January 25, 2003 - Insurer to Appeal California Jury's Award of $31.7 Million over Benefit Cut
Jan. 25--UnumProvident Corp. plans to appeal a California jury's decision to award $31.7 million to a man who accused the company of improperly cutting off his benefits under a disability insurance policy.
Thurday's ruling called for UnumProvident, which employs about 3,600 people in Portland, to pay Randall Chapman back benefits and $30 million in punitive damages.
The ruling was the latest in a string of setbacks for the company, headquartered in Chattanooga, Tenn. It has lost several lawsuits that alleged, as did Chap- man, that the company cut off benefits of its clients as a way to boost profits.
Recent airings of the television shows "Dateline" and "60 Minutes" have repeated the charges and included interviews with former employees who said the company routinely denied benefits despite medical findings that indicated the policyholders were unable to work.
The company has consistently denied the allegations.
Linnea R. Olsen, the UnumProvident spokeswoman, said the company is appealing the Chapman ruling as well as another California verdict last year that ordered the company to pay a woman $7.67 million, including $5 million in punitive damages. A judge in the latter case upheld the jury's decision and ordered UnumProvident to stop avoiding the payment of legitimate claims.
Olsen said the company will ask the judge in the Chapman case to overturn the jury verdict. If that fails, she said, UnumProvident will appeal.
"$30 million in punitive damages is unbelievable," Olsen said. "We strongly disagree with the nine-to-three jury decision."
Chapman is an opthalmologist in Novato, Calif. He and his doctors said a phobia gave him the shakes, preventing him from performing eye surgery.
UnumProvident's doctors disagreed, and the company cut off his benefits in September 2000 after paying him for three months.
The jury said UnumProvident acted in bad faith.
Olsen said the court awards will not affect the company's Portland operations.
"We have litigation reserves set up for what we consider a reasonable amount," she said. "We're not concerned about the financial status of the company or anything here in Portland as a result of these lawsuits."
UnumProvident's stock closed Friday at $17.94, down 76 cents for the day.