New Jersey Insurance Official’s Letter Was Misleading

On July 21, you published a letter from Elizabeth Randall, commissioner of the New Jersey Department of Insurance and chairman of the Prudential Multistate Task Force, in which she asserts that your July 10 article concerning the Prudential task force report and remediation plan gave an “outline of the program [that] could mislead consumers,” and that, therefore, her response was necessary in order to “clarify for policyholders how the remediation system will work.” It is Randall who needs clarification.

As co-lead counsel for the class-action plaintiffs in the sales practices litigation against Prudential currently pending in federal court in New Jersey, I have spent a great deal of time in the last several weeks reviewing both the task force’s report and its remediation plan. Although, at the court’s urging, I have entered into an agreement not to comment publicly on the report or the plan for a period of 30 days from its issuance, I feel compelled to correct the material inaccuracies in Randall’s supposedly clarifying description of the process.

Specifically, Randall takes issue with the way your story described the “independent review” of how claims are initially handled. Randall concedes that such claims are initially reviewed by Prudential employees but states incorrectly that claims “challenged by the company will be immediately removed from the company’s decision-making capacity and reviewed independently. In other words, Prudential does not have the final say, and consumers can appeal decisions.”

Wrong. It emphatically is not the case that such claims will be “removed from the company’s decision-making capacity.” Nor is it true that “Prudential does not have the final say” absent an appeal. Rather, if the independent claim evaluation team--whose members must be “agreeable” to Prudential--disagrees with Prudential’s initial determination, the claim will then be reevaluated by a second Prudential team. If the second Prudential team disagrees with the independent team, that team may “advocate the application” of its position to Prudential. However, the remediation plan provides that thereafter “the [Prudential] claim review staff will decide . . . which relief or choice of relief, if any, to offer the claimant submitting the claim. Such determination shall supersede any determination of . . . the independent claim evaluation team.”

Randall is also wrong, or at least extremely misleading, when she states in her letter that the “task force requires that consumers be assigned an advocate to help them organize papers and get ready to file their claims.” In fact, the plan does not provide for the appointment of a “policyholder representative” (i.e., an “advocate”) to assist the consumer unless and until there is an appeal--something that does not occur until well after the claim has been filed. While technically correct that the plan contemplates the availability of assistance in “completing claim forms and responding to inquiries . . . during the time prior to the submission of the claim form,” this assistance does not come from the “policyholder representative” but, rather, from a “claimant support team” that is “designated by the company.” Randall’s failure to disclose this fact, and her decision to characterize the Prudential claimant support team as “an advocate,” has far more potential to mislead consumers than anything that appeared in your July 10 report.

MELVYN I. WEISS

Co-lead counsel for

Class-action plaintiffs