Massachusetts Secretary of the Commonwealth William F. Galvin has charged MetLife with making misleading statements relating to its failure to make pension payments to hundreds of Massachusetts retirees.
The complaint filed by Galvin’s office alleges that MetLife’s public filings contained material misstatements about the company's finances resulting from the failure to adequately administer employer pension plans. According to a press release, under the plans, MetLife was responsible for reserving enough money to make payments to Massachusetts pensioners, whose average age was 72. Instead, some reserves were released – MetLife had flagged them as “presumed dead” – and became assets that inflated MetLife’s bottom line.
The charges brought by Galvin’s office are the result of an investigation opened by the Securities Division in December 2017 after MetLife announced that it had lost track of tens of thousands of pensioners to whom they owed payments. MetLife had acquired the pension obligations from the retirees’ employers.
“Once we were notified of these so-called missing pensioners, my first priority was to track down Massachusetts seniors who were owed back pension payments,” Galvin said. “My office was able to locate a majority of the missing Massachusetts residents within just a few weeks. In fact, approximately half of these seniors were still living at the same address MetLife had on file for them for the entire time MetLife failed to make payments to people they had so callously designated as ‘presumed dead.’”
According to the complaint, MetLife did not take reasonable steps to notify plan participants when their pensions were initially transferred. After the transfer, MetLife’s only contact with the pensioners was two form letters, sent more than 5 years apart, to those to whom payments were owed. MetLife designated plan participants who did not respond to the notices that were sent to the address on file as “presumed dead.”
Once a plan participant was presumed dead by MetLife, the money to which the retiree was entitled was no longer held in reserve by the company and became assets of MetLife, which were reported in public filings. The complaint states that these reserves should not have been released and resulted in misleading financial statements.
Galvin's office presented MetLife with the results of their search efforts in March 2018. Since then, a press release says that his office has learned that many retirees have yet to receive the payments they are owed, and that several plan participants have reported to Galvin’s Securities Division that MetLife has been slow to respond, has lost their paperwork, or has not provided back payments with interest.
The complaint filed by Galvin’s office seeks an order requiring MetLife to locate all Massachusetts retirees eligible for benefits and provide retroactive and continuing payments to each person. The complaint also seeks sanctions, censure and an administrative fine.
Class Action Lawsuit Filed
Last week, law firms Berman Tabacco and Bailey & Glasser LLP filed a class action lawsuit against MetLife, Inc. on behalf of retirees who were allegedly unfairly denied timely payment of their pension benefits over the last 25 years. The suit, filed in the U.S. District Court for the Southern District of New York, alleges that MetLife has publicly acknowledged that it failed to keep track of pension annuity beneficiaries, failed to contact them, and failed to pay them their benefits when due for as long as 25 years. Rather than paying the pension annuity benefits to beneficiaries or turning them over to states under unclaimed property law, the suit claims that MetLife allegedly “kept the money and has acknowledged that it owes as many as 30,000 beneficiaries more than $500 million in annuity benefits,” and that after what it described as “feeble attempts to contact beneficiaries,” MetLife closed its files and kept the money for itself. “Now, years later, the suit alleges that MetLife has promised to try harder to reunite the retirees with their money,” according to a press release.
The suit goes on to claim that MetLife’s methods for notifying beneficiaries of their eligibility for pension benefits “appear designed to ensure that many retirees would never be paid so that MetLife could convert the payments to its own use.” MetLife acknowledges that it made only two attempts to contact these pension beneficiaries – one at age 65 and the only other at age 70½ – and made no effort to locate individuals if the mailings were returned as undeliverable.”
The plaintiffs’ attorneys say that if the beneficiary did not respond to this “half-hearted outreach, plaintiffs alleged, that it was MetLife’s practice to convert the reserve for these benefits and treat the beneficiaries’ retirement benefits as income to itself.” Moreover, it is alleged that MetLife’s notices did not even identify the former employer of the retirees.
The plaintiffs note that MetLife has revealed that it is responding to questions from its lead state regulator in New York and other state regulators, and that the Securities and Exchange Commission enforcement staff “has made an inquiry” about the matter.