U.S. District Judge Michael Ponsor, a Massachusetts federal judge gave preliminary approval last month to a $39.2 million settlement in a consolidated class action alleging Prudential Insurance Co. of America failed to pay death benefits to military service members, veterans and their families under a group life insurance program. The Plaintiffs claimed that Prudential didn’t pay lump sum death benefits under several group life insurance policies as required by law. Instead, Prudential provided military service members, veterans and other beneficiaries with an interest-bearing retained asset account.
The consolidated class claimed the accounts amounted to a breach of contract and various tort law claims were alleged. The bulk of the proposed settlement will come in $20.5 million of charitable donations over the next five years from Prudential to an organization focusing on veteran or military causes of the company’s choice. About $8.4 million will go into a common fund escrow account to provide cash payments to settlement class members.
The Plaintiffs said in a memorandum that “(t)he settlement closely tracks the goals of the Plaintiffs and the settlement class members they represent.” Ponsor signed off on the settlement on Aug. 5, saying it was a reasonable agreement and the class should be notified about the proposal. He stated:
The court finds that the agreement between representative plaintiffs and Prudential was entered into at arm’s length by experienced counsel for the parties and only after extensive negotiations.
It’s estimated that there will be approximately 67,000 class members in the settlement class, each of whom will receive a $125 check if they don’t opt out of the approved settlements. The consolidated suit stems from four cases filed across the country over the Prudential asset accounts. The first suit, filed in Massachusetts in July 2010, alleged Prudential only paid military families one percent interest on the unpaid balance of their life insurance benefits when in fact the company was earning more than 5.69 percent interest by investing the money.