Shareholders Cry Foul After MetLife Probed
by 30 States Over Misuse of Death Database
Shareholders Cry Foul After MetLife Probed
by 30 States Over Misuse of Death Database

(CN) - A shareholder derivative complaint against MetLife claims the company faced audits from 30 state governments for allegedly failing to set up "adequate claims payment practices and procedures" and failing to ensure that the company "complied with unclaimed property laws."
Plaintiff Lee Batchelder claims that board members did not properly supervise or monitor the company and allowed it to issue misleading or false statements and filings. MetLife allegedly used the U.S. Social Security Administrations Death Master File (SSA-DMF) to find out if annuity policyholders had died so that they could stop making payments but failed to use the file to determine if the company should begin making payments to life insurance beneficiaries.
"A significant amount of the company's operating income and investment income is intertwined with procedures and policies used by MetLife in the investigation and paying of claims," the complaint states. "A further investigation into these practices by the Illinois Department of Insurance has been converted into a multistate targeted market conduct exam."
As part of the investigation in July 2011, New York State's Insurance Department issued a directive that required companies to use the SSA-DMF to determine if death benefits were due to policy holders beneficiaries.
According to Shareholders Foundation Inc., in August the company reported to the U.S. Securities and Exchange Commission that investigations into its death benefits practices had led to substantial costs thanks to additional state and administrative penalties. This was followed by an October filing indicating that it would cost $115 million in after-tax charges to increase its death benefits practices reserves.
In addition, the company filed a 10-Q form in November warning that "it is possible that other jurisdictions may pursue similar investigations or inquiries, may join the multi-state conduct exam or issue directives similar to the New York Insurance Department's letter," according to the complaint.
The complaint seeks a jury trial to force the company to change its policies and practices so that the SSA-DMF is used to determine the death of policy holders and requests restitution from defendants to cover the company's debts, fees and fines resulting from this lack of oversight.
The suit was filed Joseph E. Levi of Levi & Korsinsky LLP in New York.
Copyright Courthouse News Service 2012
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