Unum Disputes Law Firm’s Statement on Jury Verdict in Social Security Disability Case

Unum Group is disputing a law firm's statement that said a federal jury in Boston found that it defrauded the United States by forcing claimants to file false claims for disability insurance benefits to the Social Security Administration when it knew they weren't eligible for them.

A news release issued by the Phillips & Cohen law firm claiming victory in the trial is "misleading and filled with inaccuracies," said Unum Group, the largest disability insurer in the United States, in a statement. "The jury actually sided with Unum on the majority of claims," it said. The two claims that were decided for the plaintiff resulted in an award of less than $3,000, Unum (NYSE: UNM) said.

After a four-week trial, the jury found that Unum defrauded the United States regarding two of those cases, was unable to decide a third, and found insufficient evidence regarding two others, the firm said.

According to allegations in the whistleblower suit filed against Unum, the insurer required claimants to file first for Social Security disability insurance benefits even when they didn't qualify. If they didn't apply to Social Security, Unum would cut their benefits. The suit was filed in 2003 under the federal False Claims Act.

Social Security has much stricter criteria for disability benefits than private insurers. Unum, the complaint said, provided financial incentives to in-house physicians who would rubber-stamp decisions, and authorized senior in-house doctors to change the written reports to justify a claim denial or termination. (BestWire, Sept. 26, 2008).

The jury, with its verdict, rejected Unum's main contention that it could force people to apply for Social Security disability benefits based on SSA's "open-door policy," which encourages individuals to apply for Social Security disability benefits if they want to, according to the statement from Phillips & Cohen. During trial, Unum admitted that it caused many of its customers to apply for Social Security disability over the 10 years covered by the case, it said.

"Unum's conduct in threatening people to apply for Social Security under penalty of losing a significant portion of their private disability benefits is wrong," said whistleblower Patrick Loughren, in the firm's statement.

Before the trial started, the federal judge ordered that the case proceed in stages, according to Phillips & Cohen. As a test case, the judge submitted five people's disability benefits claims to the jury.

"This is a blatant attempt by Phillips & Cohen to try to influence public opinion in a situation where they were unable to claim victory in a court of law,” said Chris Collins, Unum US's senior vice president and general counsel, in Unum's statement. “What makes this even more ridiculous is that Phillips & Cohen, while claiming to be lead counsel, was rarely in court, never asked a single question and never called a single witness."

As part of the trial, Unum said it produced 1,600 claim files that the plaintiffs then narrowed to 101 claims that they said shouldn't have been submitted to the Social Security Administration. This figure was later reduced to 61 as it was shown that many of these claims were awarded Social Security disability benefits, and in other cases, there was no proof that an application was made to the government, Unum said.

“We are pleased that the jury sided with Unum on the majority of the claims, which we believe substantially supports our position that working Americans who pay Social Security premiums have a right to have a disability claim reviewed by the Social Security Administration," Collins said.

Of the two remaining claims decided in favor of the plaintiff, Unum continues to think they are without merit and that it will win on appeal, Collins said.

Overall, Unum said it processed nearly 400,000 disability claims and paid more than $4 billion in disability benefits in 2007.

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])