NEW YORK—A federal judge has found in favor of a plaintiff suing Unum Group over the Chattanooga, Tenn.-based insurer’s denial of long-term disability benefits.
The Monday ruling follows a December finding by the 2nd U.S. Circuit Court of Appeals that, among other problems, a unit of Unum Group operated under a conflict of interest when it denied disability payments to a cancer sufferer (BI, Jan. 5).
The New York-based appeals court ruled in John E. McCauley vs. First Unum Life Insurance Co. that the insurer, operating as a claims administrator and benefits payer, set up the conflict of interest.
The appeals court remanded the case to a New York federal district court that originally found in favor of Unum, which denied coverage under two separate policies. Mr. McCauley was insured under a disability policy purchased by his employer, Sotheby’s Holdings Inc., and later under a conversion policy.
Unum initially denied coverage because Mr. McCauley’s employment with Sotheby’s had terminated and he exercised his conversion coverage after an allowable time for filing a claim.
On remand, Unum again tried to limit the plaintiff’s recovery with a new argument, according to Anderson Kill & Olick P.C., the law firm representing Mr. McCauley.
Unum argued on remand that the plaintiff should be denied 13 years of disability benefits because he had tried to return to work. But the trial court ruled earlier this week that Mr. McCauley’s aborted effort to return to work was involuntary and compelled by his financial condition, which was affected by Unum’s denial of benefits, according to the law firm.
Unum’s attorneys were not immediately available for comment.
The courts found that Mr. McCauley is retroactively entitled to benefits beginning Sept. 15, 1995.
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