A federal court jury in Nevada returned verdicts last month against Paul Revere Life Insurance Company and UnumProvident Corporation (Unum Group). This was a partial retrial of a lawsuit originally tried to verdict in 2004. In the first trial, the jury awarded $1.6 million in compensatory damages and $10 million in punitive damages to G. Clinton Merrick in connection with the insurers’ denial of his disability claim. The insurers appealed and the punitive award was ultimately sent back for retrial before a new jury. The jury ordered Paul Revere Life Insurance Co. to pay $24 million and UnumProvident Corporation was ordered to pay $36 million. Interestingly, the punitive award of $60 million is six times the previous award that had been appealed by the insurers following the 2004 trial.
In the case, it was alleged that improper claims handling practices begun at Provident were brought to Paul Revere and influenced its claim handling with respect to Mr. Merrick’s claim both before the initial denial and afterward. These practices at the Unum Group of disability insurers have been the subject of media scrutiny as well as multiple governmental investigations. Rick Friedman, the lawyer who tried the case, had this to say about the verdicts:
The jury heard evidence of a fifteen year scheme to cheat disabled people. The money made off this scheme is in the hundreds of millions, if not billions of dollars. Jury after jury, and regulator after regulator has condemned their practices, but still they continue. The verdicts will keep coming until their practices change.
Rick did a very good job in this case and got an exceptionally good result. The fact that it was a retrial makes the result even better. An appeal of the verdicts is expected.
Source: Associated Press
AMERIGROUP SETTLES U.S. SUIT OVER PREGNANCY COVERAGE
Amerigroup Corp., a manager of government health plans, has agreed to pay $225 million to the federal government and to the State of Illinois to settle a lawsuit alleging the company wrongfully denied coverage to pregnant women eligible for Medicaid. The company also will pay attorneys’ fees and will enter into a corporate integrity agreement. A whistleblower, who was in charge of government relations for Amerigroup in Illinois, filed the complaint in 2002.
The company, which then operated in nine states and the District of Columbia, was accused of maximizing profits by keeping pregnant women and others with costly medical conditions off its rolls. A federal judge in Chicago fined Amerigroup $190.4 million last year. There was also a $144 million verdict by a federal court jury in 2006. The latest suit was filed under the federal False Claims Act and a parallel state law.
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