MetLife must defend lawsuit over retained asset checkbook

MetLife must defend lawsuit over retained asset checkbook
MetLife Inc. must defend a lawsuit by the beneficiary of a policy who claimed the insurer paid $302,000 to the wrong person.
JAN 13, 2012
MetLife Inc., the largest U.S. life insurer, must defend a lawsuit by the beneficiary of a policy who claimed the insurer paid $302,000 to the wrong person. The suit was filed by Jose Herrera, who lived with his wife, Maria Diaz, until she died in 2006. Diaz had been covered by a U.S. program under which MetLife provided insurance to federal employees. When Diaz died, MetLife paid proceeds of her policy into a so-called retained asset account, in which MetLife kept custody of funds while issuing a checkbook to the beneficiary. Herrera sued MetLife after learning that Diaz's daughter by a prior marriage had allegedly forged his signature to a claim form and told MetLife to send the checkbook to the daughter's home. MetLife wouldn't make payments to Herrera, the beneficiary of Diaz's policy, after the daughter allegedly forged Herrera's name to $302,820 in checks, according to the complaint. U.S. District Judge Lewis Kaplan in New York yesterday rejected MetLife's bid to dismiss the suit by Herrera, who said MetLife failed to exercise “reasonable caution” before issuing the checkbook. “Herrera simply claims monies allegedly due to him by virtue of the contract between the government and MetLife of which Diaz availed herself,” Kaplan said in an opinion. MetLife is among more than 100 insurance carriers that earn investment income on billions of dollars owed to life insurance beneficiaries, Bloomberg Markets magazine reported last year. John Calagna, a spokesman for the New York-based insurer, declined to comment on the ruling. “I'm pleased with the judge's decision,” Eric Wertheim, a lawyer for Herrera, said in a statement. Appellate Decision Kaplan didn't rule on the merits of Herrera's claims. Among its legal arguments, MetLife said Herrera hadn't alleged enough facts for the suit to proceed. In August, a federal appeals court in New York ruled that MetLife's use of retained asset accounts didn't violate a fiduciary duty owed to beneficiaries of policies issued under employee-benefit plans. The beneficiaries argued that they were entitled to the full amount that insurers earn by investing the retained assets. Insurers said beneficiaries were entitled only to the amount they have been guaranteed under contracts. --Bloomberg News--

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