Thursday, November 1, 2018

No. 293: MetLife and a Tragic Theft of Structured Settlement Annuity Payments

Nicole Herivaux, now 38, was born August 1, 1980 in a hospital operated by New York City. The amended complaint referred to later says: "She suffered a serious physical injury during the birth process, resulting in an Erbs palsy to her arm, rendering same permanently undeveloped and useless." According to the American Academy of Orthopaedic Surgeons:
Erb's palsy is a form of brachial plexus palsy. It is named for one of the doctors who first described the condition, Wilhelm Erb. The brachial plexus is a network of nerves near the neck that give rise to all the nerves of the arm. These nerves provide movement and feeling to the shoulder, arm, hand, and fingers. Palsy means weakness, and brachial plexus birth palsy causes arm weakness and loss of motion. One or two of every 1,000 babies have this condition. It is often caused when an infant's neck is stretched to the side during a difficult delivery.
The Medical Malpractice Lawsuit
Marie Herivaux, Nicole's mother and natural guardian, filed a medical malpractice lawsuit against New York City. The case ended in a settlement on February 25, 1983. It provided that Marie, who was not injured, was to receive a one-time payment of $25,000.

The settlement also provided that Nicole was to receive $50,000 immediately; $2,200 per month for life; $100,000 on August 1, 1998 (her 18th birthday); $200,000 on August 1, 2005 (her 25th birthday); $200,000 on August 1, 2015 (her 35th birthday); and $200,000 on August 1, 2025 (her 45th birthday). The money for Nicole, until she turned 18, was to be paid jointly to Marie, who was Nicole's mother and natural guardian, and a bank officer. The money for Nicole was to be kept for her benefit in certain savings accounts. The money thereafter was to be paid to Nicole.

The Structured Settlement Annuity
To assure that Nicole's benefits would be paid, New York City purchased a structured settlement annuity from Alpine Life Insurance Company. The company made the payments properly until 1995, when Nicole was 15.

Metropolitan Life Insurance Company (MetLife) acquired the structured settlement annuity from Alpine on January 1, 1995 as part of a block of business. MetLife mistakenly made Nicole's benefits payable to "Marie Herivaux" rather than to "Marie Herivaux as guardian of Nicole." Over the years, Marie received checks in her own name and MetLife paid Nicole nothing.

Nicole's Lawsuit against MetLife
On February 13, 2017, when Nicole was 36, she filed a lawsuit against MetLife in state court in New York. She filed an amended complaint on October 9, 2017. (See Nicole Herivaux v. MetLife, Supreme Court of the State of New York, County of New York, Index No. 650783/2017.) How Nicole learned that Marie had been stealing money from her is described in a memorandum of law Nicole's attorneys filed in opposition to MetLife's motion to dismiss her original complaint. The words shown here in brackets were in a footnote.
From time to time Marie would give Nicole some money, advising Nicole that the monies were from her settled case, but Nicole was never provided any details about the settlement, and Nicole relied on what her mother told her. For instance, Marie gave Nicole $100,000 on August 1, 1998, her 18th birthday; another $100,000 on August 1, 2005, her 25th birthday; and a small amount on August 1, 2015, her 35th birthday. [According to the court order, Nicole should have received $100,000 on August 1, 1998; a full $200,000 on August 1, 2005; and a full $200,000 on August 1, 2015.]
More recently, Marie stopped giving plaintiff money altogether, and Nicole, who is now 37 years old, grew curious as to why the payments had stopped. While at her mother's house in Florida, Nicole came across an old check from MetLife showing a payment of $2,200 dated September 1, 2012—when Nicole was already 32 years old and no longer an infant. Nicole noticed that the MetLife check was made out to Marie, without any "for the benefit of" language.
When she discovered the payment, Nicole called MetLife to inquire whether she was owed any money and was told that MetLife had no record of Nicole being the beneficiary of any annuity or funds. Nicole then located Attorney Michael D. Wolin, whom she knew her mother had dealt with. Mr. Wolin advised that he had not been with the Julien Schlesinger & Finz firm for thirty years, that he did not have a file concerning the settlement, nor did he have any specific recollection of the settlement terms, although he remembered the case.
Mr. Wolin further advised that the court order should be on file at the courthouse. Nicole had someone obtain a copy of the order from the courthouse. Nicole then contacted Mr. Wolin, who wrote to MetLife to inquire as to why Nicole was not receiving the proceeds of the settlement she was entitled to. A brazen stonewalling response was received from MetLife stating that it had no record of any annuity for Nicole at all and that she was not listed as an annuitant on its records.
The Factoring Transaction
In the course of Nicole's lawsuit against MetLife, her attorneys learned to their amazement that in 2009 Marie had sold half the $200,000 August 1, 2015 payment to Novation Capital LLC, a factoring company. In her affidavit in connection with the transaction, Marie said this under oath: "I am currently divorced and have one dependent, Emily Seymour, a daughter, born on 6/14/2002." As if the failure to mention Nicole was not enough, Marie also made these brazen lies, also under oath:
I am entitled to the settlement payments set forth in the Transfer Agreement. The structured settlement payments arose as a result of a medical malpractice claim. The cause of action associated with the aforementioned lawsuit has been resolved. Pursuant to a Settlement Agreement, I was entitled to receive certain periodic payments, to wit: a lump sum payment of $200,000 due on 8/1/2015, a lump sum payment of $200,000 due on 8/1/2025, and monthly payments of $2,200 for life, thereby creating a structured settlement.
Nicole's attorneys also learned that the Miami attorney who handled the factoring transaction—Jose M. Camacho, Jr.—was disbarred for forging signatures relating to structured annuities. Several documents relating to the factoring transaction are among the appendixes to Nicole's amended complaint and are in the package offered at the end of this post.

The Consent Order
On September 11, 2018, after the parties (but not Marie) had reached a settlement, the judge issued a consent order. He entered a default judgment against Marie, who had failed to respond to the amended complaint or otherwise appear. MetLife demanded, and Nicole agreed, to assign the default judgment to MetLife. Nicole also agreed not to try to collect on the default judgment. I do not know whether MetLife will attempt to collect on the default judgment.

MetLife agreed to pay Nicole for life the suspended and future monthly payments beginning with the payment that was due April 1, 2017, including 9 percent interest on the suspended payments. MetLife also agreed to pay Nicole the $200,000 due in 2025. The parties agreed to bear their own costs and attorney fees.

The consent order is silent on the $100,000 payment due in 1998, which Nicole received; the $200,000 payment due in 2005, half of which Marie apparently stole; and the $200,000 payment due in 2015, half of which Marie sold to the factoring company in 2009, and the other half of which, except for a "small amount," Marie apparently stole. The judge dismissed the case with prejudice (permanently).

The Article in The Wall Street Journal
On February 21, 2018, The Wall Street Journal carried an article entitled "Lawsuit Alleges MetLife Helped a Woman Keep Settlement Money From Her Daughter." The reporter was Leslie Scism, who interviewed Nicole. Aside from comments that "Nicole lives in a cheap apartment in Detroit, has $30,000 in student debt and sometimes relies on free-food pantries," Nicole said: "I could have done so many different things with my life" had she received the full proceeds, she had sometimes borrowed from her mother, and "The ironic thing was I was paying back myself."

General Observations
I think Nicole's attorneys—Wolin, David Jaroslawicz, and others—did excellent work on the case. The attorneys for MetLife are associated with the firm of Drinker Biddle & Reath LLP. I sympathize with them, because I think they were on the wrong side in this tragic case.

On February 9, 2018, Christina M. White, an attorney for New York City, submitted a statement in opposition to a MetLife motion to dismiss the amended complaint. I was impressed by her statement. She assembled a substantial amount of background information on the case despite the lack of many documents that were not available because of the document retention (document destruction) policy of several of the organizations involved in the case.

This is one of the most shocking cases I have ever seen. It is inconceivable to me that a mother would steal money month after month and year after year from her permanently disabled daughter.

Available Material
I am offering a complimentary 104-page PDF consisting of Nicole's amended complaint (15 pages), exhibits to the amended complaint (40 pages), the memorandum of law in opposition to MetLife's motion to dismiss the amended complaint (26 pages), Christina White's statement (19 pages), and the consent order (4 pages). Email and ask for the November 2018 package about the case of Herivaux v. MetLife.