MetLife Wins Dismissal of Beneficiary’s Lawsuit

A federal judge threw out a lawsuit claiming MetLife Inc. unfairly profited from the account of a policy beneficiary, while saying the company-described money-market account the life insurer uses to pay claims has an “inherently deceptive” name.

Plaintiff Jamie Clark didn’t prove she had a “special or confidential relationship” with the company required to advance the case, U.S. District Judge Larry Hicks in Reno, Nevada, said in a ruling yesterday. Clark, who sought class-action status on behalf of other beneficiaries, claimed that MetLife earned a greater return on the money it owed her than what it paid.

“Clark argues that a confidential and special relationship arose between her and MetLife when MetLife undertook to invest her insurance proceeds and pay her all earnings and gains,” Hicks wrote. “The court finds that there is no evidence that Clark had any ties with MetLife that could rise to such a special relationship.”

Bruce Clark bought a MetLife life insurance policy in 1995 naming his daughter, Jamie, one of his beneficiaries. Bruce Clark died in 2006, and rather than pay the death benefit of $50,000 that MetLife determined was due to Jamie, the insurer retained the sum and paid her a “relatively insignificant rate of interest,” which was less than it earned by keeping the money in its own accounts, according to the complaint.


The U.S. Department of Veterans Affairs and New York Attorney General Andrew Cuomo started investigations of life-insurance industry practices after Bloomberg Markets reported in July that carriers profit by holding and investing $28 billion owed to beneficiaries. The insurers earn hundreds of millions of dollars a year in investment gains on the death benefits, including those due to families of U.S. military service members killed in combat in Iraq and Afghanistan.

Hicks did determine that Metlife’s Total Control Money Market Account Option, used to pay survivors their life insurance proceeds is “inherently deceptive” because it suggests the account is covered by FDIC insurance. MetLife keeps billions of dollars of its life insurance beneficiaries’ money in its general account, and sends them “checkbooks” instead of checks as it earns investment gains on their money.

Breach of Contract Claim

Hicks wrote that the account name is “inherently deceptive because it gives the beneficiary the impression that the account is either a money market account or is associated with a money market account, and contains the same benefits and protections that a money market account offers, namely that the account is insured by the Federal Deposit Insurance Corporation (FDIC) if Metlife was to become insolvent and file for bankruptcy.”

The court also found the relationship between MetLife and the retained asset account holder was “one of debtor-creditor,” without addressing how that would affect availability of the state guarantee fund if MetLife failed.

Hicks found that a reasonable person would be under the impression they had a money market account, or an account with money market protections.

The court said it awarded summary judgment to Metlife on the breach of contract claim because Clark admitted never reading or relying on the Metlife contract, nor understanding what a money market account is. Hicks also found that Clark, of Reno, Nevada, failed to prove damages.

Curtis Coulter, a lawyer representing Jamie Clark, didn’t return a call seeking comment after regular business hours yesterday.

Christopher Breslin, a spokesman for New York-based MetLife, also didn’t return a call seeking comment.

In July, New York Attorney General Andrew Cuomo opened a fraud probe into the accounts. The Georgia and New York insurance departments also began probes of these practices. The U.S. Department of Veterans Affairs said it would review its own insurance program, and the U.S. House Oversight and Reform Committee said it would investigate insurance benefits for 6 million U.S. soldiers.

The case is Jamie Clark v. Metropolitan Life Insurance Co., 3:08-cv-00158, U.S. District Court for Nevada (Reno).