Unum Group Loses Disability Benefits Case on Remand

The ruling follows a December finding by the 2nd U.S. Circuit Court of Appeals that the insurer, acting as both claims administrator and benefits payer, operated under a conflict of interest when it denied disability benefits to an employee who suffered with cancer (see Despite Standard of Review Change, 2nd Circuit Rules Against Disability Denial ).

According to Workforce Management, attorneys for plaintiff John E. McCauley said that on remand, Unum again tried to limit McCauley’s recovery with a new argument that he should be denied disability benefits because he had tried to return to work. However, the New York-based federal district court found that McCauley’s aborted effort to return to work was involuntary and compelled by his financial condition, which was caused in part by Unum’s denial of benefits.

The district court originally found in favor of Unum, which denied coverage under two separate policies. McCauley was insured under a disability policy purchased by his employer, Sotheby’s Holdings Inc., and later under a conversion policy.

Unum denied coverage saying McCauley’s employment with Sotheby’s had terminated and he exercised his conversion coverage after the allowable time for filing a claim.

Workforce Management reports that the courts ruled McCauley is retroactively entitled to benefits beginning September 15, 1995.