UnumProvident Corp. fired Harold Chandler as chairman, chief executive and president Monday as part of an effort to restore confidence in the disability insurer, which recently restated three years of earnings.
Chandler's firing comes a week after UnumProvident said it would reduce earnings by $29.1 million for 2000, 2001 and 2002 to resolve concerns of the Securities and Exchange Commission related to its investment disclosures.
But the company continues to face hundreds of lawsuits from policyholders who charge their claims were routinely denied, and Tennessee is investigating the company's claims handling.
San Francisco attorney Ray Bourhis, who has won judgments against UnumProvident, thinks that more changes will be needed.
"To make Harold Chandler into the fall guy and pay him off with a fat check so he doesn't turn against the company and create problems for people above him, including on the board of directors, isn't going to accomplish anything," Bourhis said.
Chandler will receive severance of about $8.5 million and pension benefits of about $8.5 million.
The company said those charges were expected to reduce its first-quarter net income by about $9.8 million, or 4 cents a share.
Shares of the Chattanooga, Tenn.-based company rose 25 cents to $9.80 on the New York Stock Exchange.
Chandler could not be reached for comment.
The company's board appointed Thomas R. Watjen, currently vice chairman and chief operating officer, as interim president and CEO.
Hundreds of policyholders have sued UnumProvident, saying it routinely denies claims and requires its medical employees to support the denials.
In January, a California jury awarded $31.7 million to an eye surgeon who accused UnumProvident of denying benefits as part of a management scheme to boost profit.