CHATTANOOGA, Tenn. – UnumProvident Corp. has settled a lawsuit with a fired medical director who accused the disability insurer of routinely denying legitimate claims.

Dr. Patrick McSharry filed suit in 2002, contending he was wrongly fired for challenging the way the company handled claims.

“There was only so much more I could achieve by going to court,” McSharry said Thursday. “When they offered to settle it, that was a victory, and I was happy to let it go.”

His attorney, Harry F. Burnette, said the company agreed to pay McSharry $100,000.

An aide to U.S. District Judge Curtis Collier said she had not received written agreement from the parties, but was notified earlier Thursday that a settlement had been reached.

A scheduled Friday court hearing on the lawsuit was canceled, Burnette said.

UnumProvident released a statement that said McSharry received about $43,000, “roughly the equivalent of normal severance,” and his attorneys received $40,000 for fees and $17,000 for actual expenses.

The statement also said the company was confident it would have prevailed at a trial.

“We have always believed, and continue to believe, that Dr. McSharry’s claims were baseless and without merit,” the statement said.

Paula Wade, a spokeswoman for the Tennessee Department of Commerce and Insurance, said Thursday the states were still investigating, but she declined to say when it might be finished.

McSharry said he talks to friends who continue to work at UnumProvident and he still watches the company closely.

“I have a feeling there is much more willingness now to look at claims more fairly and give a more and fair review,” he said.

UnumProvident was formed with the 1999 merger of Provident Cos. of Chattanooga and Unum Corp. of Portland, Maine.