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Litigation Update: Court Dismisses $14.5 Billion Case Against Life Insurers

Posted By Administration, Thursday, May 30, 2019

On April 3, 2019, New York Supreme Court Justice Andrea Masley granted a motion to dismiss by defendant life insurers in Total Asset Recovery Services LLC v. Met Life Inc., a whistleblower (qui tam) case brought by audit firm Total Asset Recovery Services on behalf of the state of New York. 

 

Filed in 2010 and amended by TARS in 2011 and 2017 under the New York False Claims Act, the case alleged that nearly a dozen life insurance companies failed to escheat to the state unclaimed funds held under mature life insurance policies. The plaintiff alleged more than $14.5 billion in damages.

 

TARS based its claim, in part, on the defendant life insurers’ alleged failure to use the Social Security Administration’s Death Master File to locate beneficiaries of deceased insureds and to report and escheat to the state funds that had not been claimed by the beneficiaries. However, the court pointed out in its ruling that insurance companies had no obligation to search the DMF when the case brought in 2010. New York did not require such searches until April 2012. 

 

“TARS’ assertion that death alone, not proof of death triggers the three-year dormancy period of escheatment requirement… lacks merit. The pleadings do not allege that any of the defendants received notice and proof of death of any insureds,” the court wrote. 

 

The court also denied a request to amend its pleading, saying it had already done so twice and “any further amendment would be futile.” 

 

Created and maintained by the Social Security Administration, the Death Master File has been a controversial tool. Government agencies and private businesses rely on the DMF to verify the death of U.S. citizens, but questions about its accuracy and, thus, reliability continue to make it a contentious issue among insurers, consumers, government agencies and politicians. Life insurers’ use of the DMF has been a source of debate, scrutiny, litigation and regulation in recent years.

Tags:  Death Master File  DMF  qui tam  whistleblower 

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