The Social Security Administration’s “Death Master” File sounds like something that is guarded by a specter resembling the Ghost of Christmas Yet To Come, but it’s really just a list of everyone who has recently moved on to another plane of existence. Regardless, the nation’s largest life insurance company is now on the hook for $500 million after being accused of using the Death Master File for its own benefit while ignoring it when it could benefit others.
A coalition of states had accused MetLife of scanning the Death Master File to identify beneficiaries who had passed away (and therefore should no longer be receiving annuities), while not using the same Death Master File (can you tell we like the sound of that phrase?) to identify deceased policyholders, thus holding back on paying benefits to beneficiaries who didn’t immediately make claims.
The deal requires MetLife to restore the full value of any account that was improperly drawn down, comply with state unclaimed property laws and pay 3 percent compounded interest on amounts that had been held back, starting with either the date of the policy owner’s death or Jan. 1, 1995, whichever came later.
MetLife says it expects to pay out $438 million in payments to policyholders and beneficiaries ($188 million this year; the rest doled out over next 17 years), plus another $40 million in settlement costs.
The MetLife settlement comes on the heels of a similar settlement with Prudential. There are at least eight additional Death Master-related investigations pending against other insurers.
Of course, the dreaded Death Master File is not a perfect document. We wrote in 2011 about the 14,000 people each year who mistakenly end up on the list, often because of a small error on a death notice. However, that small error can take months of concerted effort to convince the Social Security folks that you are not actually a zombie.