Agency Made Secret Deal
enabling Prudential Financial Inc. to withhold lump-sum payments of life insurance benefits for survivors of
fallen service members, according to records made public through a Freedom of Information request.
The amendment to Prudential’s contract is the first document to show how VA officials sanctioned a payment
practice that has spurred investigations by lawmakers and regulators. Since 1999, Prudential has used so-called
retained-asset accounts, which allow the company to withhold lump-sum payments due to survivors and earn
investment income on the money for itself.
The Sept. 1, 2009, amendment to Prudential’s contract with the VA ratified another unpublicized deal that had
been struck between the insurer and the government 10 years earlier -- one that was never put into writing,
Bloomberg Markets magazine reports in its November issue. This verbal agreement in 1999 provoked concern
among top insurance officials of the agency, the documents released in the FOIA request show.
For a decade, until the contract was formally changed, Prudential wasn’t fulfilling its obligations to survivors
of fallen service members, says Brendan Bridgeland, an insurance lawyer who runs the non-profit Center for
Insurance Research in Cambridge, Massachusetts.
“It’s very clear they violated the original terms of the contract,” says Bridgeland, who is retained by the
National Association of Insurance Commissioners to represent consumers.
“Every veteran I’ve spoken with is appalled at the brazen war profiteering by Prudential,” says Paul Sullivan...
Prudential sent checkbooks instead of checks to survivors requesting lump-sum payouts...
New York Attorney General Andrew Cuomo launched what he called a “major fraud investigation”...
The more I read, the more I'm convinced this is NOT a big deal.
Yeah, it's slightly sleazy, not making it clear that they could earn more elsewhere,
but since when has an American business taken the path of not-as-much-profit?
If you read long enough, you'll see this line:
>DeFillippo said "Survivors can withdraw some or all of their money at any time."
So if they had $60,000 coming, when they got that checkbook in the mail,
they could write their personal account a check for $60,000 and be done with it.
But why would the U.S. Department of Veterans Affairs explicitly allow that practice?
If somebody took a bribe to let that crap go on, NOW we have a problem.