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Federal Court in Tennessee Refuses to Dismiss Securities Fraud Cases Against UnumProvident

The Federal judge in Tennessee who is handling most of the UnumProvident class actions in the country has dealt a blow to UnumProvident by refusing to dismiss a number of class actions filed against the company. In the Court's September 12, 2005 Decision, the Court addressed various securities class actions pending against the nation's largest disability insurer. In the securities cases, the plaintiffs alleged that UnumProvident made misrepresentations to the investing public concerning their illegal claims practices, such as the denial of claims based upon financial budgets and targets. The plaintiffs allege that the misrepresentations propped up the stock price of the company and then the stock price plummeted when the illegality was made public.

In denying UnumProvident's motion to dismiss, the Court acknowledged the plaintiffs' allegations that there were ". . . predetermined financial objectives designed to maximize the amount of claims reserves which could be eliminated from the company's books and then recognized as income on the company's financial statements." UnumProvident tried to convince the Court that it had no duty to disclose their practices and that the alleged conduct was nothing more than "corporate mismanagement." The Court rejected UnumProvident's arguments and ruled that the plaintiffs could proceed with their proposed class action.

The same judge who rendered this decision must now decide a number of motions pending in the group of disability claims class actions pending before him. In that bundle of cases, the plaintiffs are disabled individuals whose claims were denied or terminated. Those plaintiffs seek a reassessment of all of their denied claims, an injunction stopping UnumProvident from using illegal budgets and targets, and certain company reforms. Quadrino Schwartz represents some of the plaintiffs in this group of cases and was the first law firm in the United States to file a class action against UnumProvident based upon their illegal claims practices.