Oregonians may qualify to have disability claims reassessed
Several thousand Oregonians may benefit from settlement agreements reached between subsidiaries of UnumProvident Corp. and state and federal regulators following a multistate market conduct examination of the companies’ handling of disability claims.
The settlement requires the companies to reassess certain disability claims going back as far as 1997, and to change their future claims practices.
UnumProvident, based in Chattanooga, Tennessee, is the largest disability insurer in the U.S.
“This collaborative action by state and federal regulators will provide important benefits and protections to consumers,” said Oregon Insurance Administrator Joel Ario.
The affected companies in Oregon are:
* Unum Life Insurance Co. of America
* The Paul Revere Life Insurance Co.
* Provident Life and Accident Insurance Co.
The settlement agreements require the companies to offer, in writing, to reassess claims denied or closed since Jan. 1, 2000, for reasons other than settlement, death, or reaching benefit maximums. The companies are required to send notices by Feb. 3 to about 2,000 Oregon claimants in this category, who will have 60 days from the date of the notice to request reassessment.
The settlement agreements also allow for reassessment, upon request, of claims similarly denied or closed between Jan. 1, 1997, and Dec. 31, 1999. The companies aren’t required to send notices to these claimants, but the Insurance Division is trying to identify Oregonians in this category to inform them of their rights. Their requests for reassessment must be submitted by July 18, 2005.
In addition, the companies agreed to modify their claims handling and benefit determination practices, and to improve accountability and oversight of claims processes. These changes address areas of concern identified in the multistate market conduct examination of the companies, including:
* Excessive reliance on in-house medical staff to support the denial, termination, or reduction of disability income benefits.
* Unfair evaluation and interpretation of attending physician or independent medical examiner reports.
* Failure to evaluate the totality of the claimant’s medical condition.
* An inappropriate burden placed on claimants to justify eligibility for benefits.
Among other provisions of the settlement, the companies agreed to use experienced claim personnel at the earliest stages of reviewing a claim, emphasize staff accountability for complying with the terms of insurance policies and laws, and involve higher levels of management in claim denial and benefit termination decisions.
In addition, the companies agreed to improve claim procedures, including obtaining complete medical records needed for a decision, and appropriately using in-house medical resources and independent medical examiners.
Ario said Oregon received $120,000 of the $15 million fine assessed nationwide against UnumProvident as part of the settlement. If the companies fail to meet the terms of the agreements, an additional $145 million fine will be imposed.
“The agreements ensure that policyholders and claimants, past and present, get what they paid for,” Ario said. “They also require significant changes in UnumProvident’s claim handling processes, and the states will continuously monitor and assess the companies’ compliance with the agreements.”
The cost of the examination, the continued oversight called for in the settlements, and compliance with the settlements is estimated to be more than $120 million nationwide.
The settlement agreements became effective after more than two-thirds of state insurance departments ratified them in December 2004. The U.S. Department of Labor also is a party to the settlement, and New York Attorney General Eliot Spitzer endorsed the settlement.
More information about the settlement is available on the Oregon Insurance Division’s Web site, insurance.oregon.gov.
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