Galvin charges MetLife with fraud over failed pension payments

THE METLIFE BUILDING, home of the MetLife Inc. headquarters, stands in New York. The company was the target of a complaint filed Monday by Mass. Secretary of the Commonwealth William F. Galvin, charging MetLife with failing to make pension payments to hundreds of Massachusetts retirees. / BLOOMBERG FILE PHOTO/DANIEL ACKER
THE METLIFE BUILDING, home of the MetLife Inc. headquarters, stands in New York. The company was the target of a complaint filed Monday by Mass. Secretary of the Commonwealth William F. Galvin, charging MetLife with failing to make pension payments to hundreds of Massachusetts retirees. / BLOOMBERG FILE PHOTO/DANIEL ACKER

PROVIDENCE – Mass. Secretary of the Commonwealth William F. Galvin filed a complaint Monday charging financial-services giant MetLife Inc. with failing to make payments to hundreds of Massachusetts retirees it had wrongly designated as “presumed dead.”

Galvin’s office said it started investigating MetLife in December after the company announced it had lost track of tens of thousands of pensioners to whom the firm owed payments. MetLife had acquired the pension obligations from the retirees’ employers.

“The payments to individual retirees may seem small to MetLife, but for the retired nurses, salesmen, shipbuilders, grocery clerks and other seniors affected who are living primarily on Social Security, these payments were significant,” Galvin said in a statement.

Metlife told Providence Business News it is in the process of resolving the matter.

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“We self-identified and self-reported this issue to our regulator and to the public,” the company said in a statement Monday. “We have taken aggressive steps to locate unresponsive annuitants who are due funds and already have or will commence payment, including interest, once the necessary paperwork is complete.”

Galvin’s office made the charges in an administrative complaint seeking 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.

The case is expected to be handled by a state-appointed hearings officer. A date for a hearing has not yet been set, said Galvin spokeswoman Debra O’Malley.

She said Massachusetts is the only state so far to bring such a complaint against MetLife.

New York-based MetLife is one of the world’s largest providers of insurance annuities and employee benefits programs.

Galvin’s complaint states that MetLife did not take reasonable steps to notify plan participants when their pensions were initially transferred. After the transfer, the company’s only contact with the pensioners was two form letters, sent more than five years apart, to those owed payments.

Galvin’s office said the company designated retirees who did not respond to the notices sent to the addresses on file as “presumed dead.”

Once a retiree was presumed dead, the money to which that person was entitled was no longer held in reserve by the company and became assets of MetLife, which were reported in the company’s public filings, the complaint states. It states those reserves should not have been released and it resulted in misleading financial statements that inflated MetLife’s bottom line.

Under the pension plans, Galvin said, MetLife was responsible for reserving enough money to make payments to Massachusetts pensioners, whose average age was 72.

“MetLife has an obligation to provide truthful statements in its public filings. They did not,” Galvin said.

“Shareholders and investors were denied the ability to rely on MetLife’s public statements,” he added. “My action today is based on the misleading statements as to MetLife’s financial condition.”

Scott Blake is a PBN staff writer. Email him at Blake@PBN.com

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