Unum 2007 Annual Report Download - page 138

Notes to Consolidated Financial Statements
136 Unum 2007 Annual Report
Broker-Related Litigation
We and certain of our subsidiaries, along with many other insurance brokers and insurers, have been named as defendants in a series
of putative class actions that have been transferred to the U.S. District Court for the District of New Jersey for coordinated or consolidated
pretrial proceedings as part of multidistrict litigation (MDL) No. 1663, In re Insurance Brokerage Antitrust Litigation. The plaintiffs in MDL
No. 1663 filed a consolidated amended complaint in August 2005, which alleges, among other things, that the defendants violated federal
and state antitrust laws, RICO, ERISA, and various state common law requirements by engaging in alleged bid rigging and customer
allocation and by paying undisclosed compensation to insurance brokers to steer business to defendant insurers. Defendants filed a motion
to dismiss the complaint on November 29, 2005. On April 5, 2007, defendants’ motion to dismiss was granted without prejudice as to all
counts except the ERISA counts. Plaintiffs were granted a last opportunity to file an amended complaint, and they did so on May 22, 2007.
On June 21, 2007, defendants filed a motion to dismiss and for summary judgment on all counts. On August 31, 2007 and September 28,
2007, plaintiffs’ federal antitrust and RICO claims were dismissed with prejudice. Defendants’ motion for summary judgment on the ERISA
counts was granted on January 14, 2008.
We are a defendant in an action styled, Palm Tree Computers Systems, Inc. v. ACE USA, et al., which was filed in the Florida state Circuit
Court on February 16, 2005. The complaint contains allegations similar to those made in the multidistrict litigation referred to above. The case
was removed to federal court and, on October 20, 2005, the case was transferred to the District of New Jersey multidistrict litigation. A
motion to remand the case to the state court in Florida remains pending, but no further action has been taken in the case subsequent to
the transfer.
Miscellaneous Matters
In September 2003, United States of America ex. rel. Patrick J. Loughren v. UnumProvident Corporation and GENEX Services, Inc. was filed
in the United States District Court for the District of Massachusetts. This is a qui tam action to recover damages and civil penalties on behalf
of the United States of America alleging violations of the False Claims Act by us and our former GENEX subsidiary. In accordance with the
False Claims Act, the action was originally filed under seal to provide the government the opportunity to investigate the allegations and
prosecute the action if they believed that the case had merit and warranted their attention. The government declined to prosecute the
case and the case became a matter of public record on December 23, 2004. The complaint alleges that we defrauded the government
by inducing and or assisting disability claimants to apply for disability benefits from the Social Security Administration (SSA) when we
allegedly knew that the claimants were not disabled under SSA criteria. A motion to dismiss the complaint was unsuccessful. We intend
to vigorously defend the action.
In May 2007, Roy Mogel, Todd D. Lindsay and Joseph R. Thorley individually and on behalf of those similarly situated v. Unum Life
Insurance Company, was filed in the United States District Court for the District of Massachusetts. This is a putative class action alleging
that we breached fiduciary duties owed to certain beneficiaries under group life insurance policies when we paid certain life insurance
proceeds by establishing interest-bearing Retained Asset Accounts rather than checks. On February 4, 2008, the court granted the
Company’s motion to dismiss all claims.
Summary
Various lawsuits against us, in addition to those discussed above, have arisen in the normal course of business. Further, state insurance
regulatory authorities and other federal and state authorities regularly make inquiries and conduct investigations concerning our
compliance with applicable insurance and other laws and regulations.
Given the complexity and scope of our litigation and regulatory matters, it is not possible to predict the ultimate outcome of all
pending investigations or legal proceedings or provide reasonable estimates of potential losses, except where noted in connection with
specific matters. It is possible that our results of operations or cash flows in a particular period could be materially affected by an ultimate
unfavorable outcome of pending litigation or regulatory matters depending, in part, on our results of operations or cash flows for the
particular period. We believe, however, that the ultimate outcome of all pending litigation and regulatory matters, after consideration
of applicable reserves and rights to indemnification, should not have a material adverse effect on our financial position.