A federal judge in charge of overseeing Prudential's $2 billion class action settlement says it may be difficult to add Florida's concerns to an investigation into whether the company has abused sales practices to cheat its customers.

Florida Insurance Commissioner Bill Nelson wrote a Nov. 23 letter to Judge Alfred W. Wolin and asked him to include Florida in an investigation stemming from job discrimination lawsuits in Minnesota. Employees in that state claim the New Jersey-based insurer encouraged and trained them to shortchange customers in settling claims. (For details, see Prudential employees tell of settlement-claim abuses and discrimination) Nelson's office was contacted on Nov. 18 by an employee who worked in an Alternative Dispute Resolution (ADR) unit who claimed that "improper claim scoring procedures" were widespead in the Jacksonville, Fla., claims facility.

Wolin responded in a Nov. 24 memo to Nelson that it would be "inappropriate" for him to initiate an investigation with just a letter from the commissioner. The judge wrote that there may not be "sufficient legal resources" to conduct a Florida investigation. A clerk in Wolin's office says the judge has not made a final decision on whether to allow Florida into the investigation.

Nina Botcher, a spokesperson for the Florida Department of Insurance (DOI) says Wolin's reaction to the letter was expected. "We anticipated that he would need some new information," she says. In response, the DOI sent transcripts from interviews that attorneys had with the employee who alleged the fraudulent claim practices. "At this point, all we can do is simply wait for (Wolin) to make a decision," she says.

In 1997, Prudential agreed to a $2 billion settlement as a result of litigation that alleged the company routinely "churned" policyholders. Churning is a practice where agents encourage customers to use built up cash value in their whole life insurance policies to purchase new policies. This causes customers to lose their cash value and any other benefits they have accumulated. Churning is unethical and illegal.

Prudential was supposed to end the settlement process by Dec. 31, 1999. The company has said the allegations "simply don't make sense."