48 states have approved a settlement in an investigation of UnumProvident Corp., requiring the disability giant to reconsider about 200,000 claims and pay a $15 million fine, insurance officials involved in the deal said.

"These claim denials involved vulnerable workers--those whose illnesses and injuries prevented them from continuing their employment. I am very pleased that these individuals will have their claim reviewed, and that UnumProvident will now implement the structural reforms necessary to ensure that future claims are handled appropriately."

If UnumProvident fails to implement the required changes in a timely manner as stipulated by the agreement, it will be subject to penalties of $100,000 per day until compliance is achieved. In addition, failure to meet acceptable levels of accuracy in making disability claim determinations will result in a penalty of $145 million.

While regulators in California and Montana chose to not approve the deal, individual policyholders are not affected by whether their states agree and are eligible to have claims re-examined. California and Montana regulators felt that the settlement, including the minimal $15 million fine, allowed the disability insurer off too easily.

The investigation was conducted by the New York State Attorney General's Office, the New York State Insurance Department, state insurance regulators conducting a multi-state examination led by Massachusetts, Maine and Tennessee on behalf of all the other states, and the United States Department of Labor.

The settlement covers Unum Provident and five of its subsidiaries -- Unum Life Insurance Company of America, The Paul Revere Life Insurance Company, Provident Life and Casualty Insurance Company, Provident Life and Accident Insurance Company and First Unum Life Insurance Company.

The reassessment process covers the vast majority of persons whose claims for group or individual long-term disability benefits were terminated or denied after January 1, 2000. UnumProvident and its subsidiaries are required to provide notice to those individuals of their rights under the agreement.

The review process and restitution payments will provide claimants with a more expedient method of obtaining recoveries, and simultaneously will reduce the companies' exposure to litigation judgments and other costs.

UnumProvident insures more than 25 million people.

The investigation began in Georgia in responses to customer complaints. Georgia's insurance commissioner, John Oxendine, in March 2003 imposed a $1 million fine on UnumProvident and its subsidiaries over the claim payment issue. Flowers has said investigators saw a "lack of diligence in the claims personnel'' and insufficient training.

Regulators will re-examine the company's claims handling after two years.