MET MetLife Inc

By Leslie Scism 

When Nicole Herivaux was born at Coney Island Hospital in New York in 1980, doctors made a mistake that left one of her arms useless.

Ms. Herivaux's family sued and reached a settlement on the infant's behalf. It provided $2,200-a-month in lifetime income paid out by an insurance firm, and lump sums of as much as $200,000 were sprinkled in to help, say, with college costs.

This money was supposed to be paid into specified banks until Ms. Herivaux was 18, with court approval needed for its spending. But according to a lawsuit in a New York state court, MetLife Inc. mistakenly began sending checks directly to her mother when Nicole was 15, and her mother passed on to Nicole just a portion of the proceeds from thereon.

The suit alleges the mother hid from her daughter the full size of the settlement. Now 37, Nicole lives in a cheap apartment in Detroit, has $30,000 in student debt and sometimes relies on free-food pantries.

"I could have done so many different things with my life" had she received the full proceeds, Ms. Herivaux said in an interview.

Her mother, Marie Herivaux, didn't respond to repeated efforts to contact her.

MetLife suspended payments on the annuity last year after the litigation began and says in court filings it will dispatch the money to the younger Ms. Herivaux if the court tells it to do so. MetLife declined to comment.

In its filings, MetLife is seeking to get the lawsuit dismissed for reasons including that it wasn't party to the original transaction in 1983. It assumed responsibility for the structured-settlement annuity in a 1995 transaction. MetLife also maintains no evidence has been introduced that it ever was instructed to directly pay Nicole Herivaux.

Ms. Herivaux's lawyer David Jaroslawicz says the 1983 court order and settlement are clear enough that the money was intended for Nicole. MetLife is to file more responses this week.

The lawsuit is the latest example of an unexpected problem popping up at MetLife from decades-old business. The suit has been unfolding in a New York County courthouse as the company has publicly acknowledged failing to pay benefits to 13,500 retirees in its business of taking on responsibility for private-sector pension plans. Some of those payments date to the 1990s.

MetLife has said it failed to aggressively search for people as they neared pension-eligibility age. The 13,500 represent about 2% of the 600,000 retirees in MetLife's pension-risk-transfer business.

Earlier, in 2012, MetLife was one of many insurers to settle multistate regulatory probes into unclaimed death benefits. Some of those policies were issued in the early 1900s. MetLife didn't admit any wrongdoing and emphasized that the overdue policies represented only a tiny fraction of its policy count.

Industry analysts and consultants say it is understandable that MetLife would have mistakes lurking in older business, because there is so much of that on its books as a company tracing its roots to the 1860s. Improved technology makes widespread errors less likely on newer business at MetLife and elsewhere, they say.

The pension matter prompted a global review focused on other potential unclaimed property and missing participants. On Feb. 14, MetLife Chief Executive Steven Kandarian told analysts he doesn't believe any significant problems of that type remain. "We made sure we had the resources within countries and regions to put all necessary people against this review to get to the right answers," he said.

The use of structured-settlement annuities to resolve injury cases such as Ms. Herivaux's, grew dramatically in the 1980s. Lawyers representing injured minors often prefer them for paying out large settlements in medical-malpractice and catastrophic accidents. The money often is routed through a guardian until the person turns 18.

Peter Arnold, who runs a consulting group in Washington that advises on structured settlements, said a settlement typically spells out what happens when the child turns 18, and if it isn't clear, that can be a point of contention.

Before MetLife entered the scene in Ms. Herivaux's instance, payments were deposited in banks in the name of her mother "as guardian," according to filings for New York City and the New York City Health and Hospitals Corp., which are being sued along with MetLife. Between 1984 and July 1995 the court approved withdrawals for such things as medical and living expenses, private-school tuition, and the 1991 purchase of a Florida home for $140,828, in Nicole's name, filings show.

After MetLife took responsibility for the annuity, "the proper payee mysteriously changed," the city's filings state. The city maintains it properly obtained the annuity in 1983 and opposes MetLife's effort to dismiss the lawsuit.

Several years ago, Nicole spotted a $2,200 MetLife check made out to her mother, and she began putting the pieces together, she alleges in court. She tracked down the lawyer who handled the 1983 medical-malpractice lawsuit.

"It was just incredible to me" that Nicole hadn't been getting all of the money, said the lawyer, Michael Wolin, who had last seen her as an infant. "Especially when she told me of the financial hardships."

In years past, Nicole said she had sometimes borrowed from her mother. "The ironic thing was I was paying back myself," she said.

Write to Leslie Scism at leslie.scism@wsj.com

(END) Dow Jones Newswires

February 21, 2018 05:44 ET (10:44 GMT)

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