CHATTANOOGA, Tenn. (AP) – The fired president and chief executive of UnumProvident, the nation’s largest disability insurer, contends in a lawsuit that his $17 million severance and retirement package should be bigger.

J. Harold Chandler, who oversaw a $20 per share drop in stock value during four years as the Chattanooga-based company’s top executive and left amid investigations of how it handled claims, wants another $3.4 million.

No hearing has been set on Chandler’s lawsuit, which was filed July 15 in Hamilton County Chancery Court.

UnumProvident, created by the 1999 merger of the Unum Corp. of Portland, Maine, and The Provident Companies, based in Chattanooga, claims about 30 percent of the nation’s disability insurance business.

The suit contends the company promised Chandler the same $20.4 million termination benefit it gave the former chairman and chief executive officer of Unum Corp. in 1999. It also contends the company violated its agreement by “terminating Mr. Chandler without cause, without reasonable notice and without an opportunity to respond to the board or to consider the terms of his replacement without cause.”

Chandler’s attorney, William H. Horton of Chattanooga, declined to comment Wednesday about the suit.

UnumProvident officials also declined to discuss the case but issued a written statement saying its board “authorized the payment to Mr. Chandler of the amount due under his employment contract, and the company has paid in combined severance and retirement benefits approximately $17 million.”

The Chattanooga-based company fired Chandler in March after restating three years of earnings in response to a Securities and Exchange Commission inquiry.

At the time, the stock price had fallen to less than $10 per share. On Wednesday, the stock closed down 15 cents at $12.90 on the New York Stock Exchange.

The firing also followed a $1 million fine by Georgia insurance officials.

Georgia insurance commissioner John Oxendine has said his investigation of the claims handling showed a corporate mentality of “looking for every technical legal way to avoid paying a claim.”

UnumProvident spokesman Tom White previously described the penalty as “an agreement with the Georgia Department of Insurance relating to that state’s ongoing market conduct examination.”

In addition to the fine, Georgia officials put four UnumProvident subsidiaries on probation for two years: Unum Life Insurance Co. of America, the Paul Revere Life Insurance Co., Provident Life and Accident Insurance Co. and Provident Life and Casualty Co.

Insurance officials in Tennessee, Maine and Massachusetts are continuing investigations of the company’s claims handling.

Hundreds of policyholders are suing UnumProvident, contending it routinely denies claims and requires its medical employees to support the denials. The company also is being sued by shareholders who claim it made misleading statements about its finances.

Since March, Chandler has said he would become chairman and CEO of Benefit Partners of America LLC, a new company that will provide assistance with employee benefit services and workplace communications.

Chandler said in a statement that during nearly a decade with UnumProvident and as chief executive of The Provident Companies the companies gained more than $25 billion in assets while his “net take home pay, not including retirement benefits, was less than $400,000 per year on average.”

“In addition, I used all of my net severance and retirement payments, after taxes, to pay back loans used to purchase additional shares of UnumProvident stock during my employment there. I still owe a net balance of over $2 million on such loans,” Chandler said in the statement.

Brad McCurtain, who as president of Maine Securities Corp. in Portland is a longtime analyst of Unum and more recently UnumProvident, said Wednesday that Chandler was “lucky he wasn’t fired for cause. He’s lucky the shareholders haven’t sued him personally.

“There is no individual in the history of Unum who has messed up a great company, with great employees and great product, more than Harold Chandler,” McCurtain said.

UnumProvident has said it processes 400,000 claims annually, distributing $3.6 billion in the process, and that the vast majority of policyholders are pleased with their treatment. The company insures about 25 million people.

The company has about 3,500 employees in Portland and about 3,000 in Chattanooga, among 13,000 overall.

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AP-ES-07-24-03 0559EDT

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