As the good news sank in, the Potters purchased one Winchester condo, and then another, to house Ron's parents and his grandmother. They remodeled the basement of their house as an apartment for Debra's mother. They started to do some serious traveling -- to the Bahamas, Cancun and Australia. And by 2001, they'd begun to lay plans for their retirement.
"We literally thought we were going to be millionaires," Ron Potter marveled.
Reining in claims
As Debra Potter's career was taking off in the mid-1990s, disability industry executives were struggling with an onslaught of expensive claims.
At what was then Provident Corp., the company was tightening its claim-handling system in ways that reduced benefit costs and, whenever possible, used ERISA to cut claim payments and shield the firm from lawsuits, according to documents that emerged in subsequent litigation.
In one 1995 memo, Ralph W. Mohney Jr., who was a senior vice president with Provident and is a consultant with the since-merged UnumProvident, explained that the firm's "claim improvement initiatives" were designed to move the company from "a claim-payment to a claim-management approach."
The "return on these claim improvement initiatives," he wrote to then-Provident Chief Executive J. Harold Chandler, "is expected to be substantial.... A 1% decrease in benefit cost ... translates into approximately $6 million in annual savings."
In another 1995 memo, Jeffrey G. McCall, then an assistant vice president with Provident, now a vice president with the merged firm, said the company had set up a task force to spot policies not covered by ERISA and to bring as many as possible under it.
"The advantages of ERISA coverage in litigious situations are enormous," McCall wrote. "There are no jury trials. There are no compensatory or punitive damages. Relief is usually limited."
As an example, McCall wrote, a company lawyer had recently identified 12 cases where the firm had paid out $7.8 million in benefits. "If these 12 cases had been covered by ERISA," he wrote, "our liability would have been between zero and $0.5 million."
In recent interviews, senior UnumProvident executives said that Mohney's and McCall's remarks, which date back a decade, had been taken out of context. As an example, they said, the "decrease in benefit costs" discussed by Mohney was expected to come from streamlining company operations rather than rejecting benefit claims.
These executives adamantly denied that UnumProvident systematically turned down claims to improve the company's bottom line. In a news release, the company attributed most complaints about the company's operations to "a handful of plaintiff's attorneys and a few disgruntled former employees."
The executives conceded, however, that the firm's handling of some cases was flawed.
"You're never going to hear from me that everything in the past was perfect," said UnumProvident CEO Watjen, "but we've shown a willingness to learn from our past mistakes."
A 'promise broken'
Potter would not be alone in the problems that she began to encounter with UnumProvident in 2002. Nor would UnumProvident be the only disability insurer accused of mishandling claims and mistreating claimants.
In Berkeley, Joan Hangarter had had to give up her chiropractic practice because of shoulder, neck and arm pain several years earlier. But after paying Hangarter under her individual disability policy for 20 months, a UnumProvident subsidiary terminated her benefits, attached her bank account and canceled her policy. Before it was over, the single mother of two had lost her home and gone on welfare.
"She was almost ruined," said San Francisco lawyer Ray Bourhis, who handled Hangarter's case and whose book on the case, "Insult to Injury," will be published next month.
In West Berne, N.Y., Kevin Murphy, now 51, was battling prostate cancer that his doctors said was spreading and that left him unable to perform his job as international sales vice president for textile maker Guilford Mills Inc. UnumProvident paid Murphy a $7,200 monthly benefit for most of 2002 and half of 2003, then declared him no longer disabled and cut him off even though he still wasn't working.
In Wilkesboro, N.C., 47-year-old Ricky D. Hart was a mechanic at a Tyson Foods chicken-processing plant before a quadruple bypass -- and the subsequent recurrence of artery blockages -- convinced his doctors that he could no longer work. The insurer paid Hart $1,198.20 a month on and off for 18 months before cutting him off.
In Michigan, another insurer, Liberty Life Assurance Co. of Boston, came in for a blistering verbal assault from a federal judge for its treatment of former Steelcase Inc. employee Nancy Loucks. The company, as administrator of Steelcase's disability plan, first concluded that Loucks had been disabled by a rheumatic condition and began paying her. Then, after requiring her to undergo repeated evaluations by company-paid doctors, it concluded that she was not disabled and stopped paying.