MANHATTAN (CN) – Six years after MetLife Inc. paid $500 million in overdue death benefits, a federal class action accuses the insurance giant of having taken the same liberties with retirement funds.
Filed in New York with attorneys at Bailey & Glasser and Berman Tabacco at the helm, the June 18 complaint calls it undisputed that MetLife converted another $500 million in retirement annuity benefits over the last 25 years.
“Instead of paying the annuity benefits to beneficiaries or tendering them to states under unclaimed property law, the company took the money for itself and has acknowledged that it owes as many as 30,000 beneficiaries more than $500 million in annuity benefits,” the complaint states.
For beneficiaries like 75-year-old Edward Roycroft, however, acknowledgment alone is of little help when retirees face a limited timeframe to collect what they are owed.
“Indeed, as acknowledged by MetLife, this problem ‘goes back 25 years,’ meaning that some unpaid beneficiaries were 65 years old 25 years ago and would be 90 years old today,” the complaint states. “Thus, class members suffer irreparable harm each day that they are deprived of annuity benefits (and interest) due to them from MetLife as their opportunity to enjoy these benefits decreases. Thousands of retirees throughout the United States are without this important retirement income.”
Accusing MetLife of dragging its feet, the complaint notes that, “two months after acknowledging its failure to pay annuity benefits and conversion of annuity monies to its own use, it was still in the process of hiring advisors to analyze the problem.”
MetLife meanwhile appeared to dispute the claims. “We are reviewing the filing and will defend ourselves vigorously,” MetLife spokesman John Calagna said Wednesday.
Brightview Financial, the company’s life insurance arm, is also named as a defendant.
Roycroft, the lead plaintiff, says he retired in 1999 but had to call MetLife in 2012 when he was 70 to see if it owed him annuity benefits. The company wrote him back, according to the complaint, but “did not acknowledge that its payment of annuity benefits to plaintiff was thirteen years late, did not provide any basis whatsoever for plaintiff to verify the amount owed him, and did not acknowledge that plaintiff was owed interest or other additional consideration for MetLife’s decision to wrongly take possession and ownership over his funds for as much as 13 years.”
The complaint says Metlife makes two attempts to reach beneficiaries: once at the age of 65 and once at the age of 70.5.
“If the beneficiary did not respond to this half-hearted outreach, it was MetLife’s practice to convert the reserve for these benefits and treat the beneficiaries’ retirement benefits as income to itself,” the complaint states.
Roycroft says MetLife finally sent him a check in 2013 for the $2,508.36 it was supposed to have paid him when he retired in 1999.
“The check did not include any interest that had accrued during the thirteen years that MetLife had converted his annuity benefit to its own use,” the complaint states. “Nor did it include any profits wrongfully earned by MetLife on the monies it converted to its own use but that was owed to plaintiff.”
Still waiting on the interest, Roycroft says the annuity benefits scandal “is particularly egregious in light of its failure to pay death benefits in connection with the company’s life insurance business that resulted in the company paying $500 million in overdue death benefits.”
MetLife had to look for similar problems in its annuity business as part of that settlement. “That MetLife then allowed five years to pass before ‘discovering’ its conversion of over $500 million in annuity benefits displays a shocking disregard for the beneficiaries and the duties MetLife owed to the beneficiaries,” the complaint states.
Roycroft quotes a statement that MetLife issued on the converted annuity benefits in December 2017.
“When we realized this was a significant issue,” the email statement says, “we launched an effort to do three things: figure out what happened, strengthen our processes so that we do a better job locating retirees, and promptly pay anyone we find – as we always do …. We are deeply disappointed that we fell short of our own high standards. Our customers deserve better.” (Ellipses in complaint.)
But Roycroft says “this mea culpa could barely have satisfied those beneficiaries who have been unfairly denied annuity benefits.”
MetLife is one of 15 firms from which U.S. corporate pension plans purchase group annuity contracts to transfer their pension liabilities.
Roycroft wants an accounting and an injunction to prohibit MetLife from settling claims for unpaid pension benefits in a manner that would require the beneficiaries to waive any right.
Lead counsel for the class is Kevin Barrett of Bailey Glasser.
“MetLife’s systematic conversion of retirement annuity benefits betrayed thousands of annuitants and their beneficiaries,” the complaint states.