MetLife, Brighthouse Sued Over $500M Annuity Biz, Lost Clients (1)

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By Carmen Castro-Pagan

MetLife Inc. and its annuity and life insurance arm Brighthouse Financial Inc. are in the crosshairs of a new lawsuit challenging the conversion of more than $500 million in retirement benefits over the past 25 years, which allegedly deprived 30,000 retirees of their income.

MetLife systematically took ownership of the retirees’ annuity assets, ultimately releasing more than $500 million in reserves that belonged to them and taking the money for itself, according to a lawsuit filed June 18 in the U.S. District Court for the Southern District of New York. MetLife acknowledged that for the past 25 years, it failed to keep track of the retirees, failed to contact them, and failed to pay them their benefits when due, the lawsuit said.

MetLife is reviewing the lawsuit and will defend itself vigorously, a company spokeswoman told Bloomberg Law June 19.

The lawsuit comes four months after MetLife, the largest annuity provider in the U.S., announced that it had failed during a 25-year period to distribute annuity pension benefits to 13,500 recipients.

The new lawsuit takes issue with MetLife’s procedures and protocols for notifying beneficiaries of their eligibility for retirement benefits. Between 13,500 and 30,000 retirees covered under MetLife’s group annuity contracts were never notified that they were eligible for benefits, the lawsuit says. MetLife’s notification procedures “appear designed to ensure that many beneficiaries will never be paid so that MetLife can convert annuity benefits to its own use,” the lawsuit says.

MetLife allegedly makes two attempts at contact—one at age 65 and the other at age 70.5, the lawsuit says. No additional efforts were made when the mailings were returned as undeliverable, it says. If the beneficiary didn’t respond to this “half-hearted outreach,” it was MetLife’s practice to convert the reserve for these benefits and treat the retirees’ benefits as income to itself, the lawsuit says.

The lawsuit was filed by former Martindale-Hubbell employee Edward Roycroft, who retired in 1999. As a beneficiary of a MetLife group annuity contract through his former employer, Roycroft was supposed to receive his benefits in 1999. MetLife didn’t pay Roycroft his benefits until January 2013, when it issued a check for $2,508 as a lump sum payment in lieu of a monthly annuity, the lawsuit says.

The four-count lawsuit includes claims of conversion and unjust enrichment. Roycroft seeks a court judgment that could exceed $500 million, according to the lawsuit. Roycroft also seeks a court order to hold an accounting with respect to all funds owed and the imposition of a constructive trust on the amount by which MetLife allegedly enriched itself.

Bailey & Glasser LLP and Berman Tabacco represent the beneficiaries.

The case is Roycroft v. MetLife, Inc., S.D.N.Y., No. 1:18-cv-05481, complaint filed 6/18/18.

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