Nation's Largest Disability Provider Found Guilty of Defrauding the United States

Posted on Jul 14, 2009

Unum, the nation’s largest disability provider, was found guilty of defrauding the United States by a Boston jury last week.  Unum forced its customers to submit false claims to the Social Security Administration, in an attempt to receive disability benefits.  According to the case against Unum, the company knew that these customers were not eligible for government benefits.

As a result of Unum’s actions, a substantial burden was placed on the Social Security program, causing taxpayers to spend money to process and deny the false claims.

The case against Unum was brought on behalf of the government by a whistleblower, Patrick Loughren, under the federal False Claims Act.  According to Loughren, "Unum's conduct in threatening people to apply for Social Security under penalty of losing a significant portion of their private disability benefits is wrong.  After five years of intense litigation during which Unum refused to admit it was defrauding the United States, I am gratified that a Boston jury has called them to account."

Loughren filed the “qui tam” (whistleblower) lawsuit in 2003.  Under the False Claim Act, private individuals can sue companies that are defrauding the government to recover funds on the government’s behalf.

Unum, which is based in Portland, Maine and Chattanooga, Tennessee, encouraged customers who were seeking disability benefits to apply for Social Security disability benefits even though these individuals already informed Unum that they were not eligible.  Social Security has stricter guidelines for qualifying for benefits than private insurance companies like Unum.  This insurer went as far as to tell thousands of claimants that they would cut their private disability benefits in half or more if they did not comply with Unum’s directive.

The jury did not accept Unum’s claim that the insurer made individuals file frivolous Social Security claims because employers who purchased group disability benefits from Unum wanted the company to impose that requirement on their employees.