Tuesday, June 06, 2017

MetLife contractor’s pricing concerns didn’t amount to protected reporting

By Anne Sherry, J.D.

A terminated MetLife contractor who raised concerns about the pricing of insurance policies failed to plead a whistleblower retaliation claim under Sarbanes-Oxley. The Second Circuit agreed with the district court that the plaintiff failed to demonstrate an objectively reasonable belief that the alleged pricing irregularities constituted a violation enumerated in the statute (Kantin v. Metropolitan Life Insurance Company, June 1, 2017, per curiam).

As set out in the Southern District of New York’s opinion, the plaintiff was a longtime MetLife employee who retired and then signed back on as a contractor. He was concerned about the pricing associated with a new MetLife joint life insurance offering, known as GSUL. MetLife priced each couple’s GSUL policy based on the combination of their genders, ages, and health classifications. Each possible combination of these factors, or “cell,” was priced according to actuarial formulas that combined the life expectancies of both spouses.

The plaintiff raised concerns internally about whether MetLife would lose money if the cells were improperly priced, but it was not until his deposition taken for his whistleblower case that he first stated he believed it would have been illegal for him to sell a particular policy. Prior to his termination, he also raised concerns about a certain commission payment and a conversation with an individual; he did not believe either situation to involve illegal activity.

Granting summary judgment for MetLife, the district court held that the plaintiff could not, as a matter of law, establish the first element of a SOX whistleblower claim: that he engaged in protected activity. To be protected, an employee’s activity must relate to an enumerated violation, and his belief that his employer’s conduct was unlawful must be objectively and subjectively reasonable. The plaintiff made only one allegation relating to activity that he considered unlawful: an insurance policy that he did not allege was even sold. Even if the pricing concerns were more than speculation, they did not amount to fraud.

The appeals court also held that the plaintiff failed to make a case under SOX. The alleged commission payment and pricing irregularities simply did not sound in fraud and were wholly unrelated to any of the violations enumerated in the statute. The plaintiff admitted that he himself did not believe the commission payment or most of the pricing irregularities to be illegal. Like the district court, the appeals court reasoned that in the absence of evidence that an allegedly unlawful insurance policy was sold or intended to be sold to a customer, the mere existence of such a product could not reasonably be believed to constitute a fraud.

The case is No. 16-1091-cv.