Lawsuit Against MetLife: Nearly $1 Billion in Penalties

Since 2000, lawsuits against MetLife have produced close to $1 billion in recorded settlements, fines, and restitution. The cases fall into a handful of recurring patterns: failing to pay benefits owed to policyholders and beneficiaries, charging nonwhite customers more for life insurance, defrauding federal programs, discriminating against employees, denying disability claims, and miscalculating pensions. Below is what each of the major actions involved and what it cost the company.

Failure to Pay Benefits Owed

The single largest cluster of penalties against MetLife concerns money the company held onto instead of paying out.

New York DFS Consent Order: $208.75 Million

In January 2019, the New York Department of Financial Services entered a consent order finding that MetLife had failed to locate and pay benefits to thousands of its insureds between 1992 and 2017, particularly holders of group annuity contracts. The company had unlawfully released reserves on 13,712 in-force group annuity certificates, later forcing a reserve increase of more than $500 million.¹

DFS found that MetLife did not cross-check its records against the Social Security Death Master File for annuitants with missing or invalid Social Security numbers, did not confirm deaths of insureds, and did not conduct timely outreach to beneficiaries. It also cited inaccurate fee comparisons during variable annuity replacements. The total impact was $208.75 million: a $19.75 million civil fine plus more than $189 million in retroactive benefits, of which $123 million had already been paid by the time of the order. MetLife was required to hire a third-party servicer to locate unpaid beneficiaries.¹²

SEC Accounting Controls Case: $10 Million

In December 2019, the SEC charged MetLife with violating books-and-records and internal accounting controls provisions of federal securities laws. The agency found that MetLife had improperly released annuity benefit reserves because it lacked adequate processes for locating unresponsive annuitants, inflating reported income, and separately overstated reserves for variable annuity guarantees because of data mistakes and models that failed to incorporate policyholder withdrawals. MetLife paid a $10 million civil penalty and made accounting adjustments that included a $510 million reserve increase and an $896 million reserve reduction to correct the respective errors.³

Securities Class Action: $84 Million

The same underlying facts drove a securities class action. In 2012, the City of Westland Police and Fire Retirement System sued MetLife in the Southern District of New York, alleging the company misled shareholders by underreporting life insurance death benefit liabilities. The complaint said MetLife used the Social Security Death Master File to stop annuity payments to deceased policyholders but did not use it to identify death benefits owed to beneficiaries, producing financial statements that hid the company’s true exposure.⁴

Judge Lewis Kaplan partially dismissed the case in 2016 but allowed the Securities Act claims to proceed on the theory that MetLife’s opinions about the adequacy of its reserves were misleading given what the company knew.⁵ The parties filed a proposed $84 million settlement in 2020. MetLife admitted no wrongdoing.⁴

Retained Asset Accounts

MetLife was among several insurers scrutinized for depositing death benefit proceeds into company-controlled “retained asset accounts” instead of promptly paying beneficiaries. The insurer invested the pooled funds and kept the returns, which by some estimates generated $100 million to $300 million a year for MetLife.⁶

In Clark v. Metropolitan Life Insurance Co., a Nevada federal judge dismissed the plaintiff’s claims in 2011 because MetLife had paid above-market interest rates and no damages could be shown, but described MetLife’s marketing of its “Total Control Account Money Market Option” as “inherently deceptive,” saying an ordinary person would be misled into thinking the account was FDIC-insured. Insurance regulators in Nevada, California, and Georgia expanded their examinations of insurer disclosure and payment practices in response.⁶ Separately, in 2019, MetLife reached an $80 million settlement over claims it held ERISA-governed death benefits in company accounts to earn interest rather than paying beneficiaries.⁷

Race-Based Insurance Pricing: $160 Million

MetLife’s largest single settlement resolved a class action alleging the company charged nonwhite customers higher premiums than white customers on life insurance policies issued between 1901 and 1972. The “burial insurance” policies at issue used race-based mortality tables. Nonwhite customers were also required to undergo medical exams and background checks that white customers were not, and they generally received lower benefits for the premiums they paid.⁸

A federal judge in New York approved a settlement of up to $160 million covering roughly 1.8 million policies. Eligible policyholders received payments between $20 and $892 in cash or increased life insurance coverage. MetLife admitted no wrongdoing. Although the company began phasing out these pricing formulas in 1948, some policies issued under the old system stayed in force into the 1980s and 1990s.⁸⁹

Employment Discrimination

Race Discrimination Against Financial Services Representatives: $32.5 Million

In May 2015, lead plaintiff Marcus Creighton filed a class action in the Southern District of New York alleging MetLife Securities steered lucrative accounts and business opportunities away from Black financial services representatives, excluded them from favorable team arrangements, and denied them equal access to the company’s “Delivering the Promise” training program. The complaint described a “nearly all-white” management team.¹⁰

Judge William Pauley III approved a $32.5 million settlement in mid-2017. The class included about 690 Black U.S.-based financial services representatives who worked for MetLife or New England Life Insurance Co. between May 2011 and July 2016. Of the fund, $25.35 million went to class members, with payments tied to employment duration and individual experiences. Creighton received $75,000 and six additional named plaintiffs received $50,000 each; class counsel Stowell & Friedman was awarded $7.15 million.¹⁰

Gender Discrimination in Sales Force: $10 Million

In 2001, five women including sales representatives Stella Mitchell and Janet Ramsey filed a class action in Manhattan federal court alleging systemic gender discrimination in MetLife’s national sales force. Women were about 25% of the 6,000 sales representatives but held only 7% of branch manager or managing director positions, and none of the seventeen regional or zone vice presidents were women. Ramsey said she was told a regional manager position was “rough” and that she “wouldn’t be able to handle it as a woman.”¹¹

A consent decree approved in November 2003 required MetLife to pay $5 million to plaintiffs and the class and commit another $5 million to programs aimed at increasing female representation in its Financial Services Division. The three-year decree required an independent monitor, a written complaint procedure, HR generalists, anti-discrimination training, and benchmarks for female representation in management.¹²¹³

Fraud Against Federal Programs

FHA Mortgage False Claims: $123.5 Million

In February 2015, MetLife Home Loans LLC, as successor to MetLife Bank N.A., paid $123.5 million to resolve a Department of Justice False Claims Act suit. The company admitted that between September 2008 and March 2012 it knowingly originated and underwrote FHA-insured mortgages that failed to meet HUD requirements.¹⁴

Its own internal quality control reviews flagged the problem. Between January 2009 and August 2010, the share of loans MetLife categorized as having “material/significant” deficiencies ranged from 25% to over 60%. Of 1,097 FHA-insured loans with significant findings between 2009 and 2011, MetLife self-reported only 321 to HUD, frequently downgrading findings from “significant” to “moderate.”¹⁴

Medicare Claims Manipulation: $76 Million

In June 2002, MetLife subsidiary General American Life Insurance paid $76 million to settle a whistleblower suit alleging it defrauded Medicare. Acting as a Medicare Part B claims processor for Missouri between the mid-1980s and 1998, General American allegedly manipulated claims data during government audits, deleting claims selected for review and replacing them with satisfactory files, hiding documents, altering records, and falsifying mandatory reports. Prosecutors said the scheme helped the company climb from 38th among Medicare carriers in 1984 to 2nd by 1986. Former employees Harry and Nancy Riggs, who filed the suit, received $14.4 million. General American also agreed not to seek Medicare business for five years.¹⁵¹⁶

Disability Claim Denials

MetLife has been one of the most frequently sued insurers for denying long-term disability claims. The Supreme Court’s leading ERISA conflict-of-interest decision bears the company’s name. In Metropolitan Life Insurance Co. v. Glenn (2008), the Court held that when an insurer both evaluates claims and pays benefits, that dual role is an inherent conflict of interest that must be weighed as a factor in deciding whether a denial was an abuse of discretion. In the case before it, MetLife had encouraged the claimant to apply for Social Security disability benefits (which would offset MetLife’s payments), then ignored the Social Security Administration’s favorable ruling when deciding whether the claimant qualified under the plan, while emphasizing medical evidence that supported denial and downplaying evidence that supported the claim.¹⁷

Individual cases continue to draw judicial criticism. In Tash v. Metropolitan Life Insurance Company, a federal court in California found MetLife had abruptly stopped paying benefits to a dentist in 2012 without a written explanation or denial letter. Despite a settlement agreement requiring a decision within 45 days, MetLife did not submit the claimant’s file to a reviewing physician until after suit was filed more than two years later. The court ordered MetLife to pay all past-due benefits with interest and instructed the company to keep paying unless it issued a fully ERISA-compliant denial.¹⁸

Pension Miscalculation: $23 Million

In Masten et al. v. Metropolitan Life Insurance Co., filed in December 2018 in the Southern District of New York, retirees alleged MetLife violated ERISA by using mortality tables from the 1970s and 1980s to calculate joint and survivor annuity payments, producing lower monthly checks than they were owed. The outdated tables underestimated retiree lifespans, meaning the alternate benefit options were not “actuarially equivalent” to the default single-life annuity.¹⁹

The case was certified as a class action, survived a motion to dismiss, and after mediation failed reached a $23 million settlement on the eve of a February trial. MetLife agreed to increase monthly pension benefits for affected retirees.²⁰²¹

Kickbacks and Unlicensed Sales

In April 2010, MetLife entered a non-prosecution agreement and paid $13.5 million to resolve a federal investigation into hidden payments to a San Diego insurance brokerage. Working with the Department of Labor, FBI, and IRS, the U.S. Attorney’s Office for the Southern District of California found MetLife made undisclosed payments to the brokerage and its CEO to induce them to recommend MetLife products. The payments were disguised as “communication fees,” “RFP fees,” or “enrollment fees,” generally passed on to policyholders through higher rates, and never reported to the Department of Labor or the IRS as ERISA required.²²

In March 2014, the New York DFS fined MetLife $60 million ($50 million to the DFS and $10 million to the Manhattan District Attorney) for soliciting insurance business in New York without proper licenses and making intentional misrepresentations to regulators. MetLife subsidiaries American Life Insurance Company (ALICO) and Delaware American Life Insurance Company had collected roughly $900 million in premiums from multinational corporations between 2007 and 2012 through unlicensed New York-based sales representatives who conducted “road shows” to solicit group insurance products.²³

Overtime, 401(k), and Sanctions

In February 2017, two employees filed a class action, Julian v. MetLife, Inc., in the Southern District of New York, alleging the company denied overtime to hundreds of Long Term Disability Claim Specialists who worked 45 to 60 hours a week. The plaintiffs said MetLife reclassified them as exempt in November 2013 as a cost-cutting move even though their duties, which involved gathering information, data entry, and consulting with supervisors, did not qualify for the exemption. Judge Alison Nathan granted conditional certification of a nationwide class in March 2018. The suit sought over $50 million in lost wages and liquidated damages, and the parties reached a settlement in February 2022.²⁴²⁵

Kohari v. MetLife Group, Inc., a class action alleging MetLife breached its ERISA fiduciary duties by including affiliated investment options in its own employee 401(k) plan and failing to properly monitor fees and performance, produced a $4.5 million settlement covering participants from July 2015 to December 2021, with a fairness hearing scheduled for January 2025.²⁶

And in November 2024, OFAC announced a $178,421 settlement with ALICO for 2,331 apparent violations of Iran sanctions. ALICO had provided insurance policies to entities in the United Arab Emirates that were owned or controlled by the Government of Iran. OFAC determined the violations were voluntarily self-disclosed and not egregious.²⁷

1
New York Department of Financial Services. DFS Fines MetLife for Failure to Locate and Pay Benefits
2
Yahoo Finance. DFS Fines MetLife $19.75 Million
3
U.S. Securities and Exchange Commission. SEC Charges MetLife for Accounting Controls Violations
4
Insurance News Net. MetLife Agrees to Pay $84M in Death Master File Settlement
5
A&O Shearman. Southern District of New York Allows Securities Act Claims to Proceed
6
InvestmentNews. MetLife’s Marketing of Asset Accounts Deceptive, Judge Says
7
ThinkAdvisor. MetLife Reaches $80M Settlement on Claims It Held ERISA Death Benefits to Reap Interest
8
Tampa Bay Times. MetLife to Pay for Bias in Rates
9
The New York Times. MetLife Is Settling Bias Lawsuit
10
Stowell & Friedman. MetLife Gets Approval for $32.5M Race Bias Settlement
11
The New York Times. Five Women Sue MetLife, Charging Bias in Promotions
12
Civil Rights Litigation Clearinghouse. Mitchell v. Metropolitan Life Insurance
13
DHKL Law. Mitchell v. Met Life
14
U.S. Department of Justice. MetLife Home Loans LLC to Pay $123.5 Million to Resolve Alleged False Claims
15
U.S. Department of Justice. General American Life Insurance Company Settlement
16
Chicago Tribune. MetLife Unit Settles Fraud Charges for $76 Million
17
Justia. Metropolitan Life Insurance Co. v. Glenn, 554 U.S. 105
18
Nick Ortiz Law. Tash v. MetLife: Court Holds That MetLife Undermined the ERISA Process
19
Plan Sponsor. MetLife Settles Mortality Table ERISA Lawsuit for $23M
20
Plan Adviser. $23M Settlement Ends MetLife’s Mortality Table Case
21
Law360. MetLife to Boost Pensions in $23M Mortality Data Suit Deal
22
FBI. MetLife Non-Prosecution Agreement Announcement
23
New York Department of Financial Services. DFS Fines MetLife $50 Million for Unlicensed Insurance Operations
24
Sanford Heisler Sharp McKnight. MetLife Overtime Pay Violation Class Action
25
Law360. MetLife Reaches Deal With Claims Specialists in OT Suit
26
Claim Depot. MetLife 401(k) Plan Settlement
27
U.S. Department of the Treasury OFAC. OFAC Settlement With ALICO