GM retirees sue Met Life to recover lost insurance benefits

GM retirees sue Met Life to recover lost insurance benefits
Joseph Lichterman
Automotive News | June 22, 2011 – 4:32 pm EST

DETROIT — A group of 45 General Motors salaried retirees filed a lawsuit against Metropolitan Life Insurance Co.after their life insurance benefits were reduced.

Retirees listed in the suit — including former GM Chairman John Smale — have had their life insurance benefits cut to “a meager” $10,000, according to the lawsuit filed in Wayne County Circuit Court here.

The retirees are seeking to recover the original value of their policies, according to the suit.

Detroit-area attorney Andrew Rogers, who is representing the retirees, said each retiree’s policy was worth from tens of thousands of dollars to more than $1 million.

In a letter to each retiree, Met Life wrote that the policyholder would have “continuing life insurance in effect, without cost to you, for the rest of your life.”

Reduced life insurance benefits will create financial harm for the retirees named in the suit, Rogers said, adding that because of their advanced age the retirees will be unable to obtain a new policy.

“They took these letters to mean what they said and took them into account for retirement and estate planning,” Rogers said.

At least 300 more GM retirees are affected by the cuts in life insurance benefits and could become part of a class-action lawsuit, Rogers said.

Rogers said it is unclear when the benefits were reduced.

GM and Met Life did not immediately return requests for comment, but Rogers said the cuts have been a boon for Met Life because the insurer received full payment for the policies, but only has to pay out $10,000 per policy.

“Now,” Rogers said, “all these years later Met Life stands to obtain a tremendous windfall.”

Last month, another group of GM retirees filed suit against the automaker to recover pension benefits that were cut during the company’s restructuring.

Among executives included in that suit are John Middlebrook, former vice president of vehicle brand marketing; Richard Nerod, retired president of GM-Latin America, Africa and Middle East; and Don Hudler, a retired vice president and former head of Saturn.

At the time, GM said in a statement that the retirees filed a petition to have their benefits reviewed.

“The administrator denied their claim after thoroughly reviewing the matter,” GM said. “We are confident that the plan administrator properly considered and denied their claim.”

By ending a part of its Supplemental Employee Retiree Plan, GM saved $221 million.

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