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HomeMy WebLinkAbout2007 08 27 Consent 200 Execute A Release Of Future Claims Against The Unum Group COMMISSION AGENDA ITEM 200 Consent Informational Public Hearin Re ular x August 27,2007 Regular Meeting MGR. IV /DEPT. ~ Authorization REQUEST: City Manager requesting the City Commission to accept a settlement reached by the New York State Attorney General with the Unum Group and authorize the City to execute a release of future claims against the Unum Group. PURPOSE: This agenda item is needed for the Commission to accept the New York State Attorney General's settlement with the Unum Group and execute a release of associated future claims against the Unum Group. CONSIDERATIONS: The New York State Attorney General previously initiated an inquiry into insurance companies doing business throughout the United States, including Florida, regarding their broker compensation practices. At issue was the disclosure of sales bonuses to brokers on IRS form 5500. Although the general practice of the industry was not to disclose these type of bonuses on this particular IRS form, the New York States Attorney argued that insurance companies were mandated to do so. Although the point was arguable as we understand it, most companies agreed to settle the matter by agreeing out of court to do so. Unum is one of the insurance companies involved in this inquiry. Unum provided long-term disability and basic life products to Winter Springs' employees during this time period. Winter Spring's insurance broker received $687.29 in bonuses for these policies sold in 2002 only. The City no longer utilizes Unum for this purpose. The City broker disclosed the bonuses to the City. However, Unum did not disclose this information on the IRS form corporately. On November 1,2006, the New York State Attorney General reached a $15.5 million settlement agreement with Unum in this regard. This settlement is being shared by eligible policyholders of Unum, who held policies between January 1, 2002 and December 31, 2005. FUNDING: None. RECOMMENDATION: The City Manager recommends the City Commission authorize the City Manger to execute a settlement offer and release of future claims against the Unum Group in the amount of $687.29. ATTACHMENTS: 1. Unum Group Letter-Settlement Agreement Information 2. General Release COMMISSION ACTION: . . . unum.m June 25, 2007 Unum Fund Administrator P.O. Box 1874 Faribault, MN 55021-7129 1-800-889-6288 11111111111111111 "'" 1111111"11111' "11111111111 10028599 004900-1 CITY OF WINTER SPRINGS RONALD W MCLEMORE 1126 EAST SR 434 WINTER SPRINGS, FL 32708 Re: Your Eligibility to Receive Payment from the Unum Fund Dear Sir or Madam: You recently received a packet of materials from the Unum Fund Administrator notifying you of your eligibility to participate in a fund established as a result of a resolution Unum reached with the New York Attorney General. The packet included a notice letter, a W-9 Form, a General Release Form, and a Settlement Agreement Information sheet detailing your distribution amount. As of mid June, the Unum Fund Administrator has not received a General Release Form from you, and we do not know whether you desire to participate in the Unum Fund. This is a reminder that, in the event you elect to participate in the Unum Fund, the Unum Fund Administrator must receive your completed General Release Form and W-9 no later than September 8, 2007 in order for you to receive your distribution. Distributions will not be made to anyone whose release and W-9 is received after the September 8, 2007 deadline. For your convenience, attached is another copy of your General Release Form, W-9 and Settlement Agreement Information sheet. Please return your completed General Release Form and W-9 form in the enclosed envelope to: . Unum Fund Administrator P.O. Box 1874 Faribault, MN 55021-7129 If you have further questions, please contact the Unum Fund Administrator at 1-800-889-6288. Sincerely, Fund Administrator Enclosures: Settlement Agreement Information Sheet, General Release Form, W-9, return envelope C UNUM IS A REGISTERED TRADEMARK AND MARKETING BRAND OF UNUM GROUP AND ITS INSURING SUBSIDIARIES Settlement Agreement Information On November 1, 2006, Unum Group (formerly UnumProvident Corporation) and its insuring subsidiaries, First Unum Life Insurance Company, Provident Life and Accident Insurance Company, Unum Life Insurance Company of America, The Paul Revere Life Insurance Company and Provident Life and Casualty Insurance Company (collectively "Unum"), entered into a Settlement with the Attorney General of the State of New York to resolve his investigations ofUnum's broker compensation practices.. A copy of the Settlement (called an "Assurance of Discontinuance") is available at www.unumfundcustomer.com. As part of the Settlement, Unum agreed to distribute $15.5 million to certain Policyholders of Unum. Policyholder clients eligible to elect to receive a distribution are defined in the New York Attorney General's Assurance of Discontinuance as "policyholders of Unum covered insurance (or their successors) who were represented by Brokers that received contingent compensation or other compensation covered by this Assurance ("Eligible Policyholders") between January 1,2002 through December 31, 2005." Our records indicate that Unum paid a Broker contingent compensation in connection with a policy that was issued to your company. Therefore, your company is eligible to receive a distribution pursuant to the Settlement. Settlement Funds As part of the Settlement, Unum agreed to create a fund in the amount of $15.5 million (the "Fund"). The agreement required Unum to "calculate, in accordance with a formula approved by the Attorney General, the amount of money that each Eligible Policyholder may receive from the fund." This formula allocates a portion of the $15.5 million among Eligible Policyholders who purchased new covered policies for which contingent compensation was paid to a Broker according to a percentage of the premium that was paid for the covered policy. In accordance with the approved formulas, the amount payable to you on policy #567301 will be $687.29 associated with the premium on your policy for which contingent compensation was paid to a broker during the Settlement period. The actual amount of the payment associated with the policy premium portion may be increased slightly to reflect interest and other funds included in the Settlement fund. Please note that a W -9 form is included in this package. Consistent with IRS regulations, this form must be completed prior to making a fund payment. Based on the information provided on the W-9, as required, form 1099's will be provided for you as a result of this distribution. Unum makes no representations regarding state or federal tax consequences of this payment. Please be sure to keep this form and provide it to your tax preparer so that the proper determination of the tax consequences of this distribution can be made. To participate in the Settlement, you do not need to demonstrate that Unum violated any legal duty or that you suffered any injury or damages. The decision whether or not to participate in the Settlement is entirely voluntary. If you elect not to participate, the portion of the Fund attributable to you will be distributed to other Policyholders pursuant to the terms of the Settlement. Under no circumstances will any portion of the Fund revert to Unum. UNUM IS A REGISTERED TRADEMARK AND MARKETING BRAND OF UNUM GROUP AND ITS SUBSIDIARIES. IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII~ 1111111111111 10028599 004900-2 How to Participate You have until September 8. 2007 to request a cash distribution from the Fund. If YOU elect to receive a distribution. YOU must shm the enclosed Release form. which was approved by the New York Attorney General as Dart of the Settlement. Shminl! the Release means that YOU will not be able to assert claims covered by the Release al!ainst Unum or any of its subsidiaries or affiliates. related entities or individuals. The Release The decision whether or not to participate in the Settlement is entirely voluntary. As noted above, if you elect to receive a distribution from the Fund, you must sign and return the enclosed Release by September 8, 2007. By signing the Release, you will give up your right to pursue any claims covered by the Release against Unum or its subsidiaries, affiliates, related entities or individuals. This includes giving up any right you may have to participate in putative class actions against Unum and numerous other companies currently pending in the United States District Court for the District of New Jersey entitled In re Insurance Brokerage Antitrust Litigation, MDL No. 1663. These actions allege numerous violations of federal and state statutory and common law and seek various forms of damages and other relief. The Release does not preclude participating Policyholders from seeking relief from non-Unum entities or individuals that are not related to Unum. If YOU elect not to receive a distribution from the Unum Fund. YOU will retain any ril!hts yoU may have to pursue an individual or class action al!ainst Unum. its subsidiaries or affiliates. How the Money Will Be Distributed By November 7, 2007, Unum will pay each participating Policyholder the amount to which that Policyholder is entitled based on the calculation performed under the Settlement. If money remains in the Fund after this distribution to participating Policyholders, Unum may use the remaining money to satisfy the claims of non-participating Policyholders. As noted above, no portion of the Fund will revert to Unum. F or More Information If you have questions about the Settlement, please call the Unum toll free number at (800)-889-6288. You may also obtain information related to the Settlement at www.unumfundcustomer.com. This mailing includes the following enclosures: the Release form, a W-9 and a return envelope for the Release form and W-9. Thank you. UNUM IS A REGISTERED TRADEMARK AND MARKETING BRAND OF UNUM GROUP AND ITS SUBSIDIARIES. GENERAL RELEASE This RELEASE (the "Release") is executed this _ day of RELEASOR (defined below) in favor of RELEASEE (defined below). , 200_ by DEFINITIONS "RELEASOR" refers to CITY OF WINTER SPRINGS and any of its affiliates, subsidiaries, associates, general or limited partners or partnerships, predecessors, successors, or assigns, including, without limitation, any of their respective present or former officers, directors, trustees, employees, agents, attorneys, representatives and shareholders, affiliates, associates, general or limited partners or partnerships, heirs, executors, administrators, predecessors, successors, assigns or insurers acting on behalf of RELEASOR. "RELEASEE" refers to Unum Group (formerly UnumProvident Corporation) and any of its subsidiaries, affiliates, associates, general or limited partners or partnerships, predecessors, successors, or assigns, including, without limitation, any of their respective present or former officers, directors, trustees, employees, agents, attorneys, representatives and shareholders, affiliates, associates, general or limited partners or partnerships, heirs, executors, administrators, predecessors, successors, assigns or insurers (collectively, "Unum"). "Assurance" refers to a certain Assurance of Discontinuance between Unum and the Attorney General of the State of New York ("NYAG") dated November 1,2006, following an investigation by NY AG relating to Unum. RELEASE 1. In consideration for the total payment of $687.29 in accordance with the terms of the Assurance, RELEASOR does hereby fully release, waive and forever discharge RELEASEE from any and all claims, demands, debts, rights, causes of action or liabilities whatsoever, including known and unknown claims, now existing or hereafter arising, in law, equity or otherwise, whether under state, federal or foreign statutory or common law, and whether possessed or asserted directly, indirectly, derivatively, representatively or in any other capacity (collectively, "claims"), to the extent any such claims are based upon, arise out of or relate to, in whole or in part, (a) any of the allegations, acts, omissions, transactions, events, types of conduct or matters that are the subject of the Assurance; and (b) any allegations, acts omissions, transactions, events, types of conduct or matters that are the subject of In re Insurance Brokerage Antitrust Litigation, MDL No. 1663, or the action pending in the United States District Court for the District of New Jersey captioned In re Employee Benefit Insurance Brokerage Antitrust Litigation, Civ. No. 05-1079 (FSH) or any related actions filed or transferred to the United States District Court for the District of New Jersey that are consolidated into either of the preceding Civil Action dockets. 2. In the event that the total payment referred to in paragraph 1 is not made for any reason, then this RELEASE shall be deemed null and void, provided that any payments received by RELEASOR shall be credited to Unum in connection with any claims that RELEASOR may assert against Unum, or that are asserted on behalf of RELEASOR or by a class of which RELEASOR is a member, against Unum. 11111111111111111111111111111111111111111111111 10028599 004900-3 3. This RELEASE may not be changed orally and shall be governed by and interpreted in accordance with the internal laws of the State of New York, without giving effect to choice of law principles, except to the extent that federal law requires that federal law governs. Any disputes arising out of or related to this RELEASE shall be subject to the exclusive jurisdiction of the Supreme Court of the State of New York or, to the extent federal jurisdiction exists, the United States District Court for the Southern District of New York. 4. RELEASOR represents and warrants that the claims have not been sold, assigned or hypothecated in whole or in part. Dated: RELEASOR: Policy #: 567301 By: Print Name: Title: Telephone #: