MetLife 2012 Annual Report Download - page 206

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
January 9, 2013, the Treasurer filed substantially identical suits against MetLife Investors USA Insurance Company, New England Life Insurance
Company, MetLife Insurance Company of Connecticut and GALIC, respectively. At least one other jurisdiction is pursuing a similar market conduct
examination concerning compliance with unclaimed property statutes. It is possible that other jurisdictions may pursue similar examinations, audits, or
lawsuits and that such actions may result in additional payments to beneficiaries, additional escheatment of funds deemed abandoned under state laws,
administrative penalties, interest, and/or further changes to the Company’s procedures. The Company is not currently able to estimate these additional
possible costs.
Total Asset Recovery Services, LLC on behalf of the State of Minnesota v. MetLife, Inc., et. al. (Dist. Court, County of Hennepin, MN, filed
January 31, 2011)
Alleging that MetLife, Inc. and another company violated the Minnesota Uniform Disposition of Unclaimed Property Act by failing to escheat to
Minnesota benefits of 584 life insurance contracts, the Relator brought an action under the Minnesota False Claims Act seeking to recover damages on
behalf of Minnesota. The action was sealed by court order until March 22, 2012. The Relator alleged that the aggregate damages, including statutory
damages and treble damages, are $228 million. The Relator did not allocate this claimed damage amount between MetLife, Inc. and the other
defendant. On December 31, 2012, the court granted motions by MetLife, Inc. and the other defendant to dismiss the action.
Total Asset Recovery Services, LLC on behalf of the State of Florida v. MetLife, Inc., et. al. (Cir. Ct. Leon County, FL, filed October 27, 2010)
Alleging that MetLife, Inc. and two other companies have violated the Florida Disposition of Unclaimed Property law by failing to escheat to Florida
benefits of 9,022 life insurance contracts, the Relator has brought an action under the Florida False Claims Act seeking to recover damages on behalf of
Florida. The action had been sealed by court order until December 17, 2012. The Relator alleges that the aggregate damages, including statutory
damages and treble damages, are $3.2 billion. The Relator does not allocate this claimed damage amount among MetLife, Inc. and the other
defendants. The Relator also bases its damage calculation in part on its assumption that the average face amount of the subject policies is $120,000.
MetLife, Inc. strongly disputes this assumption, the Relator’s alleged damages amounts, and other allegations in the complaint. On December 14, 2012,
the Florida Attorney General apprised the court that the State of Florida declined to intervene in the action and noted that the allegations in the complaint
“. . . are very similar (if not identical) to those raised in regulatory investigations of the defendants that predated the filing of the action” and that those
regulatory investigations have been resolved. MetLife, Inc. intends to defend this action vigorously.
City of Westland Police and Fire Retirement System v. MetLife, Inc., et. al. (S.D.N.Y., filed January 12, 2012)
Seeking to represent a class of persons who purchased MetLife, Inc. common shares between February 2, 2010, and October 6, 2011, the plaintiff
filed an action alleging that MetLife, Inc. and several current and former executive officers of MetLife, Inc. violated the Securities Exchange Act of 1934
and Rule 10b-5 promulgated thereunder by issuing, or causing MetLife, Inc. to issue, materially false and misleading statements concerning MetLife,
Inc.’s potential liability for millions of dollars in insurance benefits that should have been paid to beneficiaries or escheated to the states. Plaintiff seeks
unspecified compensatory damages and other relief. The defendants intend to vigorously defend this action.
City of Birmingham Retirement and Relief System v. MetLife, Inc. et al. (N.D. Alabama, filed in state court on July 5, 2012 and removed to federal
court on August 3, 2012)
Seeking to represent a class of persons who purchased MetLife, Inc. common equity units in or traceable to a public offering in March 2011, the
plaintiff filed an action alleging that MetLife, Inc., certain current and former directors and executive officers of MetLife, Inc., and various underwriters
violated several provisions of the Securities Act of 1933 related to the filing of the registration statement by issuing, or causing MetLife, Inc. to issue,
materially false and misleading statements and/or omissions concerning MetLife, Inc.’s potential liability for millions of dollars in insurance benefits that
should have been paid to beneficiaries or escheated to the states. Plaintiff seeks unspecified compensatory damages and other relief. Defendants
removed this action to federal court, and plaintiff has moved to remand the action to state court. The defendants intend to defend this action vigorously.
Derivative Actions and Demands
Seeking to sue derivatively on behalf of MetLife, Inc., four shareholders commenced separate actions against members of the MetLife, Inc. Board of
Directors, alleging that they breached their fiduciary and other duties to the Company. The actions are Fishbaum v. Kandarian, et al. (Sup. Ct., New York
County, filed January 27, 2012), Batchelder v. Burwell, et al. (Sup. Ct., New York County, filed March 6, 2012), Mallon v. Kandarian, et al. (S.D.N.Y.,
filed March 28, 2012), and Martino v. Kandarian, et al. (S.D.N.Y., filed April 19, 2012). The two federal court actions have been consolidated and have
been stayed pending further order of the court. The two state court actions have been consolidated under the caption In re: MetLife Shareholder
Derivative Action and an amended complaint has been filed. Plaintiffs in all four actions allege that the defendants failed to ensure that the Company
complied with state unclaimed property laws and to ensure that the Company accurately reported its earnings. Plaintiffs allege that because of the
defendants’ breaches of duty, MetLife, Inc. has incurred damage to its reputation and has suffered other unspecified damages. The defendants intend
to defend these actions vigorously. A fifth shareholder, Western Pennsylvania Electrical Workers Pension Fund, has written to the MetLife, Inc. Board of
Directors demanding that MetLife, Inc. take action against current and former Board members, executive officers, and MetLife, Inc.’s independent
auditor, for similar alleged breaches of duty with respect to the Company’s compliance with unclaimed property laws and financial disclosures. The
MetLife, Inc. Board of Directors appointed a Special Committee to investigate these allegations. On September 24, 2012, counsel for the Special
Committee apprised this shareholder that the Board of Directors had reviewed the issues and rejected the demand.
Total Control Accounts Litigation
MLIC is a defendant in a consolidated lawsuit related to its use of retained asset accounts, known as Total Control Accounts (“TCA”), as a
settlement option for death benefits.
Keife, et al. v. Metropolitan Life Insurance Company (D. Nev., filed in state court on July 30, 2010 and removed to federal court on September 7,
2010); and Simon v. Metropolitan Life Insurance Company (D. Nev., filed November 3, 2011)
These putative class action lawsuits, which have been consolidated, raise breach of contract claims arising from MLIC’s use of the TCA to pay life
insurance benefits under the Federal Employees’ Group Life Insurance (“FEGLI”) program. As damages, plaintiffs seek disgorgement of the difference
between the interest paid to the account holders and the investment earnings on the assets backing the accounts. In September 2010, plaintiffs filed a
200 MetLife, Inc.