MetLife 2013 Annual Report Download - page 214

MetLife, Inc.
Notes to the Consolidated Financial Statements — (Continued)
21. Contingencies, Commitments and Guarantees (continued)
investigations relating to residential mortgage servicing and foreclosure activities, or any fines, penalties, equitable remedies or enforcement actions
that may result, the costs of responding to any such governmental investigations, or other litigation. Management believes that the Company’s
consolidated financial statements as a whole will not be materially affected by these regulatory matters.
In the Matter of Chemform, Inc. Site, Pompano Beach, Broward County, Florida
In July 2010, the Environmental Protection Agency (“EPA”) advised MLIC that it believed payments were due under two settlement agreements,
known as “Administrative Orders on Consent,” that New England Mutual Life Insurance Company (“New England Mutual”) signed in 1989 and 1992
with respect to the cleanup of a Superfund site in Florida (the “Chemform Site”). The EPA originally contacted MLIC (as successor to New England
Mutual) and a third party in 2001, and advised that they owed additional clean-up costs for the Chemform Site. The matter was not resolved at that
time. The EPA is requesting payment of an amount under $1 million from MLIC and such third party for past costs and an additional amount for
future environmental testing costs at the Chemform Site. In June 2012, the EPA, MLIC and the third party executed an Administrative Order on
Consent under which MLIC and the third party have agreed to be responsible for certain environmental testing at the Chemform site. The Company
estimates that its costs for the environmental testing will not exceed $100,000. The June 2012 Administrative Order on Consent does not resolve
the EPA’s claim for past clean-up costs. The EPA may seek additional costs if the environmental testing identifies issues. The Company estimates
that the aggregate cost to resolve this matter will not exceed $1 million.
Metco Site, Hicksville, Nassau County, New York
On February 22, 2012, the New York State Department of Environmental Conservation (“Department of Environmental Conservation”) issued a
notice to MLIC, as purported successor in interest to New England Mutual, that it is a potentially responsible party with respect to hazardous
substances and hazardous waste located on a property that New England Mutual owned for a time in 1978. MLIC has responded to the
Department of Environmental Conservation and asserted that it is not a potentially responsible party under the law.
New York Licensing Inquiry
The Company continues to work with the Department of Financial Services and the Manhattan District Attorney’s Office regarding their inquiries
into whether from January 2007 to the present American Life and DelAm conducted insurance business in New York without a license and whether
representatives acting on behalf of these companies solicited, sold or negotiated insurance products in New York without a license. Additionally, the
New York State Office of the Attorney General Taxpayer Protection Bureau is inquiring concerning American Life and DelAm’s New York State
premium and franchise tax filings. The Company is cooperating with all regulators.
Sales Practices Regulatory Matters
Regulatory authorities in a small number of states and FINRA, and occasionally the SEC, have had investigations or inquiries relating to sales of
individual life insurance policies or annuities or other products by MLIC, MICC, New England Life Insurance Company (“NELICO”) and General
American Life Insurance Company (“GALIC”), and broker-dealers MetLife Securities, Inc. and New England Securities Corporation. These
investigations often focus on the conduct of particular financial services representatives and the sale of unregistered or unsuitable products or the
misuse of client assets. Over the past several years, these and a number of investigations by other regulatory authorities were resolved for monetary
payments and certain other relief, including restitution payments. The Company may continue to resolve investigations in a similar manner. The
Company believes adequate provision has been made in its consolidated financial statements for all probable and reasonably estimable losses for
these sales practices-related investigations or inquiries.
Unclaimed Property Litigation and Inquiries
In 2012, the Company reached agreements with representatives of the U.S. jurisdictions that were conducting audits of MetLife, Inc. and certain
of its affiliates for compliance with unclaimed property laws, and with state insurance regulators directly involved in a multistate targeted market conduct
examination relating to claim-payment practices and compliance with unclaimed property laws. In the first quarter of 2012, the Company recorded a
$52 million after tax charge for the multistate examination payment and the expected acceleration of benefit payments to policyholders under the
settlements. On September 20, 2012, the West Virginia Treasurer filed an action against MLIC in West Virginia state court (West Virginia ex rel. John D.
Perdue v. Metropolitan Life Insurance Company, Circuit Court of Putnam County, Civil Action No. 12-C-295) alleging that the Company violated the
West Virginia Uniform Unclaimed Property Act, seeking to compel compliance with the Act, and seeking payment of unclaimed property, interest, and
penalties. On November 14, 2012, November 21, 2012, December 28, 2012, and January 9, 2013, the Treasurer filed substantially identical suits
against MLI-USA, NELICO, MICC and GALIC, respectively. On December 30, 2013, the court granted defendants’ motions to dismiss all of the West
Virginia Treasurer’s actions. The Treasurer has filed a notice to appeal the dismissal order. At least one other jurisdiction is pursuing a 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 Florida v. MetLife, Inc., et. al. (Cir. Ct. Leon County, FL, filed October 27, 2010)
Alleging that MetLife, Inc. and another company have violated the Florida Disposition of Unclaimed Property law by failing to escheat to Florida
benefits of 9,022 life insurance contracts, Total Asset Recovery Services, LLC (“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 attributable to MetLife, Inc., including statutory damages and treble damages, are $767 million. 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 “...areverysimilar(ifnotidentical)to
those raised in regulatory investigations of the defendants that predated the filing of the action” and that those regulatory investigations have been
resolved. On August 20, 2013, the court granted defendants’ motion to dismiss the action. The Relator has appealed the dismissal.
206 MetLife, Inc.