Unum 2010 Annual Report Download - page 153

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Claims Handling Matters
We and our insurance subsidiaries, as part of our normal operations in managing disability claims, are engaged in claim litigation
where disputes arise as a result of a denial or termination of benefits. Most typically these lawsuits are filed on behalf of a single claimant
or policyholder, and in some of these individual actions punitive damages are sought, such as claims alleging bad faith in the handling of
insurance claims. For our general claim litigation, we maintain reserves based on experience to satisfy judgments and settlements in the
normal course. We expect that the ultimate liability, if any, with respect to general claim litigation, after consideration of the reserves
maintained, will not be material to our consolidated financial condition. Nevertheless, given the inherent unpredictability of litigation, it is
possible that an adverse outcome in certain claim litigation involving punitive damages could, from time to time, have a material adverse
effect on our consolidated results of operations in a period, depending on the results of operations for the particular period.
From time to time class action allegations are pursued where the claimant or policyholder purports to represent a larger number of
individuals who are similarly situated. Since each insurance claim is evaluated based on its own merits, there is rarely a single act or series
of actions, which can properly be addressed by a class action. Nevertheless, we monitor these cases closely and defend ourselves
appropriately where these allegations are made.
Broker Compensation, Quoting Process, and Other Matters
Examinations and Investigations
In November 2009, we were contacted by Florida state insurance regulators to discuss a resolution of their investigation of our
compliance with state and federal laws with respect to producer compensation, solicitation activities, policies sold to state or municipal
entities, and information regarding compensation arrangements with brokers. This investigation commenced in 2005, and, until this most
recent contact, we had received no communications from the regulators regarding this matter since December 2007.
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, the Racketeer Inuenced Corrupt Organizations Act (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 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 filed an appeal with the Third Circuit Court of Appeals of the order dismissing their federal antitrust and RICO claims.
On August 16, 2010, the Third Circuit Court of Appeals affirmed the dismissal with prejudice of plaintiff’s federal antitrust and RICO claims
against us and certain of our subsidiaries. On September 27, 2010, the District Court entered final judgment against plaintiffs and in favor
of defendants, including us and certain of our subsidiaries.
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 renewed a motion to remand the case to the state court in Florida, and that motion was denied without prejudice.
Unum 2010 Annual Report