November 27, 2024
Business

UnumProvident VP pleads guilty to fraud

CHATTANOOGA, Tenn. – A UnumProvident Corp. regional vice president pleaded guilty to federal fraud charges in a case that caused losses of about $6.1 million for the nation’s largest disability insurer, prosecutors said.

James Michael Foley, 49, of Germantown pleaded guilty Thursday. His sentencing was set for March 23.

A statement from the U.S. Attorney’s Office in Memphis said Foley was the Chattanooga-based insurer’s vice president of sales for the Southeast and Midwest regions and was involved in selling blocks of group insurance to corporations from 1998 until 2004.

Foley sold block policies directly to about 10 client companies and without their knowledge directed UnumProvident’s underwriting department to name a business associate who was a friend as broker in selling the policy, the statement said. Foley would then get 90 percent of the commission.

Foley is also accused of making false statements. He could not be reached for comment.

Assistant U.S. Attorney Stuart Canale said UnumProvident cooperated with the investigation.

UnumProvident representatives did not immediately return a telephone message seeking comment Friday.

In November, UnumProvident, in an unrelated action, ended what New York Attorney General Eliot Spitzer described as deceptive practices and secret payments to brokers, according to a $15.5 million settlement.

The insurer agreed to pay restitution to policyholders and a civil penalty of $1.9 million.

The practices prohibited under the settlement were done throughout the industry, said Jim Sabourin, spokesman for Unum.

In 2004, the disability insurer ended an investigation of complaints about claims handling with an agreement to reconsider about 200,000 claims and pay a $15 million fine.

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

It has about 12,000 employees, including 3,000 in Maine, and last year paid more than $6 billion in benefits.


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