PROLOGUE
It was told to me very early on that a person’s importance as an Unum employee was indicated by the size of his/her office, and whether or not they were allowed to have a table, one or two chairs and in particular, a vase. This fact was indeed verified by me in looking at my supervisor’s office, rightfully set up for a Vice President with a round table, two chairs and a milk glass vase with nothing in it.
After several years I realized that those who were allowed to have a vase on the table rode the cusp of illegality in deliberately devising strategies to deny more claims than they paid on behalf of an American disability corporation. Amidst the background of what appeared to be diligence and propriety, Unum VPs and claims managers attended yearly week-long expensive off-sites and secretly concocted the next set of million dollar strategies to deny claims of unsuspecting disabled insureds and claimants – the most vulnerable group in our society.
At some point it must have occurred to me that what Unum was doing was wrong and probably illegal. Suddenly, one day a light bulb went off and I finally got it. Unum wasn’t about quality claims management as I had originally thought when I applied for a job in claims, but the company made its money by denying claims it targeted to deliberately deprive insureds and claimants of benefits they were entitled to. Alas! Unum’s expertise was in denying claims for profitability sake, not paying them.
From there I eventually concluded that Unum’s management, namely the table, chair and vase crowd, should probably be looking through bars of a federal prison.
Here is my story.
UNUM Enterprise and the Royal Management Aristocracy
Although there are those who would say UnumProvident deserved the fate of Enron in October 2001, it is doubtful that even the highest officials at the time had any idea of the scope of Unum’s unfair practices to deprive insureds of benefits for profit. According to Harold Chandler UnumProvident lost $50 million when whistle blowers exposed Enron’s corruption and wrong doing. Although Unum’s fate never matched that of its fellow corporation, it should have.
In 1994 as a newly hired employee of Unum Enterprise, a subsidiary of Unum America, I had opportunities to be aware of, participate in, and observe Unum Life’s highest executives complete with golden parachutes, and opportune ability to engage in insider trading of stock options at various points in time.
It is interesting to me that Unum’s attorneys never once questioned me at deposition about my role as a Compensation Specialist working in Jim’s Orr’s office acting as a go between Unum ‘s executive staff and Smith Barney transacting the trading and sale of stock options on behalf of the powers that be at Unum.
It may also be that Unum’s legal resources hoped to avoid any public disclosures of insider trading in and around the time of the merger with Paul Revere and the Provident Companies. Nothing has ever been asked or answered about the sudden disappearance of “The 1998 People Goals”, and the deliberate granting of employee stock options valued at nearly $60 per share that became worthless at $5 per share after the 1999 merger took place, possibly with the full knowledge of management.
There’s a great deal Unum has never answered for and it’s curious that no resource has ever asked me to go on record about the sales of stock options when executives got wind of a pending merger. I was the one who executed all stock option sales and finally contacted Unum’s legal department to enforce the 6 month waiting period required by the SEC for insider trading.
In 1994, Unum’s top 26 Vice Presidents, including the CEO operated at the highest levels of extravagance complete with corporate jet, nannies, free financial advisors, dog walkers, company paid rental cars, employee lunches, and bagels, coffee and sodas at every staff meeting. Golden parachutes included company paid for life insurance policies, stock options, valet and car services and as many other company paid incentives including deferred compensation packages.
While Unum’s female executives took advantage of free babysitting and nanny services (presumably to take care of adopted infants and young children) employees also received the best health and life insurance, subsidized dinners and lunches as well as an entire list of welfare cafeteria plans including domestic partner projects.
A going away party for a member of HR consisted of $500 shrimp and lobster platters complete with party favors and french pastries. Unum Life excelled in excess and extravagance to which the Unum “royals” responded to quite favorably.
At one time Unum also hosted golf tournaments on the Pro Tour and financially supported America’s Cup trials. It was reported that Unum also employed a fleet of bicycle messengers to carry communications from one Portland facility to another. Living high on the corporate hog suited Unum Life Insurance executives who seemed to have a language all its own with “paradigms, silver threads” and “placing stakes in the ground” alongside “benchmarks” in support of corporate ideologies.
It’s clear the Unum aristocracy had it made. Not only did Unum’s top VPs enjoy free traveling on the corporate Jet, but received a host of “chute” benefits including free financial advising services to help them manage their money, benefits, severance packages, life insurances, stock options and deferred compensation.
In many respects Unum’s executives took full advantage of royalty status by causing other middle management VPs’ knees to shake. My boss, the VP of Compensation was so scared of the VP of Marketing that he made sure he took her out to lunch every month. (Probably reimbursed by the company.)
At one time it was said that Steve Center, a former Unum President actually stood all of the female employees against the wall so he could check their pantyhose for runs and heels for imperfections prior to meetings.
Although I’m sure no Unum exec could get away with inspecting for pantyhose runs today, I know as an employee in the executive offices myself I kept plenty of extra shoes and pantyhose in my desk just in case. Although I could never bring myself to wear huge imitation pearl choke necklaces, most of the female executives looked like Unum Stepford wives about to be strangled by their own accessorized images.
Unum’s Enterprise also had its share of sex scandals when a member of HR was discovered in the process of a “Monica Lewinsky” with one of Unum’s executive vice presidents in a conference room. Although an embarrassed Jim Orr reassigned both executives to Unum’s “communication center” in Columbia, SC, most employees laughed to themselves at the stupidity of such conduct. “In a conference room?” Really? Maybe this post should be made into a major movie sage since it has all the elements of intrigue, suspense and sex to make millions.
Unum Enterprise and the drones who worked there went about the business of excess provided on the backs of insureds and claimants who lost benefits to meet unattainable profitability goals. When asked what he had to say upon retiring, Jim Orr III was reported as saying, “I hope I didn’t let them down.” He was referring of course to Unum’s employees not its insureds and claimants who gave up benefits to support VPs in the manner to which they had become accustomed. And yes, he let us down.
Stealing from insureds should be illegal
While Unum’s executives lived the luxury of wealth, claims handlers felt the stress of managers who demanded more and more claim terminations. If you can, picture a work area with a large red thermometer on the wall keeping track of denials, and a service bell alongside a large fishbowl into which lottery tickets were placed by those lucky enough to deny multiple claims, you would realize there was no “free lunch” at Unum. Each “ding” of the bell signified another denial complete with applause and upping the red target thermometer on the wall.
On the half hour Unum’s managers drew a ticket from the fishbowl and awarded picnic gear, movie tickets, lawn chairs and other prizes to claims handlers who denied claims. There was no specific regard for claimants or insureds only Cathy Liston’s retorts to her managers, “You tell them to go down there and deny more claims.” Terminating disability claims was a “lottery” in itself and many claims handlers walked away with grills, beach balls, Unum umbrellas, and expensive free dinner cards.
As a newbie claims specialist I was told that I had to deny $270,000 in claim reserves plus another $27,000 in settlements. In fact, my manager communicated to me often enough that if I couldn’t “roll in” my personal reserve goals of claim denials that I should look for another job. The game was on, and it wasn’t pretty. I wasn’t sure I wanted this job after all.
Unum’s claim procedures in the Central Benefit Administration were deliberately unfair in order to deny more and more claims. Highest reserve claims were targeted by using an archaic electronic system called EIS to sort claims by accumulated financial reserve. Managers went for the “biggest bang for the buck” and although Portland didn’t have a “hungry vultures award” it certainly gave money to claims handlers who denied the most claims calling it “shareholder value awards.”
What I objected to at the time was Unum’s patterns of practice to unfairly “trump up” or “stack the deck” against insureds to deny claims. Claims handlers were also told to call claimants from the south with 8th grade educations and offer them settlements, and or offer larger numbers of settlements around the holidays when claimants were in need of money.
“Blue memos” emerged informing claims handlers to deny claims for non-contractual reasons. Most of us shook our heads trying to figure out how to deny claims without a contractual reason for doing so. How do you explain something like this to insureds who ask why their claims were terminated?
Managers demanded that claims be 90 coded just prior to the end of a month, quarter or year-end profitability cycle so that financial gains could be over inflated just prior to profitability reporting. 90 codes allowed Unum to shut down financial reserves 90 days prior to actually terminating claims.
In essence, Unum and its managers and representatives were doing everything they could to NOT pay legitimate claims, or terminating claims with extremely low settlement offers including advance pay and close – yet another gimmick to trick insureds into taking money to resolve claims without appeal rights.
All Unum employees receive annual incentive bonuses to support Unum’s agenda to deny more claims and contribute “shareholder value” to the company. These bonuses are held over employees heads as incentive to work longer hours and pull off unattainable profit goals. It’s my understanding Unum employees today receive annual incentive bonuses if they support Unum’s agenda that contributes significantly to shareholder value.
In reality, Unum Life Insurance was engaging in business practices that were unfair and in some cases illegal. As an employee observer there was nothing fair or equitable about the manner in which Unum Life reviewed and made liability decisions. Unsuspecting insureds and claimants were “played” by skillfully trained Unum claims reps who could choose claims at random and successfully deny them for any reason. I know because I was there and I did as I was told.
In 1998 it became increasingly clear that Unum’s extravagant operations weren’t sufficient to show adequate profitability since the company was losing millions; and suddenly the good ol’ boys from Chattanooga came in and “stole the company’s cheese.” Although Harold Chandler and his henchmen provided no improvement, at least he ended the age of overabundance and extravagant golden parachutes for Unum’s executives who left voluntarily with hundreds of thousands in hand.
Elaine Rosen’s retort of, ” we will pay the claims we have to, but not a penny more” also didn’t help and Jim Orr III retreated with $50 million in severance plus stock and other benefits. With the exception of Elaine Rosen and John Roberts, Unum’s other 24 chief executives took their severance and jumped ship, leaving Unum Life Insurance in the hands of questionable Provident henchmen supported by the Maclellan Foundation and their millions.
Many readers of today’s blog may wonder what all of the above past history has to do with Unum Group today. With the exception of extravagance, there is no indication that Unum Group made any significant changes in its claims practices even after it was found lacking via a 48-state commission of examiners, including the state of California’s settlement initiated by John Garamendi who referred to the company as an “illegal organization.”
Today, Unum’s internal claims practices hide abuse in plain sight with multi-level medical reviews and outsourced private investigation which can be misrepresented and used to deny claims. Essentially, there has been no progress; Unum may not be calling its internal processes by the same names as in 1998, but as a horse of a different color, the company continues to “stack the deck” against insureds and claimants for the sake of profitability while lead regulators, such as the Maine Department of Insurance, turn a blind eye to Unum’s patterns of practice which clearly defraud claimants out of benefits to which they are entitled.
Unum’s claim representatives often operate beyond any reasonable ethical or professional standard of “good faith and fair dealing”, and like robots perform all tasks even when it’s clear management’s demands are unreasonable and unfair. To my knowledge Unum’s Consultants are not licensed to practice in any state and are protected by Unum’s staff of attorneys who themselves are complicit in Unum’s bad faith.
Unum’s legal department is now arguing that insureds and claimants should not be able to retain qualified assistance to help them manage their claims. Without outside assistance Unum will be able to deny more claims than ever and has gained the support of the Maine Attorney General who is in bed with Unum’s agenda. One has to wonder if the Maine Attorney General isn’t also in Unum’s pocket.
Unlike Eliot Spitzer who filed criminal charges against Unum when he was Attorney General, Janet Mills and her assistants support Unum’s agenda to act as an egregious marketer of policies the company sells with no intention of paying for in the future. One has to look no further than Maine to find governmental support for a company whose executives should have been jailed a decade ago. The Maine Attorney General has been in bed with Unum for quite some time. (Please note that the then Attorney General, Janet Mills, is now Governor of Maine, taking the state from the frying pan into the fire.)
Learning from the past is a good clue to Unum’s future and it’s response of “we don’t do that anymore” doesn’t walk the talk. It’s definitely time to take a second and third look at a company who sells insurance products and then doesn’t fairly deliver.
When Unum’s manager makes the statement, “Like slinkys, claimants aren’t worth much, but you like to see one fall down the stairs every now and then”, one gets the picture of what Unum is all about in a hurry. Looking to the past isn’t such a bad idea after all.
Stay tuned for Part II –
