U.S. District Court Affirms $50 Million Punishment of Unum Group

Las Vegas, NV

U.S. District Court Judge James C. Mahan in Las Vegas has affirmed $50 Million in damages awarded by a jury in June against Paul Revere and Unum Group in the partial retrial of a lawsuit first tried to verdict in 2004. In the 2004 trial, the first jury awarded $1.6 Million in compensatory damages and $10 Million in punitive damages to G. Clinton Merrick in connection with the insurers’ denial of his disability claim. The insurers appealed and the punitive award was ultimately sent back for retrial before a new jury. Merrick v. Paul Revere Life Ins. Co., 500 F.3d 1007, C.A.9 (Nev.), 2007.

In the June retrial, the second jury ordered Paul Revere to pay $24 Million and Unum to pay $36 Million for a total award of $60 Million. Today’s decision by Judge Mahan, while reducing the punitive award to $50 Million, affirmed the jury’s findings that both insurance companies had engaged in improper claims practices designed to cheat people out of their disability benefits. Judge Mahan found that the insurers engaged in a scheme to deny claims of their disabled policyholders, they were motivated by profit at the expense of their disabled insureds, and they profited enormously, going “from a company with little financial flexibility to a company with over $8 billion dollars in total stockholder equity.” Judge Mahan concluded that “much of this accumulation in value came at the expense of Defendants’ policyholders.” Although Judge Mahan agreed with the jury’s findings that both companies acted reprehensively, he was required to reduce the jury verdict against Unum on constitutional grounds to $26 Million, bringing the total award to $50 Million.

“The jury heard evidence of a fifteen year scheme to cheat disabled people,” said Rick Friedman, Merrick’s lead trial attorney. “Jury after jury and regulator after regulator have condemned their practices, but still they continue to cheat people.” Friedman expressed gratitude at Judge Mahan’s decision saying, “Judge Mahan is a very conservative judge. He presided over two trials, listening to the evidence and studying the exhibits that documented breath-taking corporate misconduct.” According to Friedman, “Judge Mahan’s detailed decision reflects a firm grasp of the facts and the law that must be applied to those facts. Given the present state of the law, Judge Mahan had no choice but to reduce the award. However, we are gratified that he did so in a way that makes clear how strongly the law condemns cheating the disabled.”

To see a copy of the Judge Mahan’s decision, click here. The decision has been formally published by West Publishing using the following citation: Merrick v. Paul Revere Life Ins. Co., 594 F.Supp.2d 1168 (2008).