Until a few years ago, Debra Potter made sure that her family could cruise the Caribbean, watch the NFL on big-screen TV and keep her elderly mother and in-laws at home in comfort.

She did so by earning $250,000 a year selling more insurance than almost anybody else in the state of Virginia, virtually all of it disability and health policies that she thought put a safety net under middle-class and affluent families such as her own.

Potter so believed in the protection she was providing that she made sure she was covered under a policy her employer, Southeastern financial services giant BB&T, had with UnumProvident Corp., the nation's largest disability insurer.

But when Potter began falling down in 2002 and was subsequently diagnosed with multiple sclerosis, she discovered that the protection didn't work anything like she'd expected.

UnumProvident, whose policies the 50-year-old insurance agent had been selling, questioned whether Potter really was disabled and refused to pay her. Although the firm, based in Chattanooga, Tenn., relented a few weeks ago, the reversal took three years and did not come before the Potters had run through most of their savings, yanked one of their five children from college for lack of tuition and hired a lawyer.

The $10.5-billion-a-year insurer denies mishandling Potter's case, saying only that "new information" caused it to change its position and start paying.

"People need safety nets, and that's what I thought I was selling them," Potter said. "But here I am with all my knowledge of insurance and I couldn't make it work for me."

When middle-class Americans talk about safety nets, they usually mean such things as food stamps or housing subsidies -- public assistance on which generally only the poor depend. In fact, working people up and down the income spectrum lean heavily on a long list of protections such as healthcare coverage, unemployment compensation and pensions or 401(k)s.

But an examination of Potter's experience, UnumProvident's legal and regulatory record and the practices of several other insurers suggests that a key component of working Americans' protective shield fails with unnerving regularity.

Disability insurance -- now carried by more than 50 million Americans -- generally promises to replace at least half of a person's wages in case of illness or injury. However, in a substantial number of cases, especially those involving workers with long-term or permanent disabilities, it doesn't deliver.

The chief reason -- and one that affects not only disability but the whole universe of employer-provided benefits -- is a series of court decisions dealing with the federal benefits law known as ERISA. The decisions have prevented states from extending almost any form of consumer protection to these benefits, and have severely limited individuals' ability to successfully sue their insurers.

"People who file disability claims today are worse off than they were two or three decades ago," said Judge William M. Acker Jr., who was appointed to the U.S. District Court in Alabama by President Reagan. "The law that was supposed to protect them has been turned on its head; the chief beneficiaries are now the insurance companies," said Acker, who has presided over a variety of disability insurance cases and has written extensively on the subject.

That such a sweeping change could occur and that it could upend someone as well-heeled as Debra Potter illustrates how close most Americans are to the economic edge, where a few setbacks at work or in health can send a person tumbling.

"The safety nets designed to protect people from being run over by economic forces beyond their control have been shredded," said California Insurance Commissioner John Garamendi, a Democrat whose department is investigating UnumProvident.

Expanding coverage

For years, disability was a sideline, often thrown in by insurance agents as an incentive to buy life insurance. But starting in the 1960s, the scope and importance of the disability safety net increased dramatically.

Types of policies expanded to include both individual and employer-provided coverage. Benefit-payment periods were extended to last to age 65 or later. Eligibility rules were loosened to include not only people who could do no work at all but those unable to do just their "own occupation." An example of the difference: An airline pilot whose eyesight had deteriorated so much that he couldn't fly but could still do a desk job would not have been covered under the old system, but would be covered under the new one.
Washington weighed in by extending Social Security to cover the most disabled, elderly or not, and by boosting benefits several times.

Much of the expansion was driven by economic changes that spurred the need for disability coverage. The changes required many families to begin fielding not just one full-time worker, but two, in order to afford a middle-class life. As a result, families lost their "reserve player," the non-working spouse who could enter the workforce if the other fell ill or was injured, and so found it increasingly important to take out insurance against that possibility.

However, by the late 1970s and early 1980s, many politicians and business executives had become convinced that matters had gone too far, that industry and government could not afford many of the promises they'd already made, and that some programs were backfiring by leading people to fake or exaggerate problems to collect benefits.

Remarkably, in the case of disability insurance, the first group to bring the issue to a head was the nation's doctors, seeking payments not for their patients but for themselves.
Disability insurers had sold a generation of doctors extremely generous, individual, "own occupation" policies, confident that their new clients would continue working almost no matter what, and therefore file few claims. But as the managed care revolution began to clamp down on what physicians could charge, many doctors started to exit their profession and, according to insurance industry executives, a considerable number filed for disability.

At the U.S. Supreme Court and at many federal appeals courts, attention focused on the Employee Retirement Income Security Act of 1974.

According to its preamble, ERISA's goal was to "protect ... participants in employee benefit plans and their beneficiaries." Although the 208-page law's chief focus was pensions, it also superseded virtually all state laws that "relate to any employee benefit plan." One of its authors, the late Sen. Jacob K. Javits, a New York Republican, praised ERISA as "the greatest development in the life of the American worker since Social Security."

But over the last 25 years, the Supreme Court has read the "relate to" provision so broadly that claimants who believe they have been wrongly denied benefits are rarely able to sue for punitive damages under state bad-faith or fraud laws.

The court has said the most that claimants generally can win by suing in federal court is the original benefits due them, no matter how long their wait or, often, how steep their legal fees.

In addition, the court has effectively granted insurance companies and benefit plan administrators a special status that requires an employee whose claim has been denied to prove not just that the denial was wrong, but that the officials making the decision acted in an "arbitrary and capricious" manner.

Two views of ERISA

The insurance industry argues that the recent trend in the law has strengthened, not weakened, the employee benefit system.

"It has allowed companies and unions to operate benefit plans without getting chewed up by lawsuits," said Steven J. Sacher, who helped draft ERISA as a young Labor Department lawyer and now represents insurers as an attorney with the Washington office of Kilpatrick Stockton. "That means they're willing to offer employees more choice of benefits at better prices."

"I'm a big fan of ERISA," UnumProvident Chief Executive Thomas R. Watjen said in a recent interview. "It gives consumers a voice they didn't have before."

Watjen and other UnumProvident executives defend the company's operations, especially its handling of claims. "We strive to set the standard for fair and objective claims handling," said Senior Vice President George A. Shell Jr.

As evidence, Shell said UnumProvident paid more than 90% of the 450,000 disability claims it received last year, at a cost of $4.2 billion. He said that in an additional 8% of cases, the firm did not pay because of what he described as technical reasons, as in cases where claimants returned to work before they became eligible for benefits. Only in the remaining 2% of cases or less -- involving no more than 9,000 claimants -- did the firm limit or deny benefits that led claimants to appeal.

But industry experts say that the profitability of disability insurers hinges not so much on the mass of routine claims, which typically are for short periods and involve small sums, but rather on a small number of long-term claims by people who were making good -- and therefore expensive-to-replace -- incomes.

"There's no question claims costs are driven by the adverse experience of a small percentage" of claimants, said Charles E. Soule, retired CEO of Paul Revere Life Insurance Co., one of three firms that merged in the late 1990s to form UnumProvident, and author of the definitive textbook on disability insurance. "I mean we're talking about single-digit."

The ability to deny even a fraction of these high-cost claims and to ensure that those denials stick can make a huge difference to the finances of an insurer. (UnumProvident refused to provide separate payout and denial rates for its long-term claims, although a spokesman said they differed only "slightly" from the overall rates.)

UnumProvident's claim denial practices have made it the target of several government investigations in recent years, a treatment that regulators say other insurers either already face or are likely to face in short order.

"In the last 12 months alone, we've seen the largest insurance brokers in America, the largest property and casualty companies in America, the largest title insurance companies, the largest financial service firms and the largest disability insurers all engaged in flagrant violations of their most basic obligations to their customers," said Garamendi, the California insurance commissioner. "This is not just a UnumProvident problem; it's an insurance industry one."

Although ERISA prohibits state regulators from intervening to help individuals in most disputes over employer-provided disability insurance, states can investigate insurers' overall conduct, penalize firms for bad behavior and, in some cases, ban companies from doing business within their boundaries.

In an investigation concluded last year, regulators representing all 50 states looked at a random sample of almost 300 UnumProvident cases to see whether the company was engaged in "systemic unfair claim settlement practices," then examined 75 additional cases after the firm said it had made improvements. The state examiners concluded that both sets of cases had problems "sufficient to merit further regulatory action."

However, 48 of the 50 states decided to settle with UnumProvident. The company agreed to pay a $15-million fine, review its decisions in more than 232,000 claims denied or closed over the last five years and revamp its entire claim-handling system.

The major holdout from the agreement was California, which is conducting its own investigation and negotiating a separate settlement with the firm.

In an interview, Shell, the UnumProvident senior vice president, emphasized that those states that did settle made no formal finding of wrongdoing against the firm. He said the problems that the states uncovered were not representative of the firm's overall performance because examiners looked only at "contentious" closed cases. He characterized the changes agreed to by the company as the furthest thing from an admission of failure.

"I look at them as improvements from the past," Shell said.

However, Garamendi said in a recent interview that among his chief complaints about the settlement was that it failed to allege specific violations by the insurer, a deficiency that he said rendered the accord legally useless.

"Any settlement we sign will ... allege specific violations of law and regulations," the California regulator said. "We want there to be no mistake in the minds of the company or the public about what the company did wrong and that it can't continue to do it."

Soaring income

The middle child of two railroad workers, Debra Potter grew up in Birmingham, Ala., spent a few years at Auburn University and worked variously as a teacher, a secretary at a Pepsi bottling plant and a Girl Scout camp director.

She married Ron Potter, a Presbyterian minister, in 1983. They had three children from previous marriages and soon had two together. They moved to this small northwestern Virginia community when Ron was appointed pastor of Sunnyside Presbyterian Church. The couple set about raising a family on his $20,000-a-year salary. Potter settled in for what she thought would be her life's work -- being a stay-at-home mom.

But by the late 1980s, it was becoming clear to the family that they'd never be able to send all of their kids to college on a preacher's pay alone. Debra and a girlfriend were helping an elderly parishioner of Ron's church fill out insurance forms one night when it struck the two women: Why not get their state insurance licenses?

"Here was something I was already doing anyways and that helped people and it had to pay more than I was making at the time," she said.

Potter eventually got hired by an old-line Winchester insurance agency, J.V. Arthur Inc., to start its group business. In a matter of a few years, she'd become one of the Arthur agency's top producers, sewing up the business of 230 groups that covered thousands of employees and paid the agency three-quarters of a million dollars a year in commissions. Close to one-third of that money went directly to Potter.

The realization that the couple's income was taking off dawned slowly on the Potters. At Christmastime 1994, Potter bought her sports-crazed husband a 48-inch TV to watch football, golf and soccer. "I realized I could pay cash and not even feel it," she said. The family has since stepped up to a 56-inch screen.

As the good news sank in, the Potters purchased one Winchester condo, and then another, to house Ron's parents and his grandmother. They remodeled the basement of their house as an apartment for Debra's mother. They started to do some serious traveling -- to the Bahamas, Cancun and Australia. And by 2001, they'd begun to lay plans for their retirement.

"We literally thought we were going to be millionaires," Ron Potter marveled.

Reining in claims

As Debra Potter's career was taking off in the mid-1990s, disability industry executives were struggling with an onslaught of expensive claims.

At what was then Provident Corp., the company was tightening its claim-handling system in ways that reduced benefit costs and, whenever possible, used ERISA to cut claim payments and shield the firm from lawsuits, according to documents that emerged in subsequent litigation.

In one 1995 memo, Ralph W. Mohney Jr., who was a senior vice president with Provident and is a consultant with the since-merged UnumProvident, explained that the firm's "claim improvement initiatives" were designed to move the company from "a claim- payment to a claim-management approach."

The "return on these claim improvement initiatives," he wrote to then-Provident Chief Executive J. Harold Chandler, "is expected to be substantial.... A 1% decrease in benefit cost ... translates into approximately $6 million in annual savings."

In another 1995 memo, Jeffrey G. McCall, then an assistant vice president with Provident, now a vice president with the merged firm, said the company had set up a task force to spot policies not covered by ERISA and to bring as many as possible under it.
"The advantages of ERISA coverage in litigious situations are enormous," McCall wrote. "There are no jury trials. There are no compensatory or punitive damages. Relief is usually limited."

As an example, McCall wrote, a company lawyer had recently identified 12 cases where the firm had paid out $7.8 million in benefits. "If these 12 cases had been covered by ERISA," he wrote, "our liability would have been between zero and $0.5 million."

In recent interviews, senior UnumProvident executives said that Mohney's and McCall's remarks, which date back a decade, had been taken out of context. As an example, they said, the "decrease in benefit costs" discussed by Mohney was expected to come from streamlining company operations rather than rejecting benefit claims.

These executives adamantly denied that UnumProvident systematically turned down claims to improve the company's bottom line. In a news release, the company attributed most complaints about the company's operations to "a handful of plaintiff's attorneys and a few disgruntled former employees."

The executives conceded, however, that the firm's handling of some cases was flawed.
"You're never going to hear from me that everything in the past was perfect," said UnumProvident CEO Watjen, "but we've shown a willingness to learn from our past mistakes."

A 'promise broken'

Potter would not be alone in the problems that she began to encounter with UnumProvident in 2002. Nor would UnumProvident be the only disability insurer accused of mishandling claims and mistreating claimants.

In Berkeley, Joan Hangarter had had to give up her chiropractic practice because of shoulder, neck and arm pain several years earlier. But after paying Hangarter under her individual disability policy for 20 months, a UnumProvident subsidiary terminated her benefits, attached her bank account and canceled her policy. Before it was over, the single mother of two had lost her home and gone on welfare.

"She was almost ruined," said San Francisco lawyer Ray Bourhis, who handled Hangarter's case and whose book on the case, "Insult to Injury," will be published next month.

In West Berne, N.Y., Kevin Murphy, now 51, was battling prostate cancer that his doctors said was spreading and that left him unable to perform his job as international sales vice president for textile maker Guilford Mills Inc. UnumProvident paid Murphy a $7,200 monthly benefit for most of 2002 and half of 2003, then declared him no longer disabled and cut him off even though he still wasn't working.

In Wilkesboro, N.C., 47-year-old Ricky D. Hart was a mechanic at a Tyson Foods chicken-processing plant before a quadruple bypass -- and the subsequent recurrence of artery blockages -- convinced his doctors that he could no longer work. The insurer paid Hart $1,198.20 a month on and off for 18 months before cutting him off.

In Michigan, another insurer, Liberty Life Assurance Co. of Boston, came in for a blistering verbal assault from a federal judge for its treatment of former Steelcase Inc. employee Nancy Loucks. The company, as administrator of Steelcase's disability plan, first concluded that Loucks had been disabled by a rheumatic condition and began paying her. Then, after requiring her to undergo repeated evaluations by company-paid doctors, it concluded that she was not disabled and stopped paying.

"Caveat emptor!" declared U.S. District Judge Richard A. Enslen. "This case attests to a promise bought and a promise broken." Enslen ordered the company to resume payments. Liberty Life appealed.

And in Stoutsville, Ohio, there was Kristin S. Deskins.

Deskins spent 25 years climbing the career ladder at the state's largest utility, American Electric Power Co., beginning as the company's first female meter electrician and reaching a $65,000-a- year marketing position.

When Deskins fell ill in 2002 -- like Potter, with multiple sclerosis -- administrators for her employer's disability insurance plan apparently were so convinced that she would never work again that they assigned a specialist to help convince Social Security that she met the government's stringent standard for federal disability payments, which requires that applicants be unable to function in any occupation.

Disability insurers have a huge financial interest in getting people who are seeking benefits from them onto the Social Security rolls. In effect, these insurers have come up with ways to shift much of the risk of having to cover ill and injured workers from themselves to Washington even as they continue collecting premiums.

Most disability contracts require claimants to apply for Social Security as a condition of receiving benefits under their employer- provided plan. In cases where claimants finally win Social Security benefits, the contracts give insurers the right to offset what they owe by the amount the government pays.

In fact, merely having people apply -- even if their applications for government benefits ultimately are rejected -- helps insurers by reducing what they have to set aside as reserves to ensure that they can pay what they owe. Documents show that in some instances insurers can reduce these reserves by as much as 30%.

As a result, many insurers push almost all of their claimants into the Social Security pipeline no matter what their medical condition, once the company has paid their claims for a few months.

Some companies take matters one step further. Having helped claimants demonstrate that they are totally disabled in order to qualify for Social Security, they then deny that the claimants are totally disabled for purposes of the insurer's coverage.

Within weeks of Deskins finally qualifying for Social Security as totally disabled, claim administrators at Broadspire Services Inc., a subsidiary of Beverly Hills-based Platinum Equity, wrote that they had concluded the mother of two could do some jobs after all. Among those they listed in a letter to her was the meter electrician's position she had occupied a quarter-century earlier. As a result, Broadspire said, it would no longer pay Deskins.

This practice -- helping people apply for Social Security as totally disabled, then doubling back and asserting that they weren't disabled for the purposes of company coverage -- had already caught the eye of Richard Posner, a Chicago federal appeals court judge and conservative legal theorist. In a 1998 opinion, he wrote that an employer and its disability carrier, Metropolitan Life Insurance Co., had gone too far in treating one of the employer's customer service representatives in this fashion.

The companies' behavior, he wrote, violated a fundamental principle of law, "that if a party wins a suit on one ground, it can't turn around and in further litigation with the same opponent repudiate the ground in order to win a further victory."

He ruled that the company and insurer would have to make up the difference between Social Security and what the company policy promised.

At the onset of illness

The first hint of the disease about to overtake Potter appeared during a Jazzercise class she took at a local elementary school in summer 1999. She'd later tell doctors that she suddenly felt wobbly and exhausted. She had to take the next day off and, uncharacteristically, slept for 24 hours.

But Potter wrote the incident off as a fluke or perhaps the first sign of menopause. And with so much going on in her new career, she had little time to pay attention. A regional bank had purchased the J.V. Arthur agency and Potter had been given a promotion. Then, BB&T snapped up the bank and she was offered another. She had testified before Congress, headed a regional coalition on rising health costs and had been elected president of the Virginia Assn. of Health Underwriters, an insurance industry trade group.
All the while, the money kept rolling in -- $190,128 in 1999, $229,354 in 2000, nearly $255,000 in 2001. Unfortunately, so too did the nagging problems.

At an August 2001 soccer game in which her youngest son, Nate, then 17, was playing, she got up to go to the bathroom. But she said her legs refused to budge. As she filled out clients' paperwork that fall, her arms began to ache, then went numb. Finally in December, she went to Winchester Neurological Associates to see Dr. Patrick M. Capone.

Capone's notes over the next year show a doctor in search of a diagnosis. Capone suspected multiple sclerosis from the outset. But when an MRI turned up only one wedge-shaped lesion in Potter's brain, instead of the two required by newly adopted diagnostic criteria for MS, he wrote that he couldn't prove she had the disease until further symptoms appeared. He tried out other diagnoses as well, but at least initially couldn't nail down any of these to his satisfaction. He noted in passing that his patient showed signs of depression and prescribed an antidepressant, but otherwise made little mention of her state of mind.

Finally in May 2002, he wrote that Potter was suffering from "chronic fatigue syndrome" and "possible" MS. He warned that "her fatigue is such that she is now in danger of losing gainful employment in spite of heroic efforts on her part."

While Capone wrestled with a diagnosis, her BB&T supervisor, Edwin E. White Jr., noticed that Potter looked increasingly tired, had trouble carrying the 20 or 30 pounds of paper she'd typically bring to a client meeting and began to miss work, according to subsequent documents in the case. As Potter's troubles deepened, White took over more and more of her responsibilities.

Potter said that she discussed with her bosses the possibility of having to go out on disability. She said that White and other BB&T executives, in turn, discussed the issue with UnumProvident and were given assurances that she would be covered under BB&T's group disability policy with the insurer's Provident Life & Accident arm, whether her diagnosis was MS or chronic fatigue syndrome.

Potter set herself one final goal of visiting her top 100 clients to explain what was happening with their accounts. But she only made it to six before she had to leave work May 30, 2002. A few weeks later, she filed for disability.

Focus on inconsistencies

Although UnumProvident describes the problems in the handling of Potter's claim as isolated, the parallels with problems uncovered by regulators during the multi-state examination of the company completed last fall are striking.

For example, the multi-state review concluded that there was a bias in the way UnumProvident's in-house medical staff interpreted the records that claimants submitted to prove their disability. "The bias," the regulators wrote, "was reflected in attempts to focus upon any apparent inconsistencies in the medical records or other information supplied by claimants, rather than attempt to derive a thorough understanding of the claimants' medical condition."

Although Capone in his medical records made comparatively little of Potter's psychological state to account for her condition, documents show that UnumProvident officials seized on what he had said. Within two weeks of the company's receiving her claim in early July 2002, an in-house nurse was e-mailing Potter's claim handler to alert her that Capone "has noted that there is an anxiety/ depressive factor present which could be significant."

Disability insurers have a considerable financial interest in concluding that a disability has psychological rather than physical roots. Most policies -- including the one that covered Potter -- limit the benefits that a company must pay for "mental and nervous disorders" to two years. By contrast, many of those with physical causes must be paid until the claimant turns 65.

In Potter's case, that meant the difference between UnumProvident's owing about $295,000 and its owing more than $2.5 million.

In September, a second nurse, reviewing the records in the case, but not Potter herself, prepared a report that quoted Capone's notes from his first meeting with Potter that there was "clear evidence" of anxiety or depression.

What the UnumProvident report failed to mention was that in the very sentence before saying there was "clear evidence" of anxiety, Capone wrote that his first guess about what was causing Potter's problems was a "demyelinating disease" like MS.

After reviewing company records, state regulators said they found many instances where UnumProvident denied benefits "on the grounds that the claimant had failed to provide 'objective evidence' of a disabling condition" even where the company's claim forms did not require such evidence.

Company documents show that within three weeks of receiving her disability claim, UnumProvident officials were on the phone to Potter complaining that her condition was "self-reported" and saying they needed objective evidence that something was wrong with her.

"We must have medical records from the doctor where he finds out what is the problem and diagnoses the problem," company official Mark Hicks wrote that he told Potter in an early August call.

After their inquiry, the state regulators accused UnumProvident of placing an "inappropriate burden on claimants to justify eligibility for benefits." Among other things, the regulators said they found evidence that UnumProvident was engaged in a companywide effort "to shift the burden of responsibility to the claimant to provide ... records in support of a claim," rather than investigate a claim's legitimacy on its own.

On Aug. 15, 2002, five weeks after receiving Potter's disability claim, UnumProvident denied it, writing that "we find no medical evidence to support your inability to perform the duties of your occupation. The medical evidence we have received does not indicate the severity of symptoms you claim to have."

In internal documents both before and after the denial, company officials complained about having not received a particular blood test that they said could have helped confirm Capone's secondary diagnosis of chronic fatigue syndrome. Although Potter had signed releases giving the company the right to order up almost any test it wanted, there is no record that anyone at the insurer did so.

On Sept. 9, Potter wrote the company pleading with it to reconsider its decision. "After helping so many people with disability claims personally in the past, I never expected this to take so long or be so difficult," she said.

"Please address this appeal as soon as possible. Money is very tight and it is hard enough to deal with my illness with a positive attitude."

Capone followed up with a series of memos, culminating in one on Nov. 1, 2002, that read: "The patient ... does have an abnormality on her MR and could conceivably have multiple sclerosis. This cannot be confirmed as of yet. Nevertheless, she more than meets the diagnostic criteria for chronic fatigue syndrome. This has significantly incapacitated her, making gainful employment impossible at this juncture.

"There is no basis to support that her complaints are anything other than legitimate. Clearly, not having total knowledge of the pathophysiology of a disorder is no basis of the denial of its existence."

On Nov. 11, UnumProvident denied Potter's appeal. Among the reasons cited in its denial letter was the lack of the blood test the insurer wanted in order to check for chronic fatigue.

Devastating effects

In the period that followed, the Potters burned through most of their savings, pulled Nate from $19,000-a-year Roanoke College and canceled their annual family vacations.

Documents show that BB&T made several appeals on Potter's behalf, but UnumProvident stood by its decision to deny her claim. On its own, BB&T appears to have given Potter the equivalent of about a year of her previous pay.

When Potter tried to get the insurer to reconsider, she was sent her 4-inch-thick claim file and told the case was closed.

All doubts about Potter's diagnosis vanished in August 2003, when she was hospitalized for eye pain and an inability to control her right eye. The eye problems, Capone said, clinched it -- she had MS. The following July, Social Security declared Potter totally disabled and began paying her benefits. But it took UnumProvident almost another year to budge.

In an interview, UnumProvident CEO Watjen refused to comment on particular cases, but pointed to recent declines in customer complaints and lawsuits as evidence that the company's claim- handling problems are in the past.

James Sabourin, UnumProvident's communications vice president, said that company officials initially denied Potter's claim because of inadequate evidence of her disability but subsequently gathered more evidence and changed their minds.

"We received new information along the way, and with that new information we reached a different conclusion, one that's based on the bigger picture rather than focused on a specific symptom or disease," he said.

However, the files that the insurer sent to Potter after it closed her case suggest that UnumProvident's decision to reverse itself occurred only after Potter retained Jon Holder, a Bar Harbor, Maine, lawyer. It was Holder who provided the company with new information about Potter's condition and notified the insurer that Social Security had concluded that she was totally disabled.

Although the insurer would eventually send Potter a check for the back benefits that it now agrees she was owed, the check did not include several hundred thousand dollars in legal fees that it cost her to get the company to change its position. (She and Holder are now asking UnumProvident to pay these amounts as well.) And the check would take three years to arrive.

Asked about the three-year wait recently, Sabourin, the UnumProvident spokesman, said Potter, Holder and, by implication, BB&T were as much to blame as his company for drawing out Potter's case.

"Could we have done better? Quite possibly," he said. "But to suggest that we were solely responsible for this claim taking as long as it did is not accurate."

A 'flat-out mistake'

As Debra Potter was beginning to encounter problems with UnumProvident in 2002, a federal court jury awarded Joan Hangarter, the Berkeley chiropractor, a $7.6-million judgment against the firm - - an amount it could award only because Hangarter's was an individual policy, rather than an ERISA-covered group policy.

A federal magistrate followed up with an injunction prohibiting the insurer from "targeting categories of claims or claimants [for termination], employing biased medical examiners, destroying medical reports, and withholding ... information."

Six weeks ago, the U.S. 9th Circuit Court of Appeals upheld the jury award, although not the injunction.

In Kevin Murphy's case, it took the cancer patient and former New York textile executive nearly one year, and the hiring of a lawyer, to get UnumProvident to restore his benefits, but it did so last summer. Sabourin recently acknowledged that the insurer had made a "flat-out mistake" in switching off Murphy's benefits.

As for Ricky D. Hart, the North Carolina chicken plant mechanic, UnumProvident acknowledges in documents that he has coronary heart disease. But in a letter last month, it said that it was cutting off his disability checks after an independent medical exam paid for by the company concluded that Hart could still work a 40-hour-a-week desk job and "should not have any problems in operating heavy machinery." It suggested that he exercise.

Liberty Life, the company that denied former Steelcase employee Nancy Loucks' benefits, agreed to pay her an undisclosed sum this spring in return for her joining the company in asking the federal judge in the case to vacate his "caveat emptor" ruling against the firm. The judge agreed, but not before the ruling went down in the lawbooks.
In May, Broadspire Services was supposed to notify former Ohio utility manager Kristin Deskins whether it would reverse itself and restore her employer-provided disability benefits. Broadspire seemed to be in a bind.

Along with specialists who assist people in applying for government benefits, it had helped Deskins win Social Security coverage on the basis that she was totally disabled, only to turn around and claim that her employer-provided plan need not pay because she was not totally disabled after all.

But instead of extricating itself from this dilemma, Broadspire said in a May 26 letter that it had lost most of Deskins' paperwork. She would have to file her request for restoration of benefits all over again.

Broadspire refused to comment on Deskins' case.

Preparing for a day when she will no longer be able to walk, Debra Potter and her family sold their house in December and moved into a new one, where the living area is all on one floor, the bathrooms have grip bars and the halls are wide enough for a wheelchair.
Potter makes it to her husband's Sunday service at the Sunnyside church, where the sign outside reads "Exercise daily and walk with God." But because of stiffness and exhaustion, she often has to be carried out.

On July 15, a letter arrived from UnumProvident. It said that Potter's disability benefits had been approved. It did not include an apology for the three years and one week that she had to wait, or anything extra to pay the lawyer she had to hire.

But it did include this warning: "We may investigate your claim at any time.... [We] may have you examined ... by specialists of our choice.... We may deny or suspend disability benefits if you fail to ... cooperate."