NOT EXACTLY ROBIN HOOD?  Dr. Mary C. Barry, Louisville Medicine Editor recently commented at length on the practice of Unum Group and other long term disability insurers of trying to dump their insureds on the taxpayers by requiring them to file for Social Security disability under threat of having their insurance benefits terminated.  Unum Group has its headquarters here in Chattanooga.

Here are relevant quotes from her article:
  
“The best article in the “The New York Times” was not, unfortunately, an April Fool.”

“Reporter Mary Williams Walsh explained in detail one of the reasons that the Social Security disability funds (SSI) will run out of money in about 20 years.  The reason is the insistence by private disability insurance companies that claimants file for permanent SSI benefits, despite dubious qualification.  This serves to get these claimants off their rolls, thereby shifting the payments onto the backs of the taxpayers.  If SSI runs out of money, millions of Americans would go bankrupt, lose all ability to buy needed medications, lose their personal physicians, and join the hopeless hordes of the uninsured.”

“Unum Group, one of the world’s largest disability insurers, took in revenues of $10.5 billion dollars last year.  Ten billion!  They paid out only $4 billion in claims, thus raking in profits on the order of the oil companies and Halliburton.  Unum Group and Cigna have been sued by whistle blowers who seek federal redress against the practice of “recklessly dumping people on Social Security’s doorstep, without properly screening them to ensure a chance of qualifying.”  Why do the claimants go ahead and apply to SSI, even if they think they’ll get better?  Contracts say that companies can immediately stop paying any claimant who refuses.  Additionally, the amount of the “claims reserve” funds that companies must keep bears directly on profits.  These funds, intended to pay future claims, must be invested cautiously in short-term, more liquid funds instead of whatever is deemed more profitable.  “It is all about the numbers,” said one of the plaintiffs.  This lawsuit will be heard in Boston in the fall.  Plaintiffs include employees of these companies, attorneys who represent the dibbled claimants, and the claimants themselves.”

“SSI spokesmen estimate that the investigation and processing of one person’s claim costs about $1,200.  The current backlog at the end of 2007 was 750,000 cases, extending the average wait for a hearing in front of an administrative law judge to 512 days, more than double the wait time for the year 2000.  If the claim is pursued through several appeals, which it nearly always is unless the claimant has a clear-cut advanced cancer, the cost per case can rise above $4,500.  The federal plaintiffs’ law firm estimates that this industry practice of turfing the majority of claims to SSI has cost the government hundreds of millions of dollars over the last decade.”

“Unum Group has been sued more times than it can count, according to “Los Angeles Times”, which quoted California Insurance Commissioner John Garamendi saying, “Unum is an outlaw company.  It is a company that for years has operated in an illegal fashion.”  Unum was forced by legal settlements obtained by state regulators in 2004 and 2005 to re-review hundreds of thousands of case denials.  As of mid-2007, it had reviewed only 10% of those.  (Can’t cut into the billions of profits by hiring properly trained and well-motivated workers, now can we?)  Mr. Garamendi investigated this company for illegally placing a 24-month benefit limit on any case involving a psychiatric disability and for knowingly applying a wrong legal definition of disability, among other charges. Unum has been sued by claimants for videotaping them without their knowledge or consent (a practice by which I routinely warn my patients, after one of them got to view her tapes by legal order).  Unum has been sued by delaying rightful payments for months and years.  Unum has been sued for denying legitimate claims, for retroactively changing the date of a policy, and for insisting that some other insurance company must be liable to pay.”

“People who prey on the sick and injured, then send you and me the bill, deserve raw frontier justice.  A Mississippi chain gang is not harsh enough.”

We all hope that the plaintiffs prevail and justice is served.

Trial Lawyers Say Recent Study Proves Tort Reform Doesn't Work

“A new study on tort reform by a business-backed institute ‘proves tort reform does not work,’ according to the association for the nation's trial lawyers. American Association for Justice CEO Jon Haber, representing trial lawyers, said the state rankings recently released by Pacific Research Institute (PRI) show there is no correlation between tort reform and costs. PRI, which bills itself as advancing ‘free-market policy solutions,’ found that Colorado ranks first in tort reform laws; however, it has the eighth highest costs. New Mexico ranks 44th in tort reform laws but has the sixth lowest costs, the PRI study said. Haber said the PRI study actually shows that states most ‘hurt’ by costs are the wealthiest. ‘ExxonMobil, Phillip Morris, and Big Pharma are all corporate wrongdoers who have spent millions to destroy the civil justice system using groups such as Pacific Research Institute. But PRI's new study actu! ally agrees with independent experts that tort reform does not work,’ said Haber. Haber questioned PRI's methodology and academic basis for its results. He said PRI cites itself or the American Tort Reform Association (ATRA) 34 times in the footnotes and that both PRI and ATRA are both funded by oil, tobacco, and pharmaceutical companies. ‘Even biased, junk research shows tort reform is simply a scheme by powerful corporations to avoid accountability in the courtroom and stack the deck against every day Americans,’ he said. The PRI report ranked Florida the worst in terms of tort costs and litigation risks, while North Dakota was the best. In a separate ranking, Colorado was said to have the best tort laws on its books, while Rhode Island has the worst.”

Insurance Journal, 3-25-08