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July 15, 2004 at 08:00 PM
MassMutual Agrees To Settle
Suits For More Than $130 Million
By Allison Bell
Massachusetts Mutual Life Insurance Company says it has agreed to pay at least $130 million to settle a group of suits that attack its sales practices.
MassMutual has agreed to the settlement to put the litigation behind it and continues to deny all of the allegations in the suits, the company says.
A judge in the U.S. District Court in Newark, N.J., has given the agreement preliminary approval and scheduled a fairness hearing for Nov. 22.
The proposed settlement would end a group of cases consolidated under the caption Varacallo et al. vs. Massachusetts Mutual Life Insurance Company et al. under the jurisdiction of the U.S. District Court in Newark, N.J. The cases concern complaints about permanent life policies and some term life and disability income policies issued by MassMutual affiliates from Jan. 1, 1983, to Dec. 31, 2003.
The affiliates are Connecticut Mutual Life Insurance Company, C.M. Life Insurance Company, Massachusetts Mutual Life Insurance Company and MML Bay State Life Insurance Company.
The permanent life allegations focus on charges that MassMutual misrepresented the likely performance of whole life, universal life, variable life and variable universal life policies. Plaintiffs also have accused MassMutual of misleading prospects about the merits of replacing existing life policies with new MassMutual permanent life policies.
Allegations about other products include charges that MassMutual may have charged initial premiums on term life and disability policies after the policy issue date, may have charged premiums for periods of time when insurance coverage was not provided under term life and disability policies, and used smoker rates to price juvenile insurance policies that covered nonsmoking children.
Under the proposed settlement, most customers who bought permanent life policies could choose between accepting an automatic award of extra, temporary life insurance death benefits and going through an alternative dispute resolution process.
