ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Tuesday, February 25, 1997 TAG: 9702250108
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: NEWARK, N.J.
SOURCE: Associated Press
Lawyers for Prudential Insurance Co. of America and millions of its policyholders urged a federal judge to approve a settlement that would offer case-by-case relief to victims of deceptive sales pitches.
The unlimited settlement - which an accounting firm said could cost the nation's largest life insurer up to $2 billion - is up for final approval by the court two years after the first lawsuits were filed against Prudential.
``We have a settlement here that is monumental,'' Melvyn I. Weiss, lead co-counsel for policyholders in the class-action lawsuit, told U.S. District Judge Alfred M. Wolin on Monday.
Prudential lawyer Reid L. Ashinoff said the plan would ``fully and fairly remediate misled policyholders.''
Although much opposition to the proposed settlement has evaporated in the past two weeks, Wolin expected to hear objections Tuesday. He has not indicated when he might rule on the deal.
The settlement could affect 8 million people who bought 10.7 million life insurance policies from 1982 to 1995. An undetermined number were given misleading information by agents that cost them money. Some lost all their retirement savings.
Some 19,000 policyholders have chosen not to participate; 300 of them filed objections to the settlement.
Wolin gave conditional approval to the deal in October.
Five states that had spurned a related multi-state agreement recently settled with Newark-based Prudential and dropped their opposition to the class-action settlement.
California and Florida had questioned whether the class-action settlement unfairly put the burden on policyholders to prove they were cheated. The states claim the new deals, whose terms apply to residents of all 50 states, corrects that issue.
Policyholders were cheated in a variety of ways, and since premiums varied by age and other factors, there is no ``average'' likely settlement.
The compensation process allows customers three chances to appeal to independent panels to get a better award, while Prudential is barred from contesting any decision of those panels.
The class-action lawsuit and the agreement with the states stem from charges that Prudential agents persuaded customers to use the built-up cash value of older life insurance policies to finance more expensive ones. The tactic stripped value from the old policies and drained customer savings, regulators said.
New Jersey insurance regulators led a multi-state probe that culminated in July, with Prudential admitting deceptive sales practices and agreeing to pay a record $35 million fine to 45 states and the District of Columbia.
It has since agreed to pay nearly $35 million more to California, Florida, Massachusetts, Texas and Virginia. The Virginia settlement, on behalf of an estimated 175,000 policyholders, was for $384,200.
LENGTH: Medium: 59 linesby CNB