By:  John Caylor

    @Copyright 2006

Updated January 28, 2006


According to confidential sources, UnumProvident the nations largest disability and long term insurer is operating in a state of chaos while executives struggle to cash in their chips. Insider trading by the millions, exactly $144 Million according to the United States Securities and Exchange Commission Insider & Rule 144 transactions reported period February 2004 through January 04, 2006.

According to the SEC, UnumProvident Director Hugh O. Maclellan appears to be leading the way with stock sales from his personal portfolio and the families religious foundation, the "Maclellan Foundation a prime stockholder".

Insider Magazines in-depth investigation reveals a monster corporation with a "religious front" to hide away Billions siphoned from investors and policyholders. The Maclellan Foundation definitely has hooks into the Bush White House, IRS, federal courts and the U.S. Department of Labor and it may have received millions from U.S. government sponsored faith based initiatives explained in their "how to get taxpayer money Web site" "".

Recent corporate moves suggest the company to be quietly liquidating after raising additional capital from investors. Some investors have filed suit for fraud claiming that the company lied to them about soundness of financial statements and claims payments. After years of fending off thousands of lawsuits for bad faith and reckless disregard of medical facts involving denied claims the company recently agreed to reassess 215,000 claims federal and state regulators claim were wrongfully denied.

The U.S. department of Labor has fined the company $14 Million and California Insurance Commissioner has added another $8 Million after refusing to sign a multi-state settlement saying the company was a criminal corporation and charged them with knowingly violating the law. See the Commissioners statement about UnumProvident
Click Here for Commissioners Press Release

With mandated reassessment of 215,000 claims valued at approximately $330,000 each, UnumProvident now valued at $57 Billion will not be able to survive a $71 Billion dollar run on it. The multi-state settlement agreement reached after an examination by a Boston Law firm cozy with the company spells out that the claims will be reassessed by a special unit formulated within UnumProvident.

But according to confidential employee sources and claimants who have been through the new loop, business is the same despite the agreement that calls for favorable reinstatement of claimants already on Social Security Disability. But the company had provisions written in the multi-state settlement giving them the option to deny those claims again based upon what it deems as incompetence of Social Security Awards.

According to Linda Nee a former UnumProvident manager and whistle blower, Unumprovident lies to their investors and tells them they pay 98% of all claims when in fact the company is paying only 60% of claims as a rule. Nee who now operates her own disability consulting service for ERISA and other claimants says that UnumProvident is paying those short term claims they must pay for cancer and related disabilities where claimants have a short life span. In an update to our published story Linda adds these comments on January 28, 2006:

"UNUMProvident is advertising they are paying 99% of claims, and I’m wondering why stockholders, investors, federal and state regulators aren’t taking notice. Frankly, if I were a stockholder and I heard UNUM was paying 99% of claims, I’d immediately sell my stock. If I were an investor or a creditor I’d be sweating bullets by now. How is it that no one seems to question UNUM when it tells the public they pay 99% of claims?  Do you think any disability insurer is able to make a profit and sustain new business at the rate of paying claims at 99%?  So how is it that normal, rational, intelligent people are buying this?  You got me.

There are three major blocks of business in the claims area: group short term and long term disability and individual disability. It is estimated that approximately 10% of any block of claims is fraudulent and should not be paid; another 15-20% of claims will legitimately not be paid due to return to work, deaths, etc. Just the natural numbers of “death” claims is greater than 1% . Totally, we have a potential of  40% of claims which should not be paid.  This brings us pretty close to the 65-70 % LAR or liability acceptance rate for UNUM. In fact, when the LAR’s get above 65 % management goes crazy and additional hours are expected from the claims handlers to “make sure there is no potential sitting in the blocks.” Potential means claims that can be worked up and terminated. It’s pretty obvious that any claims denied over and above the 65% is UNUM’s profit margin. The higher the LAR gets, the less profit.

If what UNUM is saying is true, then they would actually have to be paying claims which legitimately should not be paid. If I were a reporter, the next time UNUM advertises a LAR of 99% I’d ask them to prove it and give up the statistics. Investors and financial analysts should be banging their heads against the wall trying to find out what UNUM is really paying before they increase any bond ratings. Chances are, it’s not 99%. And, for your stockholders out there…………is UNUM actually paying claims it shouldn’t pay? So much for your next dividend check!  Wake up, people,  Ivory soap may be 99 percent pure, but UNUMProvident sure isn’t!" Linda can be reached at "".

The company's confidential claims manual states that Doctors and medical evidence can be ignored when determining disability under policy provisions and the company's employees will make all such determinations. See UnumProvident's confidential claims manual...
Click Here for Manual

The most they'll pay a claim will be for 24 months, that's the extreme even though some contracts call for payments to age 65. So far the company has avoided criminal prosecution and held it a bay, but, according to insider sources prosecutors in Washington, D.C. are in producing a fraud case against the company targeting benefits offset policy provisions.

In their policies UnumProvident required offsets with Social Security for long term disability claims.  But the company went about it the wrong way according to sources. A social security offset would be in the company's  best interest, but the word from the top was take claims to social security early on before real disability was established and the claims were turned down giving the company a chance to effectively end claims early and save millions. 

The pending felony charges  may come from the fact that UnumProvident owns Genex Services a claims management company that uses attorneys and insurance professionals to reduce claims payment and company liability. Genex has become the market leader for reducing claims nationally for many corporate and government agencies.

Several months into the long term disability claims payment process UnumProvident sends a letter informing claimants that they will soon reach the end of a 24 month own occupation period and they must seek social security benefit offsets as required by their policies.

The company routinely sends out "Power Of Attorney Forms"  from subsidiary Genex Services to handle the case at no cost to the claimant and tells them they are not required to appear at Social Security hearings and asks the Power of Attorney forms be promptly returned. The claimants are never informed that GENEX Services is a 100% owned subsidiary of UnumProvident and they own the lawyers lock stock and barrel.

Refusal to sign the Power of Attorney Waiver to GENEX has brought about early termination for an untold number of the 215,000 claimants due to be reassessed. Insiders claim the apparent "Fox-N-Henhouse" program led to many denials for disability claims sent over to the Social Security Administration because they say it is deliberate criminal fraud that reduced claims payments by hundreds of millions.

In a July 2005 TAPED interview with, UnumProvident Asset Manager AC Glover based in Chattanooga would not release any figures for claims paid under the multi-State reassessment and based upon Insider sources NO claims of substance have been paid to date. These facts were confirmed in late December 2005 by John Kox the Manager of UnumProvident's new Multi-State Reassessment team hired under a 2 year contract to evaluate the resubmitted claims.  Kox says that he can't supply figures or statistics on reassessment claims because the company does not have reports with that information. 

According to the company's own internal Confidential Claims Manual, has acquired; UmunProvident has approximately 500 new disability claims per month.  Doing the math shows that to be approximatley 6,000 new claims per year and there are still 215,000 outstanding claims that have been denied according to the company's own records. Insider sources have told us that many of those were legitimate active claims which were terminated early due to raids by employees seeking the companys covented "Hungry Vulture Awards and bonuses".

The claims figures raise serious doubt if the company has ever paid but very few marginal claims since the inception of the Macllean "Religious" Foundation in 1945 as an apparent safe haven source to stash billions away from eyes of the IRS and government regulators.

Oddly enough the Provident part of the now merged UnumProvident Insurance giant came about from family founder Thomas Maclellan who demonstrated faith when he bought half of Provident Life and Accident Companies, Inc. The company was in it's fifth year of operation and lacked leadership and organization, but Thomas applied his administrative skills and calm preserve to manage business affairs in Chattanooga, while his partner, John McMasters, used his vibrant, friendly personality on the road selling new policies.

The teams synergy was beneficial, but it was Provident's consistent pledge to integrity and honesty that ultimately brought the company success. In the late 1800's, an insurance company like Provident who promised to "pay all claims promptly" was extraordinary, especially because Provident followed through on that promise. Today UnumProvident provides disability insurance through several subsidiaries:

  1. Colonial Life & Accident Insurance Company (all states, except New York)
  2. First Unum Life Insurance Company (in New York only)
  3. Provident Life and Accident Insurance Company
  4. Provident Life and Casualty Insurance Company (in New York only)
  5. The Paul Revere Life Insurance Company
  6. Unum Life Insurance Company of America


"bad faith" is the intentional deception, dishonesty, or failure to meet an obligation or duty.

In a CBS 60 Minutes interview broadcast in November 2002 California Insurance Commissioner John Garamendi told CBS's Ed Bardley that UnumProvident’s the nations largest disability insurer appears to be under pressure to increase claims terminations. This kind of thing will lead to problems. It’ll lead to fraud by the insurance company against the consumer, against the policy-holder, said Garamendi.

Garamendi elaborated further by saying, "There’s been successful lawsuits against UnumProvident in which federal courts by unanimous verdicts have issued punitive damages for this kind of activity. That’s another, not a warning sign, that’s a clear siren out in the streets saying ‘What is going on here.?"

Bradley responded with, "If this company knows that they’re going to be hit with these lawsuits and they’re going to lose some of them, that there’s going to be bad publicity, why would they do this?"

Garamendi: "It’s an equation, an economic equation. How many will we lose? How much business will we lose? Versus how much will we gain by denying these claims. So they’re doing that economic equation and they’re saying, “We’ll run the risk of the lawsuits. We’ll run the risk of the bad publicity, and probably the departments of insurance are asleep anyway. So let’s go!”

The company has since ousted former CEO Harold Chandler who handed out "Hungry Vulture Awards" to employees who terminated the most cliams. New CEO Tom Watjens has tried quelling the brewing stockholder rebellion with this statement on the company's website...

At its heart, UnumProvident is a company of people serving people. We provide more than a benefit check to claimants...we provide a wide range of benefits and services designed to help people during what is often the most trying time of their lives – loss of income due to illness or injury.

We are committed to paying all valid claims. In 2004 alone, we replaced over $4.2 billion in lost income to help support families. To our knowledge, this is more than any other income protection provider in the world.

Our claims paying philosophy is simple, yet direct:

Our claims process -- we call it "The Benefits Center" -- is unique helping our customers return to work following an injury or illness. We have invested heavily in a highly innovative process that is supported by a significant number of specialty and clinical resources, including our FMLA services, disability reporting/analysis, integrated disability management and more. Within our claims operation, our employees are all working on behalf of the millions of customers who have put their trust in UnumProvident. Through these commitments, we have generated return-to-work results better than industry averages1.

UnumProvident is headquartered in Chattanooga, Tennessee, and has offices around the globe with a significant corporate presence in Portland, Maine; Worcester, Massachusetts; and Glendale California. Our subsidiaries include Colonial Life & Accident Insurance Company in South Carolina and Unum Limited in England.

Our focus on helping people return to the fullness of their lives extends beyond our business interests and into the cities and towns where we live, work and play. UnumProvident has long recognized the importance of providing philanthropic support in the communities we call home and encourage our employees to do so, as well. In 2004 we contributed more than $4.5 million to not-for-profit organizations across the United States and United Kingdom through locally made-decisions in our home cities. Through our matching gift program, we matched an additional $896,000 of donations made by North American employees to local organizations and schools. This dedication to helping our communities reach their highest potential is a natural extension of our mission to help our claimants return to the fullness of their lives.

In so many ways, and in all that we do, UnumProvident is working to make a person at a time.

But  his statements haven't stop investors .....

UnumProvident Shareholder Sues Officers, Directors

Jan 3, 2005 |
A UnumProvident Corporation shareholder is suing officers and directors of the insurance firm, claiming they concealed ″contingent commissions,″ while ″grossly overstating″ company income.

The Chancery Court action was brought by Patrick Leonard.

The 49-page complaint is filed against former officer Harold Chandler and current officers Thomas R. Watjen and Robert C. Greving.

It also names directors Hugh O. Maclellan, A.S. ″Pat″ MacMillan, William Pollard, Ronald Goldberry, Lawrence Pugh, John Rowe, Jon Fossel, Michael Caufield, Thomas Kinser, William Ryan, William Armstrong, George Mitchell, Cynthia Montgomery, James Moody Jr., Steven Reinemund, Burton Sorensen and Lois Rice.

The suit says the firm concealed illegal contingent commissions paid to brokers, while ″subjecting the company to enormous fines and penalties totaling potentially tens if not hundreds of millions of dollars.″

It says during the relevant period that Mr. Watjen was paid $2,003,648 in 1999, $1,106,800 in 2000, $4,237,085 in 2001, $1,049,140 in 2002 and $2,534,189 in 2003. He sold 47,137 shares of stock for $1,247,245.

It says Mr. Chandler was paid $5,853,648 in 1999, $2,306,800 in 2000, $2,552,266 in 2001, $1,107,234 in 2002 and $17,630,242 when he left UnumProvident. He was granted options to buy 500,000, 675,000, 550,000 and 550,000 shares of stock.

The suit says Mr. Greving, the executive vice president since May 2003 and chief financial officer since May 2002, was paid $509,548 in 2001, $379,649 in 2002 and $495,413 in 2003. During the period, he sold 2,700 shares of stock for $78,698.

It says during the period, Mr. Maclellan sold 814,000 shares of stock for $12,770,773.

The suit says Mr. Pugh sold 2,978 shares for $43,359.

The suit claims that during the period UnumProvident financial statements were false and misleading and violated generally accepted accounting practices.

The suit says UnumProvident directors receive annual retainers of $80,000. Chairs of standing committees get an additional $7,500. Directors receive $2,000 for each special meeting and $500 for each conference call meeting and committee meetings.

It says Mr. Pugh and Mr. Pollard ″as the co-chairs of the office of the chairman of the board, receive an additional quarterly retainer of $50,000.″

The suit says as of March 26, 2004, several of the defendants owned millions of UnumProvident shares. It says Mr. Goldberry had 19,547, Mr. Maclellan had 12,217,084, Mr. Pollard had 52,895, Mr. Pugh had 40,488, Mr. Rowe had 8,500 and Mr. Watjen had 476,103.