Disability insurer Unum Group agreed to pay fines and penalties totaling $5.55 million for failing to report special fees paid to a San Diego-based insurance broker.
Federal prosecutors in San Diego said in a statement Monday that the Chattanooga-based insurer paid fees to a broker from 2000 to 2004 without disclosing them.
The statement says the broker secretly charged the insured millions of dollars in higher premiums based on the undisclosed fees.
Assistant U.S. Attorney Phillip Halpern describes the penalty as part of an agreement to cooperate.
BusinessWeek, “Insurer Unum Group to pay $5.55 million penalty”
According to one report:
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. 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 Laborâ€™s Employee Benefits Security Administration and the Internal Revenue Service.
The charges were disguised as request for proposals communication or re-enrollment fees, and resulted in millions of dollars of higher premiums according to the Investment News report.