Keane's Unclaimed Property Blog

Life Insurance Companies Score Big Win in NY Qui Tam Action

NY Supreme Court Win for Life Insurers in $14 Billion Whistleblower Case

On April 3, 2019, in Total Asset Recovery Services, LLC vs. Met Life Inc., No. 115336/2010 (NY Sup. Oct. 3, 2019), the Supreme Court of the State of New York, County of New York, granted a motion to dismiss in favor of defendant life insurance companies Prudential, John Hancock, and MassMutual, and others, in a qui tam lawsuit alleging over $14.5 billion in damages.

Plaintiff-relator and auditor Total Asset Recovery Services, LLC (“TARS”) brought the action on behalf of the state of New York in 2010 under the New York False Claims Act, alleging that from April 1, 1986 to September 10, 2017, the life insurance companies knowingly failed to report and escheat unclaimed life insurance policy proceeds.  The NY Attorney General declined to intervene in the case.

TARS asserted that death alone, not proof of death, triggered the running of the 3 year dormancy period for life insurance proceeds under Section 700 of the NY abandoned property law.   However, New York did not require life insurance companies to actively search the Death Master File (“DMF”) until April 2012.   As such, Justice Andrea Masley held that TARS “fail[ed] to (1) identify facts specifically relating to defendants and their fraudulent conduct, (2) identify the specific false reports that were submitted by defendants to the State, or (3) allege facts establishing that defendants knew that they submitted false unclaimed property reports to the state.” (Id. at 25).

The Court also denied TARS’s request to further amend the pleading as it had already amended the complaint twice before.  TARS and the New York Attorney General have 30 days to file a notice of appeal.

Click here for the Opinion:

Insurance, Litigation

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