News You Can Use: LTD appeal goes against Unum

The Second Circuit Court of Appals last month ruled in McCauley v. Unum that the disability insurance giant in 1995 abused its discretion and denied benefits to a cancer sufferer under a conflict of interest.

The ruling, issued Dec. 24, 2008, involved John McCauley, who was diagnosed with advanced cancer in 1991, and notified his employer in 1994 that he was unable to keep working due to the effect of treatment. Unum in 1995 denied long-term benefits to McCauley that had been provided by his former employer, and again in 1996 under conversion coverage, leading McCauley to sue Unum for bad faith.

Although a district court sided with the insurer, the appeals court found for McCauley based on last year's Supreme Court case, MetLife v. Glenn, where justices ruled courts should consider conflicts of interest in cases where an insurer both administers the benefit and pays or denies claims.