A landmark, multi-state settlement with UnumProvident will impose sweeping reforms that will protect disabled workers nationwide, New York State Attorney General Eliot Spitzer said today.

The settlement resolves issues relating to investigations into UnumProvident's claims handling practices. The investigations focused on assertions that UnumProvident had inappropriately denied claims for benefits under individual and group long-term disability insurance policies.

The settlement requires UnumProvident and its subsidiaries: (1) to reassess approximately 200,000 claims that previously had been denied; (2) to completely restructure their claim handling procedures to ensure objectivity and fairness; and (3) to pay a $15 million fine.

"This settlement sends a strong message to disability insurance companies that improper denials of disability claims will not be tolerated," said Attorney General Spitzer.

"These claim denials involved vulnerable workers those whose illnesses and injuries prevented them from continuing their employment. I am very pleased that these individuals will have their claims reviewed, and that UnumProvident will now implement the structural reforms necessary to ensure that future claims are handled appropriately."

The investigation is unrelated to the separate probes into the payment of contingent commissions, steering and bid-rigging in the insurance industry.

Numerous other actions are still pending against UnumProvident, including a class-action lawsuit which charges that the company operates "disability denial factories" and at least 2,500 individual suits filed by policyholders. A California jury returned a $31 million verdict against the company in 2003 and the state of Georgia fined it $1 million after an 18-month investigation.

The reassessment process covers the vast majority of persons whose claims for group or individual long-term disability benefits were terminated or denied after January 1, 2000. UnumProvident and its subsidiaries are required to provide notice to those individuals of their rights under the agreement.

In addition, individuals whose disability claims were denied between 1997 and 2000 can also apply to participate in the claim reassessment process. Spitzer and Serio urged these individuals to contact UnumProvident at 1-866-278-4641 and ask that their claims be reassessed.

UnumProvident officials estimate that the settlement will result in expenditures of over $100 million in restitution to policyholders and in structural reforms to improve compliance and monitoring. Some of the structural reforms must remain in place for at least two years, while others are permanent.

The review process and restitution payments will provide claimants with a more expedient method of obtaining recoveries, and simultaneously will reduce the companies' exposure to litigation judgments and other costs.

If UnumProvident fails to implement the required changes in a timely manner as stipulated by the agreement, it will be subject to penalties of $100,000 per day until compliance is achieved. In addition, failure to meet acceptable levels of accuracy in making disability claim determinations will result in a penalty of $145 million.

The investigation was conducted by the New York State Attorney General's Office, the New York State Insurance Department, state insurance regulators conducting a multi-state examination led by Massachusetts, Maine and Tennessee on behalf of all the other states, and the United States Department of Labor.

The settlement covers Unum Provident and five of its subsidiaries -- Unum Life Insurance Company of America, The Paul Revere Life Insurance Company, Provident Life and Casualty Insurance Company, Provident Life and Accident Insurance Company and First Unum Life Insurance Company.