Jury Slaps Insurer with $30 Million in Punitive Damages

January 29, 2003 (PLANSPONSOR.com) - A California eye surgeon walked off with a $31.7-million jury award in his lawsuit against an insurance company for denying his disability claims with what jurors called fraud and malice, according to news reports.

Dr. Randall Chapman, who said anxiety-related tremors he developed in 1999 kept him out of the operating room, got $1.7 million in past and future disability benefits and $30 million in a punitive damage award, according to a Wall Street Journal report. The jury said UnumProvident Corp. breached its duty to act in good faith in considering Chapman’s disability claim.

A UnumProvident spokesman told the Journal that the company strongly disagreed with the jury decision and that it planned to file motions for post trial relief and, if necessary, an appeal.

The Journal story said the verdict comes as state regulators in California, Georgia, and Tennessee are examining UnumProvident’s claims practices. Lawyers for policyholders, who have sued the Chattanooga, Tenn., company – the nation’s largest disability insurer – contend UnumProvident has been overzealous in denying claims. In November, a federal judge in California said the company had “a comprehensive system for targeting and terminating expensive claims,” according to the Journal story

The insurer, which is appealing the California case, maintains that it pays all legitimate claims and that critics have distorted its approach, which is geared toward getting employees back to work.