Judge Richard Story, U.S. District Court for the Northern District of Georgia. Judge Richard Story, U.S. District Court for the Northern District of Georgia.

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.

(Related: New York Curtails the Use of Retained Asset Accounts)

The settlements must still be approved by Judge Richard Story.

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.

In a motion asking Story to grant it summary judgment, MetLife argued the funds credited to her account were “never plan assets” and that she had the option of immediately closing her TCA account and withdrawing the balance.

“MetLife is further entitled to summary judgment on plaintiff’s state law claim because MetLife paid plaintiff all the interest to which she was entitled under the plan and policy when it established her TCA,” according to the MetLife brief.

Story granted the plaintiffs partial summary judgment in 2016 and denied MetLife’s request. In 2017, he certified a class of all living beneficiaries of MetLife ERISA plans providing payments in “one sum” and for whom the insurer had established TCA accounts from April 2008 onward. He also approved a subclass who were Georgia residents “at the time of their decedent’s death or are the beneficiaries of insureds who were residents of the State of Georgia at the time of their death. “

The 11th Circuit US. Court of Appeals declined to hear MetLife’s appeal.

In the proposed settlement agreements, the parties say that MetLife has not conceded that the classes were properly certified or that the insurer admitted any wrongdoing.

The filings deal with two settlements: a $75 million “Owen class” of about 120,000 individuals, which includes attorney fees of up to $25 million, depending upon the court’s approval, and a $25,000 class representative award for Owens.

A $5 million “Smith class” settlement includes 128,750 members and $1.6 million in fees. Smith will receive $10,000 as class representative.

Plaintiffs counsel include John Bell Jr. and Leroy Brigham of Augusta’s Bell & Brigham; Michael Lober and William Dobson of Macon’s Lober & Dobson; Todd Lord of Cleveland’s Law Office of Todd L. Lord; Jason Carter and Michael Terry of Bondurant, Mixson & Elmore; and John Oxendine of the Oxendine Law Group.

MetLife’s lawyers include Jeremy Blumenfield, Deborah Davidson, William Delaney, Gina McGuire and Melissa Hill of Morgan Lewis & Bockius, and Michael Caplan, Julia Stone and Benjamin Cheesbro of Caplan Cobb.

No lawyers on either side of the dispute responded to requests comment.

— Read Consumer Watchdog Demands More Info on RAAson ThinkAdvisor.

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