Unum 2014 Annual Report Download - page 161

UNUM • 2014 ANNUAL REPORT 159
Miscellaneous Matters
In October 2010, Denise Merrimon, Bobby S. Mowery, and all others similarly situated vs. Unum Life Insurance Company of America,
was filed in the United States District Court for the District of Maine. This class action alleged that we breached fiduciary duties owed to
certain beneficiaries under certain group life insurance policies when we paid life insurance proceeds by establishing interest-bearing
retained asset accounts rather than by mailing checks. In September 2013, the District Court awarded damages to the plaintiffs based on
a benchmark it created by averaging the interest rates paid on money market mutual funds and money market checking accounts. Both
parties appealed to the United States Court of Appeals for the First Circuit, which overturned the District Court’s decision in July 2014, finding
our payment of benefits by retained asset accounts was in full compliance with the policy terms and therefore ERISA. The United States
Supreme Court denied the plaintiffs’ petition for a writ of certiorari in January 2015. Thus the opinion of the Court of Appeals stands, and
this case is effectively concluded.
Beginning in 2011, a number of state regulators began requiring insurers to cross-check specified insurance policies with the
Social Security Administration’s Death Master File to identify potential matches. If a potential match was identified, insurers were requested
to determine if benefits were due, locate beneficiaries, and make payments where appropriate. We initiated this process where requested,
and in 2012 we began implementing this process in all states on a forward-looking basis. In addition to implementing this on a forward-
looking basis, in 2013 we began an initiative to search for potential claims from previous years. During 2013, we completed our assessment
of benefits which we estimate will be paid under this initiative, and as such, established additional reserves for payment of these benefits.
Similar to other insurers, we are undergoing an examination by a third party acting on behalf of a number of state treasurers concerning our
compliance with the unclaimed property laws of the participating states. We are cooperating fully with this examination, as well as with a
Delaware Market Conduct examination and a Voluntary Disclosure Agreement process with the state of Minnesota. The legal and regulatory
environment around unclaimed death benefits continues to evolve. It is possible that the current examination and/or similar investigations
by other state jurisdictions may result in additional payments to beneficiaries, the payment of abandoned funds under state law, and/or
administrative penalties, the total of which may be in excess of the reserves established.
In December 2012, State of West Virginia ex rel. John D. Perdue v. Provident Life and Accident Insurance Company and State of West
Virginia ex rel. John D. Perdue v. Colonial Life & Accident Insurance Company were filed in the Circuit Court of Putnam County, West Virginia.
These two separate complaints alleged violations of the West Virginia Uniform Unclaimed Property Act by failing to identify and report all
unclaimed insurance policy proceeds due to be escheated to West Virginia. The complaints sought to examine company records and assess
penalties and costs in an undetermined amount. In December 2013, the court dismissed both complaints, holding that the West Virginia
Uniform Unclaimed Property Act does not require insurance companies to periodically search the Social Security Administrations’ Death
Master File or escheat unclaimed life insurance benefits until a claim has been submitted. In January 2014, the plaintiff appealed the
dismissal of both complaints. The appeal is now fully briefed, with oral argument set for April 2015.