Prudential, lawyers agree to settlement
This is a joint press release from Prudential and Melvyn I. Weiss of the law firm of Milberg Weiss Bershad Hynes & Lerach, LLP, issued on Sept. 24, 1996.
A settlement of the consolidated class action pending before the Honorable Alfred M. Wolin of the United States District Court for New Jersey was reached between Plaintiffs' Executive Committee led by co-lead counsel Melvyn I. Weiss of the law firm of Milberg Weiss Bershad Hynes & Lerach, LLP and The Prudential Insurance Company of America.
Prudential's chairman and CEO, Arthur Ryan, stated that, "The settlement announced today complements and substantially completes the process begun in July with an agreement between Prudential and the Multi-State Life Insurance Task Force to resolve concerns about the Company's life insurance sales." Prudential's counsel in the action is the national law firm of Sonnenschein Nath & Rosenthal.
The class action settlement includes all, and builds upon some, of the features of the Task Force agreement, which established a Remediation Program available to the owners of more than 10 million Prudential permanent life insurance policies purchased between 1982 and 1995.
Prudential believes that the Remediation Program accepted by 43 states and the District of Columbia provides policyowners fair and equitable remedies. Beyond that, Prudential agreed with the class action plaintiffs to provide additional remedies in order to achieve an overall settlement and avoid the costs and delays of litigation. Prudential will now request that the Remediation Programs previously accepted by the states be modified in order to make them consistent with the class action settlement.
"Both the Remediation Program and the class action settlement represent an extraordinary effort by state insurance regulators, the parties and by Prudential to resolve many complex and important issues," Ryan said.
The 43 states and the District of Columbia that have agreed previously to the Remediation Program currently are reviewing the terms of the class action settlement. Prudential is holding discussions with these states about adopting the important additions provided in the class action settlement. Discussions are also being held with the remaining sever states to acquaint them with the terms of the class-action settlement, of which they had not previously been informed.
The class action settlement establishes a minimum of $410 million that Prudential will incur in remedies, and may provide other guaranteed values depending upon the number of remediated claims, to policyowners who are entitled to remediation under the Alternative Dispute Resolution (ADR) process. The total cost of the ADR process is not capped and will depend on the actual number of claims remedied. That process requires filing of a claim to be resolved through a simplified claims procedure. The settlement's provision, including changes to the ADR process beneficial to policyowners, mean that those individual policyowners who file claims could receive enhanced relief.
The general relief provisions of the Remediation Program proposed by Prudential and accepted by the Task Force have also been improved. The general relief, which includes enhanced life insurance, annuities and low-cost premium loans, is available to all policyowners who purchased permanent life insurance policies from 1982 to 1995.
Ryan said, "Prudential remains fully committed to resolving all policyowners' legitimate claims. While we believe that the Remediation Program accepted by the Task Force provides fair and equitable relief for our customers, we have agreed to provide additional remedies in order to achieve an overall settlement. This settlement allows Prudential to move forward in providing the best possible service to our clients and customers."
Co-lead plaintiffs' counsel Weiss said, "Plaintiffs' Executive Committee is pleased to announce the completion of its negotiations on behalf of the policyholder class it represents. Employing, as a base, the Remediation Plan accepted by the 43 states, which was patterned after the widely reported New York Life settlement, the class action settlement proposal significantly enhances the prospects for policyholder involvement in a greatly enhanced ADR program. The enhancements include more benefits, greater outreach to ensure class member notification and additional procedural safeguards. In addition, the general relief available to those not entering the ADR program has been materially improved.