Unum: You're Supposed to Get What You Pay For…

Omaha, NEImagine undertaking with a landowner the purchase of a lot to build your dream house. Instead of going through a bank, you wait until the loan is paid—you want to own the land outright before putting a shovel in the ground. For years you make payments to the owner, on time and in full. As the end of the loan looms, you hire an architect, draw up the plans and arrange a contractor. On the day you make your final payment, you ask for the deed. The response is, "Nah…I changed my mind." You don't get your house, you don't have your land and you don't get a refund. This is essentially what Unum is accused of doing to Scott A. Boles.

Boles has an issue with Unum insurance—two in fact, as he is covered under two policies. One is his own long-term disability (LTD) policy, into which he paid dutifully since 1994. The second is a group policy to which he belonged through his employer, Telesis Inc., beginning in 2006.

Boles was an employee of and an original shareholder of Telesis Inc.—managing several of its assets until various health issues forced him to stop working and claim LTD benefits through his two Unum insurance policies.

The Unum Group policyholder became disabled in October 2007 and he applied for benefits. His insurer looked at his Unum disability claims and denied him benefits under both policies, stating that Boles' disability and medical condition did not qualify for disability benefits under the terms of either policy.

The insured appealed the Unum disability insurance decision through Unum's own appeals process—but was denied a second time. Thus, Boles had no choice but to take legal action and pursue the matter through the courts.

His claim was filed in the US District Court of Nebraska. The plaintiff holds that Unum had a conflicted role in its decision to deny the plaintiff his benefits through the group employee plan, given that Unum served as both the insurer, as well as the delegated benefits decision maker for Telesis Inc.

As for the individual Unum long-term disability insurance claim, the plaintiff argues that his disability income insurance policy—purchased individually and not in tandem with any employee welfare benefits plan—was not governed by ERISA. Boles also claims that his health issues equate a disability under the terms of the policy. Thus, he feels Unum disability has breached his contract, likened to the landowner removing the offer to sell once the purchase price had been paid in full.

One wonders at the wisdom for buying insurance in the first place, given that it appears so easy for an insurer like Unum to renege on a paid Unum insurance policy.