UNUM was the subject of an intensive study called a Market Conduct Review conducted jointly by various state insurance commissioners. The Market Conduct Review examined numerous allegations of unfair and improper claims handling practices. Following this review UNUM settled with the insurance commissioners including a separate and slightly more stringent settlement agreement with California Insurance Commissioner John Garamendi and agreed to stop many of the practices that had been investigated and also agreed to reevaluate many previously terminated claims. Some of the highlights of the California settlement provided that:

Respondent shall give significant weight to an attending physician’s opinion, if the attending physician is properly licensed and the claimed medical condition falls within the attending physician’s customary area of practice, unless the attending physician’s opinion is not well supported by medically acceptable clinical or diagnostic standards and is inconsistent with other substantial evidence in the record. In order for an attending physician’s opinion to be rejected, the claim file must include specific reasons why the opinion is not well supported by medically acceptable clinical or diagnostic standards and is inconsistent with other substantial evidence in the record.


In an effort to resolve disagreements between the Respondents and the Department concerning certain provisions in California Contracts or their interpretation as applied in handling claim decisions, which disagreements were not able to be resolved based upon usual sources of statutory, regulatory or decisional authority, Respondents have agreed to make the following changes in certain claims handling policies and in the terms of their California Contracts, in accordance with the effective date of the provisions in Section V.

A. Discretionary Authority

Respondents shall discontinue use of a provision that has the effect of conferring unlimited discretion on the Respondent or other plan administrator to interpret policy language, or requires an “abuse of discretion” standard of review if a lawsuit ensues unless the reviewing court determines otherwise (“discretionary authority provision”) in any California Contract sold after the date set forth in Section V.

B. Mental and Nervous Conditions

Respondents shall interpret the “mental and nervous conditions” benefit in a California Contract and its limitation to twenty-four (24) months to apply after the termination of any physiological-based disabling condition covered by the policy and not concurrent with such physiological condition and shall amend policy language in future California Contracts to better reflect this interpretation of the provision.

C. Self-Reported Conditions

Respondents shall discontinue application of the “self-reported condition” provisions in California Contracts, which has permitted Respondent to characterize certain disabling conditions as “self-reported” (e.g., pain, limited range of motion, weakness), while the Respondent accepted only objective test results to support disability, thus limiting payment of certain benefits under the “self-reported conditions” policy provision, and discontinue inclusion of “self-reported conditions” provisions in any California Contract issued after the date set forth in Section V.

Lee S. Harris is a partner at Goldstein, Gellman, Melbostad, Harris & McSparran based in San Francisco including the North and South Bay Areas. He has represented injury and insurance clients in numerous disaster claims. He has also served as chair of the American Association for Justice, Insurance and Bad Faith Litigation groups and serves on the board of Consumer Attorneys of California.