Disability Claims Solutions


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Blast from the past2Here is another article I wrote about Unum’s history of paying claims. Unum’s history is a matter of public record now, and is nothing to be particularly proud of.

All corporations provide employees with some type of incentives whether in the form of financial rewards, job incentives, promotional advancement or social events. In this regard UNUM Life Insurance was an exceptional employer. Since the claims specialists were located at the top of the priority pyramid in terms of relative corporate importance in achieving profits, the lion’s share of incentives were ultimately awarded to those who “touched” claims.

However, the most popular UNUM Life employee incentive was the yearly companywide “bonus” awarded to all employees of record as of October 15th of the previous year. Both executives and employees, exempt and non-exempt, qualified for the bonus awarded by February 15th, by the Corporate Compensation Committee. The amount of the bonus ranged from 2 to 6 percent of each employee’s annual salary which for most claims specialists was somewhere in the range of $2,400 – $3,000.  One of the Vice Presidents in Executive HR once commented to me that you could tell it was bonus time at UNUM Life by noticing all of the new cars in the parking lot the next day.

Of course, claims managers used the opportunity of the yearly corporate bonus to entice employees to give more of their time and energy to support the company agenda even though UNUM sold itself as one of the best employers for “work-home balance.” Like busy worker bees, employees scrambled to give UNUM Life what it wanted – more and more profit. The UNUM Life corporate annual bonus was a very successful incentive and produced tremendous growth as a result of the sacrifices made by nearly every employee, who at the time also worked toward achieving the 1998 People Goals.

Management played the bonus like a top. On the day the incentive bonus was to be announced, speculation rumored the possibility of no bonus at all. Unthinkable! How could that be? Employees gossiped all morning in the halls trying to guess the bonus percentage, while managers remained closed-mouthed and out of sight. Finally around noon, the message came down from corporate there would be a bonus after all. Shouts of approval were heard from all locations as employees cheered for UNUM Life and its management.

Within an hour special mail deliveries were made to managers at each UNUM location and bonus checks were distributed to employees along with a solid hand shake and a very polite “thank you for a job well-done.”  At least for the moment, everyone felt appreciated for their hard work and were willing to concede UNUM Life Insurance Company was the best damn employer in the United States!

Immediately, elaborately decorated cakes, pizza, shrimp and seafood platters were placed in company lobbies. Grateful Vice Presidents and managers adorned with white chef hats stood behind cardboard tables and served employees food with a smile. A few managers ordered pizza and celebrated privately with members of their unit while most employees left the buildings to deposit their checks as quickly as possible often standing in long teller lines protruding out of the doors of local banks. Clearly, on bonus day very few employees were left to “mind the store”.  By 2 o’clock only a skeleton crew remained in the UNUM buildings to answer calls. The celebration was nearly over.

The surrounding communities of Portland and South Portland also fêted UNUM’s bonus day by keeping their establishments open later than usual to accommodate anxious buyers looking to spend extra dollars on new clothes, necessities, cars and electronics. It all seemed to work together as the influx of corporate money kept local business enterprises prosperous. Neither government nor local business dared criticize UNUM Life Insurance Company as extra cash flowed from UNUM’s treasury to employee’s pockets and into local cash registers.

My motivation in describing UNUM’s bonus day activities is to illustrate what employees will actually do for money, gifts and amenities on the job.  In order to promote competition and motivation among the claims specialists to terminate as many claims as possible, CBA managers provided an endless supply of $25 movie tickets, $50 dinner-for-two gift certificates, “spot” awards, shareholder value awards, peer appreciation awards, dollar awards from UNUM’s gift catalog, gas cards, book store cards, as well as pizza lunches, and off-site social events. These incentives, if you will, were intended to keep employees “focused” on achieving financial results for the company.

During an end of the month claim denial “blitz” two of my friends were chatting just outside my office cubicle when one of the senior managers passed by in the hall.

“Ladies?”, he said somewhat sarcastically, “have you  denied a claim in the last five minutes?”

“Not yet”, one of the women answered.

“Well, why don’t you go deny one?”  And, so it was in the disability claims arena.

During the end of a month or quarter in CBA the working environment was nearly unbearable as managers grew more and more stressed when there was a good probability financial targets would not be met. I can’t honestly say I actually heard the words “blitz”, or “hungry vulture” used, but managers were really pushy about denying more and more claims.

In an attempt to achieve financial target results, and keep the disability claim terminations coming, the managers of CBA devised “focus day” activities offering claims specialists the opportunity of “winning” theme related gifts. For example, in the summer, an award area on the floor was decorated with lawn chairs, smoker grills, beach balls, towels and umbrellas, expensive suntan lotions, free tanning services and all kinds of gift certificates related to beach activity.

In order to win, claims specialists were told to write their name, and the names of the people they terminated, on white pieces of paper each time a claim was denied and place it in the “fish bowl.” Near the fishbowl was a bell which we rang every time an insured’s claim was denied. On the half-hour one of the managers withdrew a name from the fish bowl and the lucky lottery winner was able to choose from the large selection of gifts. My first summer in CBA I actually won two lawn chairs, a beach ball, and two $25 restaurant gift certificates for denying claims to meet the financial targets of my unit, CBA, and ultimately corporate UNUM Life Insurance Company of America.

 It is appropriate at this point to keep in mind that the constant sound of ringing bells on the floor in CBA signaled the denial of disability benefits to many insureds without proper cause and investigation. Although management viewed these “beach ball” activities as necessary motivating factors in achieving financial results, many group LTD claimants were deliberately harmed and were not treated fairly in the review process.

Unfortunately, due to the manner in which internal claims strategies were positioned at UNUM, any knowledgeable, experienced claims specialist could choose a group LTD claim at random, and after a period of time, deny benefits to an unsuspecting insured. It wasn’t that hard to do given the defined claims review process at that time.

One of my peers shared with me that she earned the following:

  • $500 in gasoline cards
  • 4 $500 Shareholder Value Awards
  • $150 in Border gift cards
  • 3 Dinner for Two Gift Cards at local restaurants ($75 value)
  • 2 Lawn Chairs, a Smoker Barbecue, and a Beach Ball
  • A UNUM umbrella, 4 UNUM coffee mugs from the UNUM gift catalog
  • 4 $200 spot awards

Of course we all received birthday cakes every year, and participated in as many Hawaiian shirt, jean, and dress down days as management allowed. Incentives appeared to be endless, and management kept them coming. The producers of the movie Office Space really nailed Unum’s internal culture of bored people singing “Happy Birthday” to co-workers they really didn’t like.

Looking back it is clear employee monetary incentives actually do produce the desired result in claims processing areas within the insurance industry. However, in my opinion, anytime corporate financial targets are integrated with employee performance evaluations, bonuses, and elaborate food feasts, employee temptation to deny legitimate claims is ever present.  Over time the fine line between ethical and unethical conduct becames more and more difficult to distinguish and walk away from.

While it is clear that the Multi-State Conduct Market investigation and settlement put an end to Unum’s obvious unethical claims practices, it is not unreasonable to assume Unum today provides incentives to employees in less colorful displays of unethical conduct.

As far as I am aware Unum employees, compay wide, still receive annual bonuses, and management is still handing out pizza. In my experience, there was never any free lunch at Unum.

Today,  Unum insureds remain victims of a “stack the deck” industry still looking to make a profit for the price of a pizza slice, birthday cake, or annual incentive. The only things missing are the beach balls, lawn chairs and lottery fishbowls.