Hangarter v. Paul Revere, UnumProvident

The following article on the Hangarter case was published on May 17, 2002 on the Verdicts Section of the Los Angeles Daily Journal - a publication for California lawyers. This may be of interest to individuals with disability claims.

Joan Hangarter was left bankrupt and on welfare when Paul Revere Life Insurance Co. canceled her disability benefits. She sued and won a $7.6million verdict from a unanimous jury.

Adjusted Income
by Christina Landers
Los Angeles Daily Journal

Former business owner Joan Hangarter ran a successful chiropractor practice in Albany for nearly 20 years, but when an injury left her unable to work and her insurance company stopped paying her disability benefits, her life fell to ruin.

When Paul Revere Life Insurance Co. stopped paying Hangarter disability benefits for which she had paid a monthly premium, she lost the majority of her income and was reduced first to filing for bankruptcy, then to living off welfare checks and food stamps.

But Hangarter's life turned around again when she read an article n The Wall Street Journal about two attorneys who had filed a case against Paul revere and its parent company, Unum Provident Corp. - San Francisco's Ray Bourhis .
"When Paul Revere terminated my benefits, I didn't really think I had any options," Hangarter says, "I read about Ray Bourhis representing a dentist in a case against Unum Provident and called him. It turns out I couldn't have picked better attorneys.

After hearing the details of Hangarter's story, the team took her case to federal court, where after a three-week trial a unanimous jury agreed that Hangarter had been wrongfully denied payments the insurance company owed her.

The jury awarded her a $7.6 million verdict, including $5 million in punitive damages, $1.2 million in future disability benefits, $320,849 in past disability benefits, $400,000 in emotional distress damage and $760,000 in attorney fees and costs. Joan Hangarter . The Paul Revere Life Insurance Co. C-99-5286 (N.D. Cal. verdict Feb. 2, 2002)

"The day I was awarded millions in the verdict I still wen to the market that night and paid for my food with food stamps." Hangarter says. "It was truly a surreal experience."

Counsel for the defense, Horace W. Green and Lori K. Bernard with San Francisco's Barger and Wolen, said that Hangarter had healed sufficiently to continue working and that her insurance company was justified in terminating her benefits.

"The doctor whom the company hired to perform an independent evaluation testified that he found Joan had significant subjective complaints but that there was no objective basis for them. "Green says, "I honestly believe that this organization tries to pay every single valid claim."
The trial was bifurcated to consider separately charges of unfair of unfair business practices under the Business and Professions Code Section 17200. Those matters are still under consideration by the court.

The defense has filed post-trial motions of a request for a new trial and a request for judgment notwithstanding a verdict.

"Personally, I don't think they have a chance.My guess is they'll appeal, or do anything, rather than settle.

Hangarter, who lives in Navajo, became a chiropractor because she "liked helping people," and because she never forgot the gentle assistance of a chiropractor who treated her for scoliosis when she was a child and helped ease her condition.

In 1989, a pregnant Hangarter purchased an insurance policy from Paul Revere Life Insurance Co. The policy was sold to her as an "own occupation" policy that would provide total disability benefits if she became unable to perform her duties as a chiropractor. Those benefits included residual disability benefits, rehabilitation benefits, and recovery benefits.

The lady who sold it to me was adamant that the day may come when the sky falls down and that this policy would protect me from that." Hangarter says.

In 1993 Hangarter was diagnosed with cervical disc disease and lateral epicondylyitis. She treated the back and neck injuries and physical therapy and even wore various braces, but the pain increased.

When she was involved in an auto accident in 1997 that may have aggravated the injuries, she filed a claim for disability with the Chattanooga, Tenn-based Unum Providence Corp, which by the time had taken over Paul Revere Life Insurance.

Unum Provident asked that Hangarter visit Dr. Aub Swartz, who worked for GENEX Services, Inc. wholly-owned subsidiary of UnumProvident - for a medical evaluation.

Swartz examined Hangarter.

"He did no movement tests whatsoever," she recalls.
The insurance company had asked her to print out a description of her normal work duties on a day-to-day basis before her accident and said it would give that description to the doctor.

"Swartz was not even provided with a copy of that description when he made his evaluation." Bourhis says.
Swartz determined that Hangarter was capable of seeing two patients per hour.

"Just off the top of his silly head, he came up with a number of two patients per hour," Bourhis says.

Before her injuries, Hangarter had seen eight eight to 10 patients per hour, she says.

At the time she filed the claim, Hangarter hired another chiropractor to perform her duties, to keep her business running. But her condition continued to deteriorate. In April 1999, she sold her practice.

UnumProvident paid her disability benefits of more than $8,100 per month for 18 months, until a month after she sold her practice when the company sent a letter saying they were terminating her benefits.

"They started looking for ways to deny my policy from the day I filed my claim," Hangarter says, "I freaked out because I had lost my business, and all of a sudden I had no money."

She tried opening an internet-based service for chiropractors but made less than 80 percent of what she had been making as a chiropractor. Eventually Hangarter filed for bankruptcy and was forced to go on welfare to raise her two grammar school-aged sons.

"My life went down the toilet," she says.

But when Hangarter happened upon the newspaper article about a pair of San Francisco Attorneys who took on a lawsuit against. UnumProvident, she called their office and told them her story.

"Joan called me," Wolfson recalls,"I saw her in my office on a Saturday. I heard her story, and I signed her up and started litigating her case."

They Kicked Her When She Was Down

Under Ray Bourhis's counsel, Hangarter filed suit against UnumProvident in November 1999.

"The question was whether or not the insurance company violated its obligations to her," Bourhis says. "They kicked her when she was down."

After several unsuccessful mediations, the suit went to trial in February.

"I begged the company before Christmas to settle the case," Bourhis says. "Joan became suicidal, she was so depressed. They offered $500,000, which after all fees would have been less than what she was owed for her benefits."

The case was filed originally in state court, but it was removed to federal court on the basis of diversity of citizenship-the company is an out-of-state company, and the plaintiff is from California. This provided UnumProvident with a distinct advantage." says Bourhis.
"there's always a concern when you have to have a unanimous jury in federal court, " he says. "The standard of proof is so high. You have to show malice, fraud or oppression. Add those things up, and you have damn good evidence.

But Ray Bourhis felt confident that they did, and in the form of internal insurance company memos outlining what they described as less-than-ethical business practices, and in the testimony of former Paul Revere Life Insurance Co. employees who said they witnessed some of those practices.

The attorneys had, from other cases they had tried against Unum Provident, memos that they included as evidence in this case, on how to calculate a "net terminations ratio."
"They take all new claims and compare those to the claims they're able to terminate, and turn that into a dollar formula, translated to a percentage. " Bourhis says. "They got to a point where they were at more than 100 percent on the ratio - they were terminating more policies than they were bringing in."

The plaintiff's counsel obtained the deposition of former Provident Insurance employee Dr. William Feist, who testified about meetings in which these rations were discussed.

Feist was the medical director and vice president of Provident Insurance from 1980 to 1996. He testified in a deposition that when Ralph Mohney, a new head of claims, and Harold Chandler, the company's new president, were brought in 1993 and 1994 receptively "the things they were doing were so unethical that he quit," Bourhis says.

In his deposition, Feist discussed the "round table" meetings where Mohney and Changler reviewed cases that had been on claim for several months or years and tried to determine in which, if any, of those cases the benefits could be terminated.

"These were cases where people were already being paid benefits and weren't getting any better physically, and the company wanted to terminate the claims," Feist says. "It's probably fair to say that Provident and Paul Revere wrote some very expensive benefit policies back in the 1970s and 1980s, which were not priced or underwritten correctly and then in the late 1990s it came back to haunt them.

The round-table meetings were held late in the afternoon and into the evening," Feist says, " and on record was made of what transpired there."

Defense counsel argued that policies at UnumProvident had changed by the time Feist left and that he has "no idea what the current policy is," Green says.

Green, who has worked as counsel for the company since 1986 also argued that the insurance company believed Hangarter had stopped treating patients and that she had time to recover fully when it stopped paying her benefits.

"She did have an injury, and she healed, and she was back to her prior level of performance, " Green says."As I sit here, my back hurts a bit, my knees are aching, so maybe I overdid it a bit this weekend. But that doesn't mean we are precluded from our job duties."

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Rags to Riches

But in the end, the jury felt it had enough evidence that UnumProvident had terminated Hangarter's claims without sufficient evidence that she was healed and enough evidence that the company had concealed from her benefits to which she was entitled.

"UnumProvident tried to do all sorts of things to get out of the litigation, including asserting that Joan's case was pre-empted by the Employment Retirement Income Security Act," Wolfson says. "As a sole business owner, her case was not pre-empted, but they tried to claim that it was when they sent her termination letter."

After a three week trial and five hours of deliberations, the jury awarded a unanimous verdict of $7.6million.
Hangarter was amazed by the results.

"I'm happy I won because it sends a message to the insurance company that they're not going to get away with this any longer," she says.

Ray Bourhis, who have several other cases pending against UnumProvident, similarly were pleased with the message the large verdict sent.
"This jury verdict, being unanimous and being a federal jury, fires a shot across the bow of this company that has not yet been heard, but will be very soon throughout the country," Bourhis says."I really thing that this had to happen and that it's only the beginning."

Articles of Interest

Pumping Victories
by Christina Landers
published in Litagators Profile 2002

Ray Bourhis went from wanting to work in a gas station to taking on insurers as a plaintiff's lawyer and winning multimillion-dollar cases.

If he had stuck with his high-school career plans, San Francisco attorney Ray Bourhis might be pumping gas and looking under the hoods of cars at his own gas station.

"At one point, I wanted to work in a gas station," Bourhis, 59 says. "Why not? That's what I did in high school and I liked tinkering with cars.

But a high school teacher of his recognized talent in Bourhis for writing and suggested he go off to college instead of pursuing work as a grease monkey.

"She got me interested, so I went to Ohio State University and studied political science." he recalls.

After graduating, Bourhis headed for the mountains of Appalachia, where he taught rural children for a year. The kid's long, lazy summer vacations gave him an idea.

He wrote to Robert Kennedy, who was in the Senate at that point, and said, "Why don't we send some of these kids out to Indian Reservation for the summer, and have some Native Americans spend the summer here to give them some different experiences?"

Much to the young college graduates surprise, Kennedy read the letter and loved the idea. The senator even convinced American Airlines to fly the students back and forth across the country for free.

During the planning stages Bourhis lost his position with the Appalachian school district...

He mentioned to the Kennedy clan that he was out of a job, and they offered him a job as a campaign advisor on Kennedy's presidential campaign.

" The next thing I knew, I was running all over the country with Robert Kennedy, " he says.

In 1968, Bourhis came out to California and decided to go to law school in Berkeley. He started a public interest law firm while in school, but he went into private practice shortly after graduating in 1974.

Ever since, he has done insurance bad faith work, inspired by a "horrible experience" his mother had with her insurance company, an experience that had "very dire consequences."

Bourhis preferred not to elaborate.

His practice grew quickly as he worked on ever-larger cases against insurance companies and pulled in bigger and bigger verdicts for his clients.

In one case, Bourhis represented a chiropractor whose disability benefits were terminated by Unum Provident Corp. , resulting in a verdict of more than $7.6million. Hangarter v. The Paul Revere Life Insurance Co. C-99-5286 (N.D. Cal. verdict Feb. 2002).

I've had a lot of cases against this company- I don't even want to say how many." he says. " We've represented doctors, dentists, chiropractors and court reporters who've had unbelievable things done to them by this company. This case is just the tip of the iceberg.

His peers were not surprised to hear about his latest win, which came on the heels of a $1.3million verdict against Paul Revere Life Insurance Co. for a court reporter whose benefits were canceled (McGregor v. Paul Revere Life Ins. Co. C972938 (N.D. Cal., verdict April 9,2001.)

"Ray is a very tenacious litigator, and he had them in his sights." says Robert Scott, a sole practitioner who call himself a 'professional acquaintance of Bourhis. "He mixes aggression with compassion and strategic analysis," Scott says.

These days, when he's not working on prosecuting insurance companies, Bourhis is working on a book he's written about the Hangarter case.

It's taking a hell of a lot of time, but it's worth it," he says." Thank goodness I have my patient, gorgeous, redhead wife. She is my inspiration in all of this."

As for adversaries in the field, Bourhis says he admires most of them.

"Most of the defense lawyers who represent insurance companies are great people, " he says. "I have a lot of respect for them."

But he certainly doesn't mind beating them in the courtroom.