MetLife is one of the largest insurance companies in the world, with roughly 90 million customers worldwide. The company offers life insurance, annuities, homeowner’s insurance, and automobile insurance.
On June 8, 2020, the insurance company reached an $84 million settlement with shareholders after 8 years of litigation.
Let’s take a look at the lawsuit and the settlement, as well as when an insured individual might sue a major insurance company like MetLife.
MetLife class-action lawsuit
On January 12, 2012, a class-action lawsuit was filed against MetLife.
The class-action lawsuit was filed on behalf of almost everyone who purchased MetLife stock during certain periods of time between 2010-2011.
In essence, the lawsuit alleged that MetLife misled shareholders by underreporting its death benefit liabilities.
What exactly does this mean?
The Social Security Administration (SSA) maintains a Death Master File, which is a record of all deaths that have been reported to the SSA.
Plaintiffs in the MetLife class-action lawsuit alleged that MetLife failed to include data from the Death Master File when calculating the amount of life insurance claims that the company would have to payout in the near future (i.e., claims that had not yet been filed but would need to be paid eventually).
The class-action lawsuit also alleged that MetLife failed to disclose active regulatory investigations into its misuse of the SSA death database.
The lawsuit alleged that as a result of MetLife's misrepresentations, people who bought MetLife stock during 2010-2011 did so at an artificially high price. Later, when all of these facts came to light, MetLife’s stock price dropped and shareholders who had bought stock suffered losses.
Metlife class action settlement
On June 8, 2020, after 8 years of litigation, MetLife agreed to settle the claims against it for $84 million. The $84 million will be distributed to eligible members of the class-action lawsuit, which include:
- Individuals who purchased MetLife common stock in the company’s August 3, 2010 offering at $42.00 per share or the company’s March 4, 2011 offering at $43.25 per share, and
- Individuals who acquired MetLife common stock between February 9, 2011, and October 6, 2011.
To receive a payment from the settlement, eligible class members were required to submit a “proof of claim” by February 26, 2021.
Notably, MetLife refused to admit any wrongdoing.
“For Defendants, the principal reason for entering into the settlement is to eliminate the uncertainty, risk, costs, and burdens inherent in any litigation, especially in complex cases such as this litigation,” settlement documents say.
When to sue an insurance company (and how)
The class-action lawsuit described above was filed by shareholders against MetLife. However, there are certain situations in which people who are insured by Metlife or any other insurance company can file a lawsuit against the insurer.
Insurance companies owe a duty to their insureds to act in good faith. This means that your insurance company is required by law to deal with you (the insured) honestly and fairly so that you can receive the benefits of the insurance contract.
Examples of actions that are considered dishonest or unfair include:
- Making an unfounded refusal to pay police proceeds (i.e., wrongfully denying a claim)
- Causing an unfounded delay in making payment
- Deceiving the insured
- Exercising any unfair advantage to pressure an insured into a settlement
If your insurance company acts dishonestly or unfairly, you may be able to file a bad faith lawsuit against your insurance company to recover damages.
Here are some steps you should take if you want to pursue an insurance bad faith claim:
- Review your insurance contract. If you believe your insurance company is doing something wrong, request a copy of your full insurance policy so that you can review it to make sure the issue your having isn't addressed in the policy.
- Maintain a record of every correspondence. Keep all correspondence between you and your insurance company in a safe place. Additionally, keep a log of each telephone call you make with the insurance company (date and time, nature of the conversation, name of the person you talked to, etc.).
- Appeal a claim. If you believe you received a wrongful denial, you can request a review. Though the chances the outcome will change are relatively small, it's possible you'll be able to avoid costly litigation by making this simple request.
- Make a demand. If your insurance company is still acting wrongfully, send your insurance company a letter (send it “certified with return receipt requested” so you have proof it was received) explaining that you plan to take legal action if the issue isn't resolved immediately.
- Hire an attorney. Use our free online directory to find an experienced insurance bad faith attorney near you and schedule an initial consultation. An attorney can settle the matter or file a lawsuit if necessary.