Unum 2008 Annual Report Download - page 149

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145
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
Broker-Related Litigation
We and certain of our subsidiaries, along with many other insurance brokers and insurers, have been named as defendants in a series
of putative class actions that have been transferred to the U.S. District Court for the District of New Jersey for coordinated or consolidated
pretrial proceedings as part of multidistrict litigation (MDL) No. 1663, In re Insurance Brokerage Antitrust Litigation. The plaintiffs in MDL
No. 1663 filed a consolidated amended complaint in August 2005, which alleges, among other things, that the defendants violated federal
and state antitrust laws, RICO, ERISA, and various state common law requirements by engaging in alleged bid rigging and customer allocation
and by paying undisclosed compensation to insurance brokers to steer business to defendant insurers. Defendants filed a motion to dismiss
the complaint on November 29, 2005. On April 5, 2007, defendants’ motion to dismiss was granted without prejudice as to all counts except
the ERISA counts. Plaintiffs were granted a last opportunity to file an amended complaint, and they did so on May 22, 2007. On June 21, 2007,
defendants filed a motion to dismiss and for summary judgment on all counts. On August 31, 2007 and September 28, 2007, plaintiffs’ federal
antitrust and RICO claims were dismissed with prejudice. Defendants’ motion for summary judgment on the ERISA counts was granted on
January 14, 2008. All pending state law claims were dismissed without prejudice. Plaintiffs have filed an appeal with the Third Circuit Court
of Appeals of the order dismissing their federal antitrust and RICO claims.
We are a defendant in an action styled, Palm Tree Computers Systems, Inc. v. ACE USA, et al., which was filed in the Florida state Circuit
Court on February 16, 2005. The complaint contains allegations similar to those made in the multidistrict litigation referred to above. The case
was removed to federal court and, on October 20, 2005, the case was transferred to the District of New Jersey multidistrict litigation. Plaintiffs’
motion to remand the case to the state court in Florida was dismissed without prejudice along with other pending motions in the MDL.
Miscellaneous Matters
In September 2003, United States of America ex. rel. Patrick J. Loughren v. UnumProvident Corporation and GENEX Services, Inc. was
filed in the United States District Court for the District of Massachusetts. This is a qui tam action to recover damages and civil penalties on
behalf of the United States of America alleging violations of the False Claims Act by us and our former GENEX subsidiary. In accordance with
the False Claims Act, the action was originally filed under seal to provide the government the opportunity to investigate the allegations and
prosecute the action if they believed that the case had merit and warranted their attention. The government declined to prosecute the case,
and the case became a matter of public record on December 23, 2004. The complaint alleges that we defrauded the government by inducing
and or assisting disability claimants to apply for disability benefits from the Social Security Administration (SSA) when we allegedly knew
that the claimants were not disabled under SSA criteria. We filed a motion for summary judgment which was denied on September 15, 2008.
The case proceeded to trial at which seven out of 95 claims were adjudicated. We prevailed on four of the claims, the Relator prevailed on
two of the claims, and the jury could not reach a verdict on one of the claims. The jury awarded the Relator $850 in damages which can be
trebled. The court may also assess a penalty of between $5,000 and $11,000 per claim. The court has not yet set a trial date for the remaining
claims. The court must still address the issue of whether, once all the claims are tried, there can be any extrapolation of these results to the
larger population of claims we manage. We strongly believe that no such extrapolation can be justified either legally or factually, especially
in light of the recent split verdict. On February 24, 2009, the court ruled that the testimony of the Relator’s expert in support of extrapolation
would be excluded. We have also filed post trial motions with the trial court seeking to reverse the adverse findings by the jury and, if
necessary, we will file an appeal with the First Circuit Court of Appeals if final judgment is entered against us.