State efforts to collect on unclaimed property held by insurers has mushroomed into private action lawsuits filed in Illinois, Ohio and New York against Prudential and MetLife.
The lawsuits are coming to light against the background of a hearing Thursday on inaccuracies related to the Death Master File mainted by the Social Security Administration.
The DMF is the primary research tool being used to allege that insurers did not follow applicable state law on unclaimed property, either by not being aggressive enough in seeking to find beneficiaries of life insurance policies, or, in the alternative, turn the money over to the state.
In a suit filed in Chicago, Total Asset Recovery Services, based in Auburn Hills, Mich., alleges it discovered a "massive fraud" by Metropolitan Life Insurance and Prudential Financial.
The suit alleges that the two firms kept more than $524 million in unclaimed life insurance money that should have been turned over to Illinois.
And, a class action suit alleging securities fraud was filed in Manhattan Jan. 12 against Metlife by the City of Westland Police and Fire Retirement System, Westland, Mich.
The suit alleges MetLife made "false and misleading statements" regarding its financial statements because it took a charge in the third quarter of 2011 related to a determination that it owed money by either not paying off policies to proper beneficiaries or turned the money over to the appropriate states under escheat laws.
And, an Ohio state court based in Cleveland Tuesday dismissed a complaint against Nationwide Insurance Company in which a life insurance policyholder who is 71 years-old filed suit.
The plaintiff said he filed suit out of concern that his death is imminent and he is fearful that because Nationwide allegedly "has failed and continue to fail to make reasonable attempts to determine when the beneficiaries of a life insurance policy are entitled to death benefits."
The plaintiffs fear … "that as their deaths are impending they fear that that their life insurance policies will not be honored."
The suit asked that Nationwide be required to make at least annual DMF searches for insureds with more than a 70% chance of having died.
The court dismissed the suit, on the grounds that (a) plaintiffs lacked standing because their alleged injury was too speculative and (b) the duty plaintiffs sought to impose was foreclosed by the terms of their policies.
The plaintiffs have appealed to the Ohio Court of Appeals.
