New York Life Sued Over Benefits
The New York Times, February 28, 2001
NEW YORK (Reuters) - New York Life Insurance Co. was sued on
Wednesday by a group of current and former sales agents claiming the giant
U.S. life insurer held back retirement benefits and unfairly dismissed more
than 1,300 agents.
If the suit succeeds, it could cost the New York-based insurer hundreds
of million of dollars.
The claims in the suit were ``totally without merit'', New York Life
spokesman William Werfelman told Reuters.
The group of 10 agents claimed in the suit that New York Life has not
paid the benefits it promised, when it introduced a new retirement plan for
agents in 1991.
New York Life has about 7,500 active sales agents, who represent the
insurer but are independent contractors, not employees of the insurer.
The sales agents alleged that the insurer did not pay benefits to agents
who had served less than 20 years at the firm, and arbitrarily applied quota
systems as a pretext for firing agents before they reached 20 years of
The agents claimed that this was part of a fraudulent scheme to evade the
Employee Retirement Income Security Act (ERISA), which regulates retirement
New York Life's Werfelman said the plan was not regulated by the ERISA
statute as the benefits were not contingent upon retirement.
The insurer also faces a lawsuit filed last year alleging that it
illegally invested hundreds of millions of dollars from its employees'
pension plans in its own range of mutual funds.