more on SGLI v Pru

Lucey v Prudential made it to the next round as the court took a step in the right direction and recognized it as a valid class action.  In the logic of business, Prudential probably believes it makes more sense to to fight than to admit to rapacity, but in all other universes, they're on ground about as solid as that of Japan's nuclear plants.  I assume the Lucey et al lawyers are hoping for negotiations and maybe they're already underway.

update on Prudential and military beneficiaries

The day my story (below) ran in the Boston Globe, the judge referred the lawsuit for discovery, an early but significant step in the litigation process.  Meanwhile, David Evans at Bloomberg News (with the help, no doubt of Paul Sullivan at Veterans for Common Sense) continued to do his own discovery and it wasn't pretty.  In September, he reported that the deal between Pru and the VA was sealed with a handshake until last year, when it was finally put in writing, as the law requires, and that beneficiaries will be able to get a real lump sum payment now; i.e. a check, rather than a promise.  That development, coming so quickly after the bad press, implies that the VA knew all was not well.  Sullivan gave me indications that the VA and Prudential were very cozy, a separate vector that didn't make it into my story because of space limits.

Then, on Halloween (significant?), I got an email from Cristobal Bonifaz, one of the lawyers for the case, with the teaser that something very significant was about to happen, stay tuned.
     "Something good?"  I emailed back.
     "Very good," came the reply.
The next morning, the American Legion, an organization whose 2.5 mil. members should be too numerous to ignore (not to mention that it's the American Legion, for god & country's sake!) filed a friend of the court brief in support of the lawsuit.

Case No. 3:10-CV-30163-MAP in U.S. District Court for Western Massachusetts

Mass. family at center of suit: Class action alleges Prudential unfairly profited from death benefits

By Nan Levinson, Globe Correspondent  |  October 4, 2010

Kevin Lucey was at the wake for his son, Jeffrey, a Marine who had committed suicide at their Belchertown home in the summer of 2004, when military officers presented him with a stack of forms to sign.

“I never read them. I just signed,’’ he said. “I wanted to get back to Jeff.’’

Three weeks later, Lucey received a kit from Prudential Insurance, which provides life insurance benefits to veterans on behalf of the federal government. He had the option of receiving the $250,000 payment in a lump sum or 36 monthly installments. Like most people, Lucey opted for the lump sum, and Prudential explained it had set up an “Alliance Account’’ in his name.

Still reeling from Jeffrey’s death, he asked his wife, Joyce, what she wanted to do about the money.

“I didn’t want to hear it,’’ she recalled. “I said it was blood money.’’

They stashed the kit in a drawer.

Several months later, on the advice of a colleague, Kevin Lucey decided to withdraw the money and invest it more profit ably elsewhere. The paperwork had included what looked like a bank checkbook, so he wrote a draft for the balance. Prudential took nearly a month to send the money, he said.

Only much later did he learn that Prudential had never deposited any money in his account, instead investing it as part of its general account and passing on only a small portion of the interest earned, he said.