In speaking with several of the attorneys I still have professional relationships with, it may be possible that Unum is using a tactic it used in the past to deny claims in one period by deleting them from the system, but not having sufficient proof until later months.
At the time this was referred to as “90 Codes” since claims handlers were given 90 days to “make the denial good” after the claim was officially shut down. As evidence of our suspicions are the amount of claim denials brought to our attention that were communicated to insureds in the month of October citing proof of denial as of September.
It seems likely, given Unum’s past history, the company actually closed claims on its payment system to reduce financial reserves by the end of the 3d Qtr.(September 30) and then communicated the denial to insureds in October when sufficient denial back-up was obtained. Unum may not be calling the process “90 codes”, but it is reasonable to say that it’s likely claims were closed by September 30th, but were denied in October.
One would have thought that UnumProvident learned a valuable lesson about “Off-Balance Sheet Financing” way back when its claims practices were investigated by insurance regulators. Removing the liability of claims in prior periods reduces “Liabilities” on the Balance Sheet, let’s say in September, when in reality the company continues to have the “liability” for claims for several months afterward. Hence, “Off Balance Sheet Financing.
Of course, this isn’t taking into consideration the financial MESS that’s created when claims handlers are unable to deny claims in October that have already been closed down in September. It really becomes a financial mess that violates the “Continuity and Consistency Principles” of GAAP.(Generally Accepted Accounting Principles) Financial Reserves have to be opened back up producing financial reserve losses that no one wants. Still, I think Unum’s management should have gotten the message that premature “adjustments” on the payment system are problematic.
Although we don’t know for sure that Unum is closing out financial reserves prematurely in order to meet profitability targets, the volume of October denials creates suspicion that Unum benefitted from those denials before the end of the third quarter. While we already know Unum is gearing up for year-end profitability, the likelihood of manipulation tactics such as those above isn’t good.
Does it seem as though there are quite a few articles about Unum lately? Well, there are, and legitimately so. Unum Group is a publicly traded corporation and insureds have a right to know what’s happening with their claims. If you received an October denial letter, consider that Unum actually shut it down by the end of September in order to benefit financially and notified you later. Again, while we don’t know for sure, given Unum’s past, in my opinion, it’s a distinct possibility.
