Court for the District of Arizona.