NEW YORK – A federal judge instructed a group of policyholders and UnumProvident Corp. to pursue settlement discussions in a dispute over the company’s handling of disability claims.

The suit, which seeks class-action status, was filed in November 2002 against UnumProvident, the largest disability insurer in the United States.

The plaintiffs claim Chattanooga, Tenn.-based UnumProvident gives bonuses and promotions to its employees based upon the numbers of claims they can deny. The plaintiffs contend that UnumProvident saves money and increases it profits by canceling claims. The company has denied the allegations.

U.S. District Judge Denise L. Cote in Manhattan, in an order issued earlier this week, said the parties should engage in settlement talks under the supervision of a magistrate judge. A settlement conference has been scheduled for June 4 in front of U.S. Magistrate Judge Douglas Eaton.