First Unum castigated as bad actor in court decision

An insurance company that also serves as a plan administrator for a number of energy pipeline companies has lost another court decision.
The company is First Unum. Among the plans it covers are the life insurance and long term care plans of Colonial Pipeline Co.
Colonial turned to Unum to administer its life insurance and long term care plans after it dumped Hartford and then TransAmerica.
Unum has been the subject of uncomplimentary coverage by “CBS 60 Minutes” and “Dateline.” Those stories focused on the way in which Unum fraudulently denied claims filed by covered employees or retirees.
The company’s bad reputation was acknowledged in a Dec. 24 decision handed down in McCauley v. First Unum Life Ins. Co., 2008 U.S. App. LEXIS 26094 (2nd Cir.)
The Second Circuit Court decision is a significant one for several reasons, not the least of which is that the court considered the company’s bad reputation in making its decision.
The First Circuit Court in Massachusetts noted in an earlier suit against Unum that “First Unum is no stranger to the courts, where its conduct has drawn biting criticism from judges. A district court in Massachusetts wrote that ‘an examination of cases involving First Unum... reveals a disturbing pattern of erroneous and arbitrary benefits denials, bad faith contract misinterpretations, and other unscrupulous tactics.’”
The First Circuit Court in its decision involving Unum listed more than 30 cases in which First Unum’s denials were found to be unlawful, including one decision in which First Unum’s behavior was “culpably abusive.”
In light of First Unum’s well-documented history of abusive tactics, the Second Circuit found that Unum’s history of deception and abusive tactics was additional evidence that it was influenced by a conflict of interest as both plan administrator and payor in denying McCauley’s claim for benefits in his case.
In the case, McCauley claimed to have suffered from a diverse set of symptoms following treatment for colon cancer. Unum persisted in denying disability benefits, both before and after the participant attempted to find employment compatible with his disabilities.
The Court found that Unum’s conduct reflected questionable motives.
It summarized its finding against Unum as follows:
(1) First Unum operated under a conflict of interest because it was both the claims administrator and payor of benefits;
(2) First Unum’s reliance on one medical report in support of its denial to the detriment of a more detailed contrary report without further investigation was unreasonable;
(3) First Unum deceptively indicated to McCauley that the medical professional assigned to review his records was a medical doctor when the individual was in fact a nurse, failed to obtain a physician’s recommendation, and mischaracterized its rationale for continuing to deny benefits;
(4) First Unum has a well-documented history of abusive claims processing; and
(5) observations (2), (3), and (4), above, collectively lead to the conclusion that First Unum was in fact affected by its conflict of interest.
In light of these observations, the court found that a reasonable trier of fact could only come to one conclusion: First Unum’s denial was arbitrary and capricious. It then awarded McCauley summary judgment in his favor.