The ERISA Paradox: Unum Pays Policyholder Benefits Under Individual LTD Policy, Denies Disability Under His ERISA LTD Policy

Kantor & Kantor LLP filed a lawsuit this month against Unum Life Insurance Company of America after the carrier denied client Louis Wilkins’ appeal. A resident of Moreno Valley, California, Mr. Wilkins has two UNUM Long Term Disability (LTD) disability insurance policies, an individual plan and a group plan through his employer. The group plan is subject to a federal law called ERISA, the Employee Retirement Income Security Act, which often complicates a policyholder’s ability to receive benefits.

Mr. Wilkins became disabled in May 2008 after falling down a flight of stairs. In addition to continuing neck and back pain, Mr. Wilkins doctor diagnosed him with post-concussion syndrome. One month later, he was involved in a motor vehicle accident which exacerbated his disabilities. When Mr. Wilkins applied for benefits from UNUM, he was initially approved for benefits under both policies. He was also approved for government Social Security benefits.

Less than a year later, UNUM revoked the benefits under the group ERISA policy because, after an “independent” medical review, UNUM determined Mr. Wilkins was no longer disabled and could return to his previous occupation as an assistant sales manager. Inexplicably, UNUM continued to consider Mr. Wilkins disabled under the individual policy and to pay him those benefits.

Mr. Wilkins retained our law firm to appeal the denial. The firm found no difference in the terms of the two policies that would explain the conflicting decisions, other than arbitrariness on UNUM’s part.

According to Mr. Wilkins lawyer Glenn Kantor, “Disability carriers cannot coordinate group coverage and individual coverage. As such, he would be entitled to receive benefits from both. The key point is that the policy which is subject to a punitive damage award if improperly denied is being paid. The ERISA governed policy, which has no potential for extra-contractual damages, has been denied.”

UNUM denied Mr. Wilkins appeal and we have filed a lawsuit in federal court on his behalf. We question how the same insurance carrier can determine Mr. Wilkins is disabled for purposes of one policy, but not disabled for purposes of another. Incidentally, the group policy pays more than twice what the individual policy pays.

This is yet another example of an insurance carrier delaying and denying coverage, forcing its policyholder to file a lawsuit to obtain benefits. We believe Mr. Wilkins will prevail and that Unum cannot have it both ways: avoiding bad-faith punitive damages on the one hand while denying benefits on the other.

If your insurer has denied your benefits, call us at (800) 446-7529. We can help.

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