PHILADELPHIA – A proposed class of life insurance
beneficiaries have been denied certification in their lawsuit that alleges that
Prudential Insurance Co. of America violated Employee Retirement Income
Security Act of 1974 regulations based on the method it used to make payments.
Recent court records show the plaintiffs will not appeal the September ruling. Summary judgment motions will soon be filed.
In Huffman v.
Prudential, the plaintiffs, who were paid the benefits they were entitled
to under employer-sponsored life insurance policies, allege that the insurer
improperly made the payments from a retained asset account. Instead, the plaintiffs
claimed that the policies required the benefits to be paid in a lump sum.
Specifically, the plaintiffs claimed that Prudential
benefited from investments into the account established for payment of their
As a result of these investments, the plaintiffs alleged
that the insurance company was “not acting exclusively” on their behalf. In
addition, Troesh said the plaintiffs claimed that the handling of the accounts
violated an ERISA provision that, “prohibits fiduciaries from causing a plan to
partake in a transaction involving the provision of services between a plan and
a party in interest.”
“Class certification is not appropriate ‘if proof of the
essential elements of the cause of action requires individual treatment,’” Judge
Joseph F. Leeson Jr. of the U.S. District Court for the Eastern District of
Pennsylvania wrote in his Sept. 30 ruling. “Because (the plaintiffs) have not
shown that common questions of law or fact would predominate over individual
disputes, their motion is denied.”
According to the opinion, Prudential pays any benefit claim
that exceeds $5,000 through its “Prudential Alliance Account” if the insured or
the beneficiary does not specify an alternate form of payment.
In addition, Prudential notifies beneficiaries that their
payments will be made through this account and provides details about the
account and an “Alliance checkbook” that allows the beneficiary to access the
funds in his or her account.
“There are no limits on the beneficiary's ability to use
these checks to withdraw funds, which means that the beneficiary may, if
desired, withdraw the entire balance at once by writing a single check for the
full amount,” Leeson wrote.
While plaintiff Clark R. Huffman made multiple draws on the
account, the court said plaintiff Brandi K. Winter withdrew the entire payment
in one transaction.
The plaintiffs asked the court to reconsider their motion
for class certification. However, Leeson denied the motion for reconsideration
on Dec. 13 because the “motion does not identify any clear errors of law in the
court’s decision to deny class certification or any other basis for
According to a letter sent to the court from the plaintiffs’
co-counsel on Dec. 28, Huffman and Winter decided not to appeal the denial of
the class certification and reconsideration motions.
“The remainder of the case, to be dealt with on an
individual basis, can, in the estimation of all counsel, probably be resolved
on cross-motions for summary judgment,” the letter said.
A Dec. 29 order sets a Feb. 14 deadline for summary judgment