Hancock hit with unclaimed property lawsuit

The lawsuit was filed Wednesday in federal district court in Boston. The suit was filed by Swartz & Swartz P.C. in Boston and named Richard Feingold of Lake County, Ill., as the named plaintiff.

According to the filing, the lawsuit “arises from Defendants’ pattern and practice of avoiding payment of life insurance policy death benefits that are owed to beneficiaries.”

It seeks damages for Feingold and others who did not find out until years later that their relatives had purchased life insurance policies from John Hancock for which they were the beneficiary.

The lawyer who filed the lawsuit at Swartz & Swartz, Alan Cantor, did not return phone calls seeking comment.

The lawsuit was likely prompted by the settlement John Hancock reached last November regarding its unclaimed property policies with the insurance departments of six states.

The audit turned up a widespread practice of companies failing to pay beneficiaries off with insurance policies. Rather, the companies in many cases drew down cash reserves in the policies to continue collecting premium payments from the deceased. Once reserves are gone, the companies cancel the policy. The audit found companies did not routinely check dormant accounts against lists of deceased. In other cases, the companies knew the policyholder had died, but the companies didn’t notify beneficiaries.

According to the lawsuit, Feingold was the beneficiary of a life insurance policy purchased in 1945 by his mother, Mollie.

She died in 2006, but he learned that she had the policy only in 2010, through a website on unclaimed property that said he was owed $459.

According to the lawsuit, he took that money, but only received an additional $1,349.71 “without explanation as to why this money was not escheated to the state of Illinois when the dividend monies were escheated, or explaining with any degree of certainty what the check was for.”

The suit also alleges that Feinberg “never received a copy of the insurance policy, never received an explanation or accounting for the amount paid to him of $1,349.71, never received an explanation of why the $459 was escheated to the State but the $1,349.71 was not, and never received an explanation of why the information forming the basis to stop making dividend payments was not shared to effect the life insurance policy benefits.”

According to officials at the California Insurance Department, 53 jurisdictions adopted the settlement, including D.C. and all states except New York and Minnesota.

The territories that signed on include: Guam, Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands.