Do Arbitration Clauses in Employment Contracts Automatically Preclude Employees From Litigating ERISA Claims?

Posted in: Annuities, Beneficiaries, ERISA, Fiduciary Duty, Insurance Litigation Blog, Pensions, Retirement Plans August 29, 2018

Many times, employees must sign written employment contracts before beginning a new position.  These contracts generally set forth the terms of the relationship between the employer and employee.  They also establish both the rights and responsibilities of the two parties.  Employers often include an arbitration clause in their employment contract.  This means that any disputes that arise between the employer and employee must be settled through arbitration, rather than through the courts.

But what happens when an employee sues his employer not on his own behalf, but on behalf of another entity for claims that the employee cannot bring in his individual capacity?  For instance, in the context of ERISA, employees who participate in an employer-sponsored ERISA plan can bring …

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Avoiding the Potholes on the Road to Retirement: Understanding Annuity Risks

Posted in: Annuities, Insurance Questions and Concepts December 20, 2011

Saving for one’s own retirement is something everyone needs to consider.  There are many financial vehicles that can be used when traveling along the road to retirement.  One of these financial vehicles is an annuity.  However, annuities are often not suitable for consumers, especially more elderly consumers, because of excessive “hidden” fees and large surrender charges that apply when annuities are surrendered/terminated before a certain time.  This is due in part to large commissions paid to agents who sell them, who often act in their own best interest, rather than in the interest of consumers.  John Waggoner of USA Today provides some sound advice in his recent article entitled “Annuities are a Retirement Option, But Be Wary of Fees

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New California Law Requires That Insurers and Agents Verify that an Annuity is Suitable for the Consumer

Posted in: Agent/Broker, Annuities, Insurance Commissioner, Legislation September 30, 2011

California Governor Jerry Brown recently signed a new law that will provide increased protection to seniors and other consumers who are interested in purchasing an annuity.  AB 689, which was sponsored by the California Department of Insurance and authored by Assembly Budget Committee Chair Bob Blumenfield (D-San Fernando Valley), requires that insurers verify that an annuity purchase is suitable and appropriate for the consumer based on an evaluation of his or her age, income, financial objectives and ten other factors.  The bill was unanimously passed by both the state Senate and the state Assembly.…

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California Announces Investigation of MetLife for Failure to Pay Life Insurance Benefits

Posted in: Annuities, Insurance Commissioner, Life Insurance, News April 28, 2011

On April 25, 2011, California Insurance Commissioner Dave Jones and California State Controller John Chiang announced that they are investigating Metropolitan Life Insurance Company (“MetLife”) for a failure to pay out life insurance benefits after learning of an insured’s death.  It appears that while MetLife learned of its insured’s deaths through a database prepared by the Social Security Administration called “Death Master,” which lists all Americans who die, MetLife failed to use this information to pay legitimate claims. 

As noted in the California Department of Insurance’s Press Release:

The Commissioner and the Controller are responding to preliminary findings from an audit the Controller launched in 2008, indicating that for two decades, MetLife failed to pay life insurance policy benefits

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California Insurance Commissioner Jones Announces New Regulations On Annuities For Seniors

Posted in: Annuities, Legislation, News March 14, 2011

In recent years there have been many cases of insurance agents selling unsuitable annuities to members of the public, especially seniors.  These annuities typically involve large premiums and very large cash surrender charges.  The large cash surrender charges are often in place for at least the first five years of the annuity and usually exist because of the very large commissions that are paid to the insurance agents selling them.  Also, the rates of return in the annuities are often misrepresented.  Insurers and their agents also often sell unsuitable annuities as part of 412(i) plans (named by the IRS Code section which applies to them), and sometimes the IRS disallows deductions, classifying them as abusive tax shelters.  In order for …

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