WASHINGTON–Metropolitan Life Insurance Company has agreed to pay $13.5 million to the federal government to settle allegations arising from contingent commissions it paid to a San Diego broker.

The settlement, through a “non-prosecution” agreement with the U.S. Attorney’s Office for the Southern District of California, stems from a probe into contingent commissions launched by Eliot Spitzer when he was New York attorney general.

The “settlement relates to contingent compensation and other payments made to a particular broker more than 5 years ago, said John Calagna, a spokesman for MetLife, in a statement. “We are pleased to put the matter behind us.”

MetLife was investigated because it failed to report the payments as required by the Employee Retirement Income Security Act, according to Karen Hewitt, U.S. Attorney for the Southern District of California, in a statement. The payments helped the insurer bid for business with “major corporate clients,” she said.

The payments were made for the purchase of group life insurance into retirement accounts.

MetLife erred by making contingent payments without disclosing them to the insurance plan administrator, according to the prosecutors’ statement. The improper payments were typically referred to as communication fees, request-for-proposal fees, or enrollment fees.

“These hidden fees were, in turn, generally included in the rates charged by MetLife to insureds,” the statement said.

The broker, Universal Life Resources, based in San Diego, settled related charges with the New York attorney general and the New York Insurance Department in January 2006.

Under that agreement, Douglas Cox, president of Universal, and the company agreed to pay $2 million in restitution to policyholders throughout the U.S. who the investigation found were harmed by Universal’s action.

“MetLife knowingly implemented a program of undisclosed and unreported payments designed to induce the San Diego-based insurance brokerage firm and its CEO to recommend MetLife to the brokerage firm’s clients,” according to the agreement with the California prosecutors.

MetLife’s sales force was also instructed to take advantage of the improper payments to promote MetLife products, the statement from the prosecutors said.

According to the agreement, “MetLife made millions of dollars in improper payments to obtain the business of the brokerage firm’s clients.” Accordingly, “obtaining the business of these major corporate clients became important to MetLife as well as to other competing insurance carriers.”

Prosecutors said they agreed to settle with MetLife because the firm cooperated with the Internal Revenue Service and the Federal Bureau of Investigation.

The settlement takes into account MetLife’s “substantial and continuing remedial efforts” and previous payments made by the insurer to its policyholders, the Department of Justice said.

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