MetLife Sued By Retirees Who Claim Company Slashed Life Insurance Benefits

Forty-five former General Motors employees, including former GM Chairman John Smale, have filed suit against MetLife, alleging the company improperly slashed their life benefits to a "meager" $10,000 apiece.

After retiring from GM, the plaintiffs received letters from MetLife that outlined the payment amounts for their life insurance policies and guaranteed that they wouldn't be reduced for the rest of their lives, according to the complaint, filed in Wayne County Circuit Court in Detroit. After they retired, however, the plaintiffs discovered that the benefits had been significantly reduced, the complaint alleges.

Attorney Andrew Rogers, who is representing the plaintiffs, said the reduced life insurance benefits have affected his clients' ability to plan their estates. "The timing of the notice is almost as bad as everything else," Rogers said. "At the time these people found out that their life insurance benefits had been reduced, they had been retired for years. In some cases, they are knocking on death's door. The company didn't inform them of the changes until they were no longer insurable."

The complaint accuses the company of committing fraud, unjust enrichment, breach of contract, intentional infliction of emotional distress, and violations of the Uniform Trade Practices Act, among other counts.

MetLife spokesman John Calagna said in an email the company had not seen the complaint yet and was not in a position to comment. But generally, he said, "MetLife continues to provide valuable life insurance coverage to GM's active employees and retirees."

A spokesman for GM referred requests for comment to MetLife.

MetLife is one of the companies being investigated by 35 states across the United States for allegedly using death data provided by the federal government to cut off annuity payments but not using the same data to determine that a policyholder had died and has beneficiaries who are owed payments. To date, representatives from MetLife have been ordered to appear before state regulators in California and Florida to explain their policies and procedures for using the Social Security Administration's Death Master File, which lists the names of every Social Security number holder who has died.

MetLife has said during those investigatory hearings that the annuity and life insurance businesses are inherently different and that the company has begun conducting regular sweeps of the Death Master File to act as a "safety net" for catching policyholder deaths that fall through the cracks (BestWire, May 24, 2011).

Metropolitan Life Insurance Co. has a current Best's Financial Strength Rating of A+ (Superior).

(By Jeff Jeffrey, Washington Correspondent: [email protected])