A California federal judge gave preliminary approval last month to the $46 million settlement reached by the Unum Group with long-term care policyholders. It had been alleged just the policyholders were cheated by the life insurer out of increases to their medical insurance benefits through flawed calculations. U.S. District Judge Dale S. Fischer’s ruling brings to a near close a two-and-a-half-year-long class action on behalf of individuals who bought long-term care insurance with Unum, but were denied maximum yield on benefits because of the way the company applied an annual inflation increase and how it “set the clock” on a policy’s anniversary date.
A spokesman for Unum, in a statement to Law360, said that the settlement involves the claims of only a certain segment of the Portland, Maine-based life and disability insurance provider’s policyholders. The proposed settlement arose out of a May 2013 class action lawsuit brought in California state court by Ruben Don. The suit alleged breach of contract claims and it sought injunctive relief on the basis that the company allegedly shortchanged him of $174,000 for his lifetime maximum benefit amount.
The case was later removed to California federal court, where Ruben’s son, Michael Don, was named executor of his estate and listed as a named Plaintiff in the suit. He was joined by fellow now-class representative Tamara Pelham as special administrator of the estate of Leroy Little, and Carolyn Jan Little as individual.
The Plaintiffs and Unum filed a motion for settlement and a stipulation to vacate the Plaintiffs’ motion for class certification in November, and submitted their proposed agreement to the court in February. The total settlement amount was calculated to be worth $50.6 million, but according to a declaration by the Plaintiffs’ actuary expert that figure was adjusted for present day value to $45,988,014.
The amount of the settlement includes $9.6 million in attorneys’ fees to class counsel, payouts to two separate nationwide subclasses and service award payments totaling $60,000 to class representatives. The payout to the first settlement subclass is an estimated $18.6 million for approximately 11,867 Unum policyholders who had a long-term care policy with Unum, filed a claim that was covered, then were paid benefits based on the policy’s effective date rather than policy date to calculate for any increases.
An additional 1,163 policyholders who were underpaid by Unum will be paid $1.8 million under the agreement, and another $1.8 million overpayment to 3,069 Unum policyholders will not be clawed back by the company, according to the terms of the settlement. A second settlement subclass consists of policyholders who have or may in the future reach their lifetime maximum benefit amount and in which Unum had applied or will apply an annual inflation increase to their remaining lifetime maximum benefit amount rather than the full lifetime maximum benefit amount. The settlement calls for this subclass to receive 1.5 months of additional benefits estimated at $18.6 million, an amount downward adjusted by an expert to reflect present value.
Based on the contentions of a third subclass who alleged that Unum did not provide an exact replica of their original policy statements when they requested them, the company has agreed to provide exact copies of the policies moving forward. The judge set a fairness hearing date on June 27 in Los Angeles federal court. The class Plaintiffs are represented by Allan Shenoi of Shenoi Koes LLP, and Christopher C. Vader. The case is in the U.S. District Court for the Central District of California.
Contact us today for a free legal consultation with an experienced attorney.
Fields marked *may be required for submission.
If you would like to subscribe to the Jere Beasley Report digital edition, simply visit our Subscriptions page and provide the necessary information or call us at 800-898-2034.
Attorney Advertising - Prior results do not guarantee a similar outcome.