ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, October 10, 1996 TAG: 9610100046
SECTION: BUSINESS PAGE: B-7 EDITION: METRO
DATELINE: NEW YORK
SOURCE: Los Angeles Times
Prudential Insurance Co. has confirmed it destroyed large numbers of files on customer complaints from 14 Western states, adding a new dimension to a mushrooming investigation by Florida of alleged document destruction by the largest U.S. insurer.
The confirmation came late Tuesday after the Los Angeles Times and the Florida Insurance Department independently obtained copies of an internal Sept. 23 Prudential memo that states that customer complaint files handled by Prudential's Western regional headquarters in the Woodland Hills area of Los Angeles from 1992 and earlier ``have been destroyed.''
The Florida Insurance Department late Tuesday issued a subpoena to Prudential based on the memo, demanding detailed information about the destruction and why it occurred.
Prudential spokesman Robert DeFillippo said that despite the destruction, ``critical'' information from the files had been retained on computer disks. He said he could not estimate the number of documents that had been destroyed, but said the actual destruction occurred over an extended period that probably ended some time in 1994. He contended the destruction was simply part of a routine purging of outdated files by the Woodland Hills office.
Richard Wiebe, spokesman for the California Insurance Department, said the department had not seen the memo before being given a copy by The Times. ``We will certainly look into it,'' he said.
Prudential has been under investigation for more than a year by state insurance regulators throughout the country for fraud in the sale of life insurance policies to millions of customers.
Florida, which has been conducting the most aggressive investigation, has a rapidly expanding inquiry into the alleged destruction of documents that may be relevant to the state investigations, public documents show.
Regulators from several states and lawyers for customers said the destruction of complaint files may have an impact on a pending class-action settlement between Prudential and its customers, because the amount of compensation would in part be based on information from complaint files.
In an interview, Prudential's DeFillippo confirmed that the destruction may have violated National Association of Securities Dealers' regulations requiring companies to keep paper files on complaints made against life insurance agents licensed by the NASD.
But he said any violation would have been unintentional. He denied that the destruction violated any state regulations. NASD officials had no immediate comment late Tuesday.
DeFillippo said that under a policy adopted by the Western region in 1994, the company now permanently keeps all paper files of complaints. He said he could not immediately determine whether complaint files from other regions had been destroyed.
LENGTH: Medium: 58 linesby CNB