Unum to pay $5.5 million fine

The employee benefits provider was fined for for failing to report special payments to an insurance broker.
JUN 24, 2008
By  Bloomberg
The Unum Group of Chattanooga, Tenn. will pay $5.5 million in fines and penalties to the federal government for failing to report special payments to Universal Life Resources Inc., a San Diego insurance broker. In failing to report the fees, the employee benefits provider violated the Employee Retirement Income Security Act of 1974, which requires qualified insurance plan administrators to disclose all fees paid to insurance brokers to the Department of Labor’s Employee Benefits Security Administration and the Internal Revenue Service. Those two federal entities, as well as the FBI and the Postal Investigations Service, carried out the investigation. The insurance broker asked Unum to pay the extra fees between 2000 and 2004 without revealing the details to the plan administrator, resulting in millions of dollars in higher premiums. The charges were disguised as request for proposals communication or re-enrollment fees. U.S. attorney Karen P. Hewitt agreed to a settlement with the carrier based on Unum’s voluntary and complete disclosure of the conduct, cooperation with the federal government’s investigation, remedial efforts and a lack of culpability compared with the insurance broker’s conduct, according to a statement from the U.S. Attorney’s Office in San Diego.

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