A news release from Hewitt, chief federal prosecutor for the Southern District of California, said the payments were not disclosed to MetLife’s customers or reported by MetLife as required by the Employee Retirement Income Security Act (ERISA).According to the Non-Prosecution Agreement entered into by the company, MetLife knowingly implemented a program of undisclosed and unreported payments designed to induce the San Diego-based insurance brokerage firm and its CEO to recommend MetLife to the brokerage firm’s clients.
MetLife’s sales force was also instructed to leverage the improper payments to promote MetLife products. The agreement also calls for MetLife’s continuing cooperation on any investigations arising out of the conduct described in the agreement.
ERISA requires the administrators of qualified insurance plans to provide certain specified information (including all commissions and fees paid to insurance brokers in connection with the purchase of group insurance) to the U.S. Department of Labor Employee Benefits Security Administration (EBSA) and the Internal Revenue Service (IRS).
Prosecutors alleged the company made these payments without disclosing them to the insurance plan administrator and that the payments were typically carried as communication fees, request-for-proposal (RFP) fees, or enrollment fees. These hidden fees were, in turn, generally included in the rates charged by MetLife to customers.
Hewitt said in the news release that she agreed to a negotiated settlement of this matter because of MetLife’s cooperation in the investigation and remedial steps it has taken since.
« San Francisco Increases Required Employer Health Spending