High Court Won't Review Unum LTD Denial Based on Evidence Provided by Third Party

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March 31 --The U.S. Supreme Court won't review a decision finding that Unum Life Insurance Co. of America didn't abuse its discretion when it terminated the long-term disability coverage of a plan participant based on e-mails and documents provided by an acquaintance of that participant .

The U.S. Court of Appeals for the Fifth Circuit, in its Sept. 6, 2013, opinion, reversed a decision by the U.S. District Court for the Western District of Texas which had previously found Unum's termination of benefits to be an arbitrary and capricious decision (175 PBD, 9/10/13; 40 BPR 2203, 9/17/13; 56 EBC 2602).

The district court had ruled that, although Unum had developed substantial evidence in the record to support its decision, the decision was procedurally unreasonable because it relied, without further investigation, on e-mails and documentation provided from an individual with “a somewhat lengthy criminal history including a conviction for assaulting” the participant and who had originally attempted to obtain compensation from Unum in exchange for the documentation.

In reversing the district court's ruling, the Fifth Circuit ruled that Unum didn't have a duty under the Employee Retirement Income Security Act to investigate the source of the information presented to it when deciding whether to terminate the plan participant's disability coverage. The appellate court found instead that the burden of proof was on the participant to discredit the source as well as the content of the documents provided to Unum.

The appellate court found that the participant hadn't provided any evidence to Unum rebutting the claims in the e-mails that she wasn't disabled. Therefore, the Fifth Circuit reversed the district court's decision and remanded the case for further proceedings on Unum's counterclaim seeking to recoup $1 million in overpaid benefits.

In her petition, the participant requested that the Supreme Court address whether Unum's structural conflict of interest should favor allowance of her disability claim, given the district court's finding that the decision making process was procedurally unreasonable under ERISA. Additionally, the participant requested that the high court consider whether Unum could even bring its counterclaim seeking repayment of benefits under ERISA and whether both the district and appellate courts should have considered the benefit denial under a de novo standard of review instead of under the more deferential abuse of discretion standard.

The high court announced it was denying review of the case on March 31.


Text of the Fifth Circuit opinion is at http://www.bloomberglaw.com/public/document/Truitt_v_Unum_Life_Ins_Co_of_Am_729_F3d_497_56_EBC_2602_5th_Cir_2.