The judge in charge of overseeing Prudential Insurance Co.'s $2 billion class action settlement intends to investigate allegations that Prudential's claims-payment process is rife with illegal and unethical doings.
On Nov. 8, 1999, Judge Alfred M. Wolin of the U.S. District Court in New Jersey issued an "order to show cause" to Prudential and a group of former and current Prudential employees in Minnesota. So far, more than 50 current and past employees have come forward with individual lawsuits alleging that the company's Alternative Dispute Resolution (ADR) process, which is meant to "score" settlement claims based on merit, is cheating members of the plaintiff class. The Minnesota plaintiffs all worked in Prudential's ADR claims unit in Plymouth, Minn., where they reviewed settlement-claims paperwork and scored them from 0 to 3 based on merit.
Among other accusations, the employees say there are contests to see who can score claims the fastest (thus denying policyholders a fair review) and that high scores of 3, which would award policyholders the most settlement money, are routinely and unjustifiably downgraded to scores of 2 by Prudential managers. The employees tell further stories of rampant age, gender, and race discrimination, along with personal retribution against those who have come forward. (For more details, see Prudential employees tell of settlement-claim abuses and discrimination.)
Everyone must appear in court on Nov. 15 to explain the allegations.
Judge Wolin, who approved the giant class action settlement, has jurisdiction over the administration, enforcement, and interpretation of all matters relating to the case. This means he can initiate discovery procedures for documents relating to the settlement payout and order depositions about the alleged violations taking place in Prudential's Minnesota ADR claims unit. And it looks like he'll do just that. Moreover, Wolin would have the power to prohibit litigation in other jurisdictions (such as Minnesota), that could possibly disrupt the resolution of Prudential's settlement.
Wolin has ordered Prudential's lawyers, the class counsel for the settlement, the employees bringing the suits, and their law firm, Neff Law Firm in Bloomington, Minn., to appear in his New Jersey court on Nov. 15. Wolin's order also says he wants all the discovery (or investigation) of the allegations to be completed by Dec. 17, 1999, and a report to the court made by Dec. 22, 1999.
Prudential's settlement process was supposed to be over and done by Dec. 31, 1999.