V.A. Agreed to Withholding of Benefits, Documents Say

[Frank Booth]

Source: Bloomberg

The Department of Veterans Affairs agreed in September 2009, without telling six million soldiers and their families, to allow Prudential Financial to withhold lump sum payments of life insurance benefits owed to survivors of service members, according to documents made public through a request under the Freedom of Information Act.

The amendment to Prudential’s contract is the first document to show that department officials sanctioned a practice that has prompted lawmakers and regulators to call for investigations. Since 1999, Prudential has used so-called retained-asset accounts that keep death benefits in its general corporate account, earning investment income for itself, instead of paying out a lump sum immediately.

----

Under Prudential’s original 1965 contract with the government and a 2007 revised contract — both of which were released as part of the response to the Freedom of Information Act request — the insurer is required to send lump sum payouts to survivors who request them. The contract covers six million active service members, their families and veterans.

Instead, Prudential sends to survivors so-called checkbooks that are tied to what it calls its Alliance Account. The checkbooks are made up of drafts, or i.o.u.’s, and are not insured by the Federal Deposit Insurance Corporation. Prudential invests the survivors’ money in its general corporate account.

Read more: http://www.nytimes.com/2010/09/14/business/14insure.html?src=twr

[cliffordu]

1. We just need to burn the insurance racket in it's current

iteration right to the ground.. It actually serves no purpose except to fleece the populace

[Frank Booth]

2. It's gotten to the point that when there's a dispute between a giant insurance or financial

company and members of the general public over an illegal act committed by the company, my initial assumption is that the government will be so afraid of offending the powerful company that it will allow the behavior to continue. Unfortunately, that assumption is usually right. These companies have basically captured the government, and I don't know what can be done about it.

[Fumesucker]

3. A quote from Heinlein's first story "Life-Line" written in 1939..

Interestingly, the quote is about insurance companies..

http://en.wikipedia.org/wiki/Life-Line

There has grown in the minds of certain groups in this country the idea that just because a man or corporation has made a profit out of the public for a number of years, the government and the courts are charged with guaranteeing such a profit in the future, even in the face of changing circumstances and contrary to public interest. This strange doctrine is supported by neither statute or common law. Neither corporations or individuals have the right to come into court and ask that the clock of history be stopped, or turned back.

[rpannier]

4. I'd write a 250K to my bank and be done with them

[Dappleganger]

12. It wouldn't surprise me at all

if that check bounced, either.

[Scuba]

5. Step One. Find the VA official who approved this and fire his ass. Step two. ..

...Step two. Get the for-profit insurance industry out of the picture, here and in health care.

Insurance used to be about sharing risk. Now the insurance companies just dump the riskier customers on the government and keep the low-risk (read: profitable) ones for themselves. Ridiculous that we put up with this.

[kpete]

6. Veterans Agency Made Secret Deal Over Benefits

Source: Bloomberg

Veterans Agency Made Secret Deal Over Benefits
By David Evans - Sep 14, 2010 5:54 AM PT

The U.S. Department of Veterans Affairs failed to inform 6 million soldiers and their families of an agreement 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.

Read more: http://www.bloomberg.com/news/2010-09-14/veterans-agency-arranged-secret-deal-with-prudential-over-soldier-benefits.html

[bluescribbler]

7. K&R

Any nation which does not care for its veterans, or the
families of fallen soldiers, forfeits the right to make new
ones.:mad:

[BrklynLiberal]

8. How about a class action suit to get all the interest that was paid on those held monies..and pay

it to the beneficiaries?

[dixiegrrrrl]

13. How about people in the military and their famillies getting pissed in Nov?

Or they can quietly let the robbery continue.
Up to them.

[fasttense]

9. Insurance fraud, what a racket.

Even the VA got in on it. I bet if we keep looking, someone got a kick back for "secretly" negotiating the amendment to make the fraud legal.

[old mark]

10. This is the sickest thing I have seen in many years, and nothing has made

me more angry.

People should be in prison over this fraud.

C'mon, Democrats - you talk the talk about helping veterans, let's see some action.


mark

[Crowman1979]

11. Privatization works so well.

:sarcasm: