Recently, there are questions raised about just “who is responsible at any disability insurance company for the “bad faith” claims process and unjustified denials. Well, let’s use Unum et al as an example, but remember this applies to all disability insurers.
CEO and Senior Executive Officers sign a responsibility statement as part of Unum Group’s financial statements. In brief, the CEO and/or Senior VP’s sign a short statement that they are responsible for making sure the financial statements were prepared in accordance with generally accepted accounting principles, and that in general, they can account for what the numbers mean.
An oversimplification of corporate responsibility directs that if the corporation does anything to “cook the books”, the CEO is responsible. He also certifies he knows what went into the making of those figures. Is any insurance CEO responsible you ask? You better believe it, even though he’s positioned himself an arm’s length away from actual claims practices, the CEO is held responsible for the financial statements.
So, who’s to blame? As an employee I once wrote an email note to Tim Arnold, the then Vice President of Claims, and basically told him “you either are not aware of the poor claims process, or if you are aware, are covering it up, or you have lost control of the claims process.” This didn’t earn me any brownie points to be sure, but I had already been whistleblowing up the chain of command for some time. True enough, Vice Presidents are also held accountable as part of executive management.
Either way, as Vice President of Claims Mr. Arnold was in a position along with Ralph Mohney to develop the claims process into a system of fair review, or as it turned out, to an unfair one according to multi-state settlement commissioners.
Although my experiences with Tim Arnold indicated he was generally fair regarding claims during roundtable presentations, he did terminate managers and other staff who disagreed with him, or failed to meet projected financial targets. (Just as an aside, it was the observation of everyone that most of his middle management firings were women.)
Therefore, any Vice President involved in the claims process has the authority to devise and implement strategy within the claims process itself. Claims Vice Presidents attend Multi Disciplinary Roundtables on occasion, and can approve denials for business reasons. Vice Presidents can order Managers, Directors and Claims Handlers to terminate claims, or “step up” review procedures to produce increased denials.
Claim directors and managers set the tone of the environment within the workplace. They can either make it a nice place to work, or the worst hell on earth if claims handlers aren’t living up to their unit quota of claims denials. Unit managers are granted a long list of incentives and monetary awards to encourage them to meet financial objectives.
Are claims directors aware of what “bad faith” is? Yes, they are. Do they try to implement the claims process in “good faith?” Not when the “powers that be” demand increased denials in any given financial accounting period and continue to expect managers to roll in unattainable profit targets. The job of a claims director or manager at Unum is an impossible trek toward higher and higher unattainable expectations.
In my opinion, anytime an executive is in a position to create, implement, and evaluate performance of, any process or action, THEY ARE RESPONSIBLE for the outcome. This would include any supervisory position above the claims handlers who are the lowest rung of the claims review process.
Are Unum claims handlers responsible? Yes, they are, but from a different perspective. Since they do not have the authority to create, implement and devise strategy, their responsibility is limited to that of a moral and ethical one. Certainly we would all agree that any employee should report wrong doing at any time. But, ethics is relative—not everyone has the same moral sense of ethical conduct especially when annual raises are at issue.
In general claims handlers are taught they are doing the right thing, then they are given bonuses for not doing it. It takes a long time in this type of environment to really understand what is going on and get a clear idea that it should be reported. It takes guts to report wrong doing within an insurance company, since when you do, your personnel file begins to get papered and subsequently you’re escorted to the door by security. No insurance company tolerates dissent, it’s mostly about working inside the box, and keeping your mouth shut.
