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160 UNUM • 2014 ANNUAL REPORT
Notes To Consolidated Financial Statements
In May 2013, a purported class action complaint was filed in the Superior Court of California, County of Los Angeles. The plaintiff
sought to represent a class of California insureds who were issued long-term care policies containing an inflation protection feature. The
plaintiff alleged we incorrectly administered the inflation protection feature, resulting in an underpayment of benefits. The complaint made
allegations against us for breach of contract, bad faith, fraud, violation of Business and Professions Code 17200, and injunctive relief. We
removed the case to the United States District Court for the Central District of California and filed a motion to dismiss. Rather than oppose
the motion, the plaintiff filed an amended complaint, and we filed another motion to dismiss. In August 2014, the District Court dismissed
the fraud claim as well as plaintiff’s requests for injunctive and declaratory relief, but granted plaintiff leave to file an amended complaint.
In August 2014, the plaintiff filed a second amended purported class action complaint entitled Michael Don, Executor of The Estate of
Ruben Don v. Unum Group, and Unum Life Insurance Company of America in the United States District Court for the Central District of
California. The complaint alleges breach of contract, bad faith, fraud, and violation of Business and Professions Code 17200 on behalf
of a nationwide class of insureds who were issued long-term care policies containing an inflation protection feature. In October 2014,
we answered the second amended complaint. In December 2014, the court ordered plaintiff to show cause why he was an adequate
representative with claims typical of the putative class. Briefing on those issues is complete, and we are awaiting the court’s ruling.
Summary
Various lawsuits against us, in addition to those discussed above, have arisen in the normal course of business. Further, state insurance
regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning our compliance
with applicable insurance and other laws and regulations.
Given the complexity and scope of our litigation and regulatory matters, it is not possible to predict the ultimate outcome of all pending
investigations or legal proceedings or provide reasonable estimates of potential losses, except if noted in connection with specific matters.
It is possible that our results of operations or cash flows in a particular period could be materially affected by an ultimate unfavorable outcome
of pending litigation or regulatory matters depending, in part, on our results of operations or cash flows for the particular period. We believe,
however, that the ultimate outcome of all pending litigation and regulatory matters, after consideration of applicable reserves and rights
to indemnification, should not have a material adverse effect on our financial position.