Unum 2008 Annual Report Download - page 147

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Claims Handling Matters
Multidistrict Litigation
Shareholder Derivative Actions
Between November 22, 2002 and March 11, 2003 five purported derivative actions were filed in state and federal courts in Tennessee.
The defendants removed each of the actions that were filed in Tennessee state court to the U.S. District Court for the Eastern District of
Tennessee, and the cases were consolidated. The plaintiffs then filed a single consolidated amended complaint, which purports to assert
claims on behalf of the Company against certain current and past members of our Board of Directors and certain executive officers alleging
breaches of fiduciary duties and other violations of law by establishing or permitting to be established an unlawful policy of denying
legitimate disability claims and improper financial reporting, and that certain defendants engaged in insider trading.
On August 27, 2008, the parties entered into a stipulation of settlement to resolve the litigation. Under the terms of the settlement,
which is subject to, among other things, approval of the court, we agreed to, among other things, implement or continue certain corporate
governance measures and pay plaintiffs’ attorneys’ fees in an amount to be determined by the court. We have established adequate reserves
for the attorneys’ fees, the payment of which we believe will be an immaterial amount.
Policyholder Class Actions
On July 15, 2002, Rombeiro v. Unum Life Insurance Company of America, et al., was filed in the Superior Court of California and
subsequently was removed to federal court, alleging that the plaintiff was wrongfully denied disability benefits under a group long-term
disability plan. On January 21, 2003, an amended complaint was filed on behalf of a putative class of individuals that were denied or terminated
from benefits under group long-term disability plans, seeking injunctive and declaratory relief and payment of benefits. On April 30, 2003,
the court granted in part and denied in part the defendants’ motion to dismiss the complaint. On May 14, 2003, the plaintiff filed a second
amended complaint seeking similar relief.
Between November 2002 and November 2003, six additional similar putative class actions were filed in (or later removed to) federal
district courts in Illinois, Massachusetts, New York, Pennsylvania, and Tennessee. The complaints alleged that the putative class members’
claims were evaluated improperly and allege that we and our insurance subsidiaries breached certain fiduciary duties owed to the class members
under the Employee Retirement Income Security Act (ERISA), Racketeer Inuenced Corrupt Organizations Act (RICO), and/or various state
laws. The complaints sought various forms of equitable relief and money damages, including punitive damages.
These actions all were transferred to the Eastern District of Tennessee multidistrict litigation. On December 22, 2003, the Tennessee
Federal District Court entered an order consolidating all of the above actions for all pretrial purposes under the caption In re UnumProvident
Corp. ERISA Benefit Denial Actions and appointed a lead plaintiff. A consolidated amended complaint was filed on February 20, 2004.
Court ordered mediation has concluded with the settlement of all individual claims brought by seven of the fifteen named plaintiffs.
An eighth plaintiff has subsequently resolved her claims through the process established under the regulatory settlement agreements.
On January 12, 2009, in a two-to-one decision, the Sixth Circuit Court of Appeals reversed the District Court’s earlier ruling certifying
a class. On January 26, 2009, the plaintiffs filed a petition for rehearing of this decision by the full court. The District Court has yet to rule
on our pending motions for judgment on the pleadings or for summary judgment.
On April 30, 2003, a separate putative class action, Taylor v. UnumProvident Corporation, et al., was filed in the Tennessee Circuit
Court and subsequently removed to federal court. The complaint alleges claims against Unum Group and certain subsidiaries on behalf of
a putative class of long-term disability insurance policyholders who did not obtain their coverage through employer sponsored plans and
who had a claim denied, terminated, or suspended by a Unum Group subsidiary after January 1, 1995, seeking equitable and monetary relief.
Plaintiff alleges that the defendants violated various state laws by engaging in unfair claim practices and improperly denying claims. The trial
court subsequently dismissed the plaintiff’s claims for equitable relief and punitive damages and, most recently, denied certification of a
class action. On September 23, 2008, the Sixth Circuit Court of Appeals denied plaintiff’s petition to appeal the denial of class certication;
on the following day the District Court dismissed all of the plaintiff’s additional claims except for plaintiff’s individual claims for breaches of
contract and fiduciary duty and alleged violations of the Tennessee Consumer Protection Act.