Chattanooga, TNOne thing about the insurance industry: it is never boring. Witness allegations of claimants trying to pull the wool over Unum's eyes, as evidenced by one Unum lawsuit filed by a claimant attempting to extract benefits through alleged misrepresentation. It happens. But misrepresentation can also stem from agents of Unum….
Regarding the former, an Unum disability insurance policy was issued to plaintiff George Kutlenios on May 20, 2004, based on information the plaintiff had supplied in the policy application. The policy contained an incontestability clause, which bound Unum to provide benefits as necessary even in the face of misstatements or omissions on the application, with the exception of fraud. The clause would become effective when the policy had been in force for a period of two years.
Two years and three weeks following issuance of the policy, the plaintiff applied for disability benefits based on a diagnosis of ankylosing spondylitis (AS), an arthritic condition affecting the spine. When Unum Group found evidence the plaintiff's AS was a pre-existing condition, the insurer denied benefits.
Kutlenios sued. A district court granted Unum disability summary judgment based on misrepresentations made by the plaintiff, and an appellate court upheld the lower court's finding. While it may constitute bad faith on the part of Unum—once known as Unum Provident—to consider, as a matter of principle, claimants as guilty until proven innocent, it is true that insurance companies must remain diligent to avoid being hoodwinked by way of an inappropriate claim.
But it can go the other way, too. Witness the story told by blogger Linda Nee, a former employee of First Unum and now an insurance advocate for policyholders.
As told in a recent blog (3/31/12), a registered nurse (RN) and Unum long-term disability insurance claimant was witness to what appeared to be a bicycle accident beneath his third-floor balcony. A man was lying on the ground, face down near a tree, with what appeared to be a distorted leg and other injuries. A bicycle lay nearby.
It appeared the man had hit the tree with his bicycle, and had suffered a broken leg. However, the experienced emergency room RN knew that an individual having broken his leg and sufficiently conscious to moan and call out, would be clutching his leg and crying out in pain, rather than laying in the grass mute.
The insured—who Nee describes as having been the target of previous surveillance by Unum—recognized a potential ruse and rather than take the bait and physically try to help the man, called down several times to ask if he needed help.
After several minutes, the man got up (with full weight on his supposed broken leg), and pushed the bike down the street and around the corner. By now bemused, the RN heard what sounded like a van door opening, then closing, and a vehicle start up and pull away.
Had the Unum disability insurance claimant taken the bait and descended out onto the grass to treat what appeared to be a man in distress, presumably Unum could have made a case that the claimant could still perform his duties as an emergency RN, and revoke his benefits.
In April, it was reported that Unum insurance president and CEO Tom Watjen made $12.2 million last year, including a $750,000 increase from 2011. Watjen's actual salary is reported as $1.1 million, with the remainder based on the company's performance. As is the case with any insurance company, the less an insurer has to pay out in claims, the better…
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