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New York Life Sued Over Benefits

By: Reuters
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 service.

The agents claimed that this was part of a fraudulent scheme to evade the Employee Retirement Income Security Act (ERISA), which regulates retirement benefit plans.

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.