A UnumProvident stockholder says in a Chancery Court lawsuit that president J. Harold Chandler and company directors deceived her and her shareholders.
The 27-page suit says that some UnumProvident officers sold off large numbers of shares just before the firm's stock plummeted.
The suit was brought in behalf of Yoram Levy, who is represented by Chattanooga attorney Jay Morgan and Nashville lawyers James G. Stranch III and C. Dewey Branstetter Jr.
Several class action lawsuits have been filed in Federal Court in Chattanooga against UnumProvident making some similar claims.
Defendants are Mr. Chandler, chief financial officer Robert C. Greving, executive vice president Thomas R. Watjen and directors William L. Armstrong, Ronald E. Goldsberry, Hugh O. Maclellan Jr., A.S. MacMillan Jr., George J. Mitchell, Cynthia A. Montgomery, Lawrence R. Pugh, C. William Pollard, Lois Dickson Rice, John W. Rowe, Jon S. Fossel, Burton E. Sorensen and James L. Moody Jr.
It is a complaint "for breach of fiduciary duty, abuse of control, corporate waste, gross mismanagement and unjust enrichment."
The suit claims the defendants violated Tennessee laws by "making false financial statements" during a period beginning May 2001.
It says Mr. Chandler "knew of the improper dismissal of claims" and participated in putting out false press releases inflating company financial reports. It says there were also filings of false information with the Security and Exchange Commission. UnumProvident officials said recently they are being scrutinized by the SEC.
The suit says the UnumProvident officers and directors conspired artificially raise the price of the company stock "so they could dispose of over $1.2 million of their personally held stock." The suit lists only Mr. Chandler and Mr. Watjen as actually selling stock during the time period.
The suit says Mr. Chandler in 2001 was given a salary of $2,545,466 and says he sold 2,700 shares of company stock for over $78,000.
It says Mr. Watjen was paid $1,416,285 in 2001 and sold 47,137 shares of company stock for over $1.2 million.
The suit says Mr. Chandler met Mr. Watjen in the 1980s when Mr. Chandler was a director of Colonial and Mr. Watjen was with Morgan, Stanley that had Colonial as a client.
It says as of March 17, 2002, that Mr. Chandler had 2,918,717 shares of UnumProvident stock, Mr. Watjen had 970,351, Mr. Armstrong had 68,425, Mr. Goldsberry had 33,333, Mr. Mitchell had 17,333, Ms. Montgomery had 32,733, Mr. Pollard had 17,284, Mr. Pugh had 53,233, Ms. Rice had 36,233 and Mr. Rowe had 42,133.
It says Mr. Maclellan had 18,650,486. His family started Provident Life and Accident Insurance Company.
The suit says UnumProvident has been the subject of a "60 Minutes" investigative pieces and other unfavorable media attention.
It says that and the alleged release of false information had caused substantial losses for UnumProvident and damaged its reputation.
The suit says UnumProvident has operated "long-term denial factories" in which efforts are made to get expensive clients disallowed. It says company physicians "rubberstamped medical decisions made by non-doctors."
The complaint says UnumProvident "has been damaged by over $5 billion, but the insiders fared much better."