April 1, 2008 - Today's New York Times ran a front-page story about two qui tam lawsuits brought under the False Claims Act on behalf of whistleblowers by Phillips & Cohen LLP against Unum Group and Cigna Corp.
Below are excerpts from the story, "Insurers faulted as overloading Social Security," by Mary Williams Walsh.
"The Social Security system is choking on paperwork and spending millions of dollars a year screening dubious applications for disability benefits, according to lawsuits filed by whistle-blowers.
Insurance companies are the source of the problem, the lawsuits say. The insurers are forcing many people who file disability claims with them to also apply to Social Security - even people who clearly do not qualify for the government program."
"Whistle-blowers have filed lawsuits against the Unum Group, America's largest disability insurer, and Cigna, another large one, though there is no dispute that the Social Security requirement is an industrywide practice. Unum, with revenue of $10.5 billion, paid disability claims of $4 billion last year."
"Both whistle-blower lawsuits cite the federal False Claims Act, a law that allows affected government programs to recover triple damages. The lawsuits were brought by people contending that the insurers were knowingly committing fraud."
"Lawyers from the firm Phillips & Cohen, in Washington, who are representing the plaintiffs, have been working with statistical samples. Their numbers suggest that the industry has been sending tens of thousands of dubious claims to Social Security, costing the system hundreds of millions of dollars over the last decade."
To read the entire story, see "Insurers faulted as overloading Social Security" on The New York Times website.