How to turn 8 mil into 75 mil almost overnight!

[Guest guest]

Unbelievable - Garamendi fines them 8 million, so they take a 75 million dollar

write-off? That's like, THREE TIMES the appx. 26 million total they've been

fined to date by 49 states? AND they admit no wrongdoing. That's some corporate

cojones I'm sure even the old-school robber barons would have been proud of.

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Disability Claims Settlement Sets Calif. Precedent: 10/04/05

Insurance Commissioner Garamendi on Monday announced a record $8 million

fine against disability insurer UnumProvident as part of a settlement that he

predicted will have a sweeping effect on all policies in California.

Three UnumProvident companies will pay an $8 million fine -- the largest levied

in the department's history -- to settle a dispute over thousands of claims by

California policyholders who were denied benefits unfairly, Garamendi said.

UnumProvident agreed to rewrite its policies and claims procedures to deal with

those disputed claims, and all future claims.

The three units are Unum Life, Provident Life & Accident, and Revere, the

insurance commissioner said.

Garamendi announced the settlement Monday at a Glendale physical therapy clinic,

and told reporters that all disability insurers doing business in California

will eventually be required to adhere to the standards set in the UnumProvident

agreement.

The case stems from an exhaustive department investigation begun in 2003 into

allegations of unfair claims settlement practices by the Tennessee-based

UnumProvident, according to Garamendi's office.

" ...Policies sold in California will deliver what they promise. In this state,

insurers will live up to their end of the bargain, " he said.

The insurer issued a press release of its own, denying wrongdoing and saying

that the company settled with Garamendi's office to put the issue to rest.

Chief Executive Officer R. Watjen said the settlement after two years of

negotiations with the department " eliminates the regulatory uncertainty around

claims handling in this important market and allows UnumProvident to move beyond

questions about past claims handling practices. "

Watjen added that UnumProvident did not agree with the California Insurance

Department's allegations nor with the negative characterization of the company's

claims practices.

" While we are taking this step to remove the regulatory cloud that has been

hanging over us, we do not agree with the generalizations the department has

made about our company through this process, " he said.

The California Department of Insurance investigation uncovered more than 25

business practices that violated California law, including:

-- Knowingly applying the wrong definition of 'total disability' in claims

handling;

-- Selectively using independent medical exams and other medical information to

the company's own advantage;

-- Mischaracterizing nonsedentary nursing occupations as sedentary, which

required policyholders to find sedentary nursing work instead of receiving the

disability benefits to which they were entitled.

UnumProvident last year settled with 48 other states over similar allegations,

and agreed to pay a $15 million fine in that case. Garamendi, however, opted out

of the settlement and pursued a separate agreement with UnumProvident, his

office said.

He noted Monday that portions of the California- UnumProvident settlement will

become a benchmark for disability insurers.

" Today's action goes beyond UnumProvident, " he said. " California's disability

insurers now have a new standard, one that will provide a better sense of

security for policyholders, which is what disability insurance is really all

about. "

The terms of the agreement with UnumProvident will apply to California claimants

who were denied benefits between Jan. 1, 1997, and Sept. 30, 2005. Claimants are

eligible to have their claims reassessed and the reassessment reviewed by an

independent expert, Garamendi said.

Consumer protections in the settlement include:

-- California claimants who opted in under the multistate settlement will be

reassessed under California settlement standards;

-- A higher standard must be met for the insurer to reject a claimant's doctor's

opinion on disability, and the reasons must be documented in claim files;

-- Claimants or their doctors may request an independent medical examination;

-- All other claims handling changes implemented in the multistate settlement

are incorporated within the California settlement.

Garamendi also said Monday he plans soon to issue a data call to review the

outstanding policies of other disability carriers in the California market.

Fitch announced Monday that its ratings of UnumProvident were unaffected by the

settlement. The insurer said it plans to take a one-time pretax charge of $75

million in the third quarter to absorb the fine and related costs.

Source: Calif. Department of Insurance

Serena

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