Lawyers for two classes of plaintiffs who have accused MetLife of holding on to death benefits in order to pocket the accrued interest have reached an $80 million settlement, according to filings docketed Friday in the U.S. District Court for the Northern District of Georgia
The two classes represent about 200,000 people, and the proposed settlements provide for more than $26 million in payments for the plaintiffs’ lawyers, according to the filings.
The settlements must still be approved by Judge Richard Story.
What Your Peers Are Reading
The cases began in 2014 when a Cleveland woman, Laura Owens, filed a putative class action in the Northern District’s Gainesville division over the insurer’s handling of her husband’s insurance claim after his death two years earlier.
Her husband’s employer maintained a group policy under the federal Employee Retirement Income Security Act (ERISA). Upon his death Owens was to receive $95,000 in death benefits. A clause in the policy said, “We will pay the Life Insurance in one sum. Other modes of payment may be available upon request.”
When Owens filed her claim, in 2012, MetLife established a Total Control Account — a type of retained asset account (RAA) — in her name. MetLife gave her a book of blank bank drafts. The book of bank drafts let her withdraw funds in increments of $250 or more.
According to her complaint, MetLife made a practice of holding ERISA benefits in its own general account until the bank hosting the TCA account requested funds.
“In the interim, MetLife invests the beneficiary’s funds and keeps for itself the difference or ‘spread’ between the amount it accrues by self-dealing in its beneficiary’s funds and the amount of interest it credits to its beneficiary,” according to the complaint.
The insurer “did not disclose to the plan’s sponsor or administrator the profits that it expected to accrue and did accrue from the spread between the amount it gained investing Ms. Owens’ benefits and the benefits of other plan beneficiaries for its own account and the amount of interest it credited to the ERISA plan beneficiaries on the unpaid death benefits that it owed to them,” according to the complaint.
Owens’ complaint accused MetLife of violating its duties under ERISA and Georgia law requiring the payment of “postmortem interest.”
Similar claims by another plaintiff, Joshua Smith, were later added to the case.