MetLife 2004 Annual Report Download - page 83

METLIFE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
whether any action alleging violations of the U.S. securities laws should be considered. MetLife continues to cooperate fully with the SEC in its
investigation.
The American Dental Association and two individual providers have sued MetLife, Mutual of Omaha and Cigna in a purported class action lawsuit
brought in a Florida federal district court. The plaintiffs purport to represent a nationwide class of in-network providers who allege that their claims are
being wrongfully reduced by downcoding, bundling, and the improper use and programming of software. The complaint alleges federal racketeering and
various state law theories of liability. MetLife is vigorously defending the case and a motion to dismiss has been filed and argued.
On November 16, 2004, a New York state court granted plaintiffs’ motion to certify a litigation class of owners of certain participating life insurance
policies and a sub-class of New York owners of such policies in an action asserting that Metropolitan Life breached their policies and violated New York’s
General Business Law in the manner in which it allocated investment income across lines of business during a period ending with the 2000
demutualization. Metropolitan has filed a notice of appeal from the order granting this motion. In August 2003, an appellate court affirmed the dismissal of
fraud claims in this action. Plaintiffs seek compensatory damages. Metropolitan Life is vigorously defending the case.
Regulatory bodies have contacted the Company and have requested information relating to market timing and late trading of mutual funds and
variable insurance products and, generally, the marketing of products. The Company believes that many of these inquiries are similar to those made to
many financial services companies as part of industry-wide investigations by various regulatory agencies. The SEC has commenced an investigation with
respect to market timing and late trading in a limited number of privately-placed variable insurance contracts that were sold through General American. As
previously reported, in May 2004, General American received a so called ‘‘Wells Notice’’ stating that the SEC staff is considering recommending that the
SEC bring a civil action alleging violations of the U.S. securities laws against General American. Under the SEC procedures, General American can avail
itself of the opportunity to respond to the SEC staff before it makes a formal recommendation regarding whether any action alleging violations of the
U.S. securities laws should be considered. General American has responded to the Wells Notice. The Company is fully cooperating with regard to these
information requests and investigations. The Company at the present time is not aware of any systemic problems with respect to such matters that may
have a material adverse effect on the Company’s consolidated financial position.
In October 2004, the SEC informed MetLife that it anticipates issuing a formal order of investigation related to certain sales by a former MetLife sales
representative to the Sheriff’s Department of Fulton County, Georgia. The Company is fully cooperating with respect to inquiries from the SEC.
The Company has received a number of subpoenas and other requests from the Office of the Attorney General of the State of New York seeking,
among other things, information regarding and relating to compensation agreements between insurance brokers and the Company, whether MetLife has
provided or is aware of the provision of ‘‘fictitious’’ or ‘‘inflated’’ quotes and information regarding tying arrangements with respect to reinsurance. Based
upon an internal review, the Company advised the Attorney General for the State of New York that MetLife was not aware of any instance in which MetLife
had provided a ‘‘fictitious’’ or ‘‘inflated’’ quote. MetLife also has received a subpoena, including a set of interrogatories, from the Office of the Attorney
General of the State of Connecticut seeking information and documents concerning contingent commission payments to brokers and MetLife’s
awareness of any ‘‘sham’’ bids for business. MetLife also has received a Civil Investigative Demand from the Office of the Attorney General for the State of
Massachusetts seeking information and documents concerning bids and quotes that the Company submitted to potential customers in Massachusetts,
the identity of agents, brokers, and producers to whom the Company submitted such bids or quotes, and communications with a certain broker. MetLife
is continuing to conduct an internal review of its commission payment practices. The Company continues to fully cooperate with these inquiries and is
responding to the subpoenas and other requests.
Approximately twelve broker related lawsuits have been received. Two class action lawsuits were filed in the United States District Court for the
Southern District of New York on behalf of proposed classes of all persons who purchased the securities of MetLife, Inc. between April 5, 2000 and
October 19, 2004 against MetLife, Inc. and certain officers of MetLife, Inc. In the context of contingent commissions, the complaints allege that
defendants violated the federal securities laws by issuing materially false and misleading statements and failing to disclose material facts regarding
MetLife, Inc.’s financial performance throughout the class period that had the effect of artificially inflating the market price of MetLife Inc.’s securities. Three
class action lawsuits were filed in the United States District Court for the Southern District of New York on behalf of proposed classes of participants in
and beneficiaries of Metropolitan Life Insurance Company’s Savings and Investment Plan against MetLife, Inc., the MetLife, Inc. Employee Benefits
Committee, certain officers of Metropolitan Life Insurance Company, and members of MetLife, Inc.’s board of directors. In the context of contingent
commissions, the complaints allege that defendants violated their fiduciary obligations under ERISA by failing to disclose to plan participants who had the
option of allocating funds in the plan to the MetLife Company Stock Fund material facts regarding MetLife, Inc.’s financial performance. The plaintiffs in
these actions seek compensatory and other relief. Two cases have been brought in California state court against MetLife, Inc., other companies, and an
insurance broker. One of these cases alleges that the insurers and the broker violated Section 17200 of the California Business and Professions Code by
engaging in unfair trade practices concerning contingent commissions and fees paid to the broker; the other case has been brought by the California
Insurance Commissioner and alleges that the defendants violated certain provisions of the California Insurance Code. Additionally, two civil RICO or
antitrust related class action lawsuits have been brought against MetLife, Inc., and other companies in California federal court with respect to issues
concerning contingent commissions and fees paid to one or more brokers. Three class action lawsuits have been brought in Illinois federal court against
MetLife, Inc. and other companies alleging that insurers and brokers violated antitrust laws or engaged in civil RICO violations. The Company intends to
vigorously defend these cases.
In addition to those discussed above, regulators and others have made a number of inquiries of the insurance industry regarding industry brokerage
practices and related matters and others may begin. It is reasonably possible that MetLife will receive additional subpoenas, interrogatories, requests and
lawsuits. MetLife will fully cooperate with all regulatory inquiries and intends to vigorously defend all lawsuits.
Metropolitan Life also has been named as a defendant in a number of silicosis, welding and mixed dust cases in various states. The Company
intends to defend itself vigorously against these cases.
Various litigation, claims and assessments against the Company, in addition to those discussed above and those otherwise provided for in the
Company’s consolidated financial statements, have arisen in the course of the Company’s business, including, but not limited to, in connection with its
activities as an insurer, employer, investor, investment advisor and taxpayer. Further, state insurance regulatory authorities and other federal and state
authorities regularly make inquiries and conduct investigations concerning the Company’s compliance with applicable insurance and other laws and
regulations.
MetLife, Inc.
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