The policies examined allowed for payment of claim prior to final determination of liability. The policies also allow the Company to recover payments made prior to final determination if the final determination is to decline the claim. This process is called Payment with Reservation of Rights (ROR). The letter sent with an ROR payment does not state that the claimant may have to reimburse the Company if the final determination is denial.
The Company states that "it is UNUM’s practice not to seek reimbursement of ROR payments. We reserve the right to determine benefit eligibility at a later date, but we do not attempt to reserve the right to reclaim benefits paid.." The Company needs to declare their contractual right of recovery in the ROR letter, or the company must change the policy language to reflect their actual practices.
Total Claim Population
Claims in Sample
Claims Paid with ROR
Incomplete disclosure in Letters or No Letter Sent
% Sample in violation
Results: The Company does not meet this standard.
220 77 4 4 100% (Outside tolerance level)
Standard #8 Reasonable standards have been adopted to ensure prompt payment of claims once the obligation to pay has been established. WAC 284-30-330(16)
There are no formal procedures or standards to ensure prompt payment once liability has been established. However, the examiners’ file review did not uncover any instances of lengthy delay in payments.
Subsequent Event: In 1997, the Company adopted Standards of Service which do include specific standards for prompt payment.
Results: For most of the exam period, UNUM did not have written standards for prompt payment of claims. However, we did not find any payment delays in the files reviewed. Given that they did develop and distribute standards during the last year of the exam, the Company meets this standard.
Standard #9 Adopt and implement reasonable standards for the prompt investigation of claims. WAC 284-30-330(3)
The Company has a manual entitled "Individual Disability Benefits Guide." This manual discusses the basic procedures and company philosophy for adjudicating individual disability claims, but does not set standards or formal procedures for the claim process. The manual contains suggestions and ideas on how to process claims and has some