• Case 2:01-cv-00444-DWA- Document 184-1 - Filed 05/17/06 - 38p
  • ⇒ Deposition - 2002 0802 - Harry P Kamen - In The Matter Of: Hazen v. Metropolitan Life - <Case Number - Any Information>
  • p17 - [20] Q: And if you give someone permission to use what you were calling an unauthorized document, does it not then become an authorized document?
  • p18 - [2] Q: What procedural safeguard was in place to guarantee the integrity of what was being said orally to the customer?
    • p18 - A: [13] A: There's no taping, there's no hidden camera, so you don't know what's happening.
  • p19 - [4] Q: Were you aware that Mr. Urso not only instilled training at his managerial office on his sales personnel, but he was invited to go other places throughout the country to train people to sell this particular product?
  • p19 - 1121 Q: Mr. Kamen, the Tew report dealt specifically with the Urso office and the problems there, but do you recall that it also made findings as to what was occurring nationally within MetLife?
    • A: I recall it did discuss other, yes, it did have- discuss other instances-
    • Q: What !'d like to do -
    • A: - of impoper sales approach letters.
    • MR. DePASQUALE:What I'd like to do is show you what we're going to label as Kamen Deposition Exhibit 1, and it's going to be page 41 of the Tew report. I'd like you to take a look at that. Why don't we do it as a two-page Exhibit with a cover page and then with page 41.
  • p19 - Q: Okay. Mr. Tew has a section in his report on page 41 under Roman numeral XII which is described as, quote, the heart of the problem, and in the first paragraph of that Mr. Tew states that the problem of selling life insurance as, quote, a savings plan with Iife insurance as, quote, a bonus, was, quote, rife companywide. Did you accept that, when this report came out, as a fact?
    • A: No, I didn't.
  • p19 - A: You know, if they had a free hand, we would have been in trouble much before this.
  • p20 - Q: ...the last sentence of the third paragraph, which is the last paragraph, Met tacitly condoned nationwide efforts of its aggressive sales force to sell whole life policies disguised as savings or retirement plans. Didn't Met tacitly condone those efforts nationwide?
    • A: No, I don't agree with that. I mean, there were cases where it happened, but it was not tacitly condoned, where cases were brought to anybody's attention, maybe other than in the southern territory but, you know, this is a conclusion he reaches, tacitly, from the assumption that the earlier
      facts are correct, which I don't agree with.
  • p20 - 99 - - [6] A: Now, two things, one, I said it was basically accurate, had to do with what it had focused on, which was Urso and his selling techniques and the nature of the preapproach letter and the fact that he got away with it for awhile. What I'm disagreeing with is saying that it was the heart of the problem for the whole company, that it was the culture of the company, that the majority, overwhelming majority is
    implied here, of the sales force was violating all the rules, all the statutes, and that was the reason for the
    success of the company.
  • p20 - 101 - Q: Well, he does not say that, Mr. Tew, He says, tacitly, which means that the words you just used may never have been conveyed, but by the silence of MetLife, there is consent.  I mean, you're
    familiar with the Latin maxim, having gone to Harvard qui tacet consentire, he who is silent gives consent?
    • A: No, we studied the whole thing in English.
  • p20 - 101 - A: It relates to all ow- efforts in terms of training and meeting and issuing, you know, and distributing regulations in terms of the results, in terms of the policyholders' satisfaction, which is rifer than this. We have enormous policyholder satisfaction that results - it's evidenced in a lot of things. Nobody asked me to make a study today. It would take me a week maybe.
  • p20 - 102 - A: Based on my overall impression, and my overall impression of what I read in 1993 was that it was okay, we could live with it.
    • p20 - 102 / 103 - A: --- We 're talking about page 41, with the evidence that Tew had and with the
      evidence that we had, if we were litigating this particular thing, but we were in the position of, here's the report, it wasn't nearly as bad as we thought it could be, and so that was that, we just had to live with it.
    • We were in the process at this time of putting in the new compliance program and negotiating
      with all the states on penalties and fines and all that stuff.
  • p20 - 103 - Q: Well,how much worse could it be where it states that Met tacitly condoned nationwide efforts of its aggressive sales force to sell whole life policies disguised as savings or retirement plan
    • MS. TAYLOR: Objection as to form.
    • BY MR. DePASQUALE:  Q: Could you think of anything stated on a national base that could be
      worse than that?
  • p21 - 106 - ...Maurer reported to Robert Crimmins...
  • p21 - 107 - ...Tom McDermott...
  • p22 - 110 - A: ...but I think he's referring to Urso's office, that the selection of Urso's office as office of the year did not embarrass Met.  - [Bonk: Crimmons, 1990]
  • --- A:  ... senior vice president in charge, Rudy Michaud...
  • --- Q: Well, I'm still trying to get to why Mr. Maurer was fired.
  • --- Q: ... Pennsylvania report of sales practices that was issued by the Pennsylvania Insurance Commission's
    office, I believe by Cynthia Milewski...
  • --- Q: Inconsistent.
    • A: It was, I agree with that.
    • Q: Was it incoherent?
    • A: It was incoherent. I didn't know what they were talking about, when I read it, in many instances
    • Q: And therefore the third would follow as well, it arrived at unwarranted conclusions?
    • A: I'd have to look at it again. As I say, what I remember is it was a poorly drawn report with incoherence and inconsistency. Whether it was totally unwarranted, I'd have to look at it.
  • ---  Q: Well, I want to show you a transcript of a deposition that you gave in the case of Carothers versus MetLife on March 7, 1995 and ask you to look at... (Document marked Exhibit Kamen-3 for identification.)
  • p23 - Q: Under what decision-making process was the determination made by MetLife to pay $ 1.5 million to the Commonwealth of Pennsylvania as a penalty resulting from a report that was inconsistent, incoherent and recited conclusions that were unwarranted?
    • A: Well,you know, you try to argue on the fine, but they're in control and we're on the ropes.
  • --- Q: In addition to the $1.5 million fine there was an excess of $20 million in restitution that was made by MetLife to Pennsylvania policyholders because of the Pennsylvania Insurance Commission's investigation,  correct?
    • A: ...we came after the people and said, if you feel you've been deceived, you get your money back, you can get an annuity if that's what you want, your money with interest, and all you have to do is tell us,that's all.
  • ------
  •  
  • --- A: I mean, it was unbelievable to us that three or four insurance departments could have complained
    about it and nobody in the home office knew about it.
  • p24 - A: Urso ...had a branch of 10 people that grew to 125 people in a year or two, another flag. Everyone said, wow, what a great leader he is; but when that happens, unusual success means a special investigation, special care, and that's why he had the success, he was cheating orat least in his - yes, he was cheating. So I've forgotten a lot of the facts over the years, but I still remember my emotions.
  • --------------------------------------------------------
  • p24 - [
  • --- A: single premium life, life at 95, which is whole life, and universal life are excellent vehicles for building your grandchildren's college education fund.
  • --- Q: All right. Would it be a deceptive practice to sell to somebody a universal life policy for a grandchild
    under the pretense that that universal life policy is in fact a college funding savings program?
  • --- [Illustrations]
  • ---  Q: MR. DePASQUALE:Okay. I'm going to show you a document that we'll label as your Deposition Exhibit 5. It's a memo, purports to be a memo, at least, from a senior vice president out of the head office
    operation of MetLife, and it's dated June 29, 1977. (Document marked Exhibit Kamen-5 for identification.)
  • [piggybacking = FIP]
  • 26 - Q: Do you agree with Mr. Maurer's assessment that the field employees act, in general, towards the policyh.older in overseeing financial security, No. 1, and No. 2, acting in a fiduciary capacity?
    • A: Yes. I don't know what he means by fiduciary capacity. I think that he is referring to things
      like handling money, policy payment checks, and so forth, so, you know, I don't think he means that the relationship between a sales rep and a policyholder is a fiduciary relationship. I think Maurer was talking about just the trust that policyholders have in the agent when he's handling their money or claims or what have you.
    • ...
    • MS. TAYLOR: Objection as to form. It calls fora legal conclusion and, as you know, what is a fiduciary varies from Jurisdiction to Jurisdiction.
    • A: Right, and in that respect I would say that the relationship between a policyholder and a sales rep is not a fiduciary relationship. The laws governing fiduciary relationships do not apply in general to that relationship.
  • p26 - Q: Okay.If we can go now to the next document - (Document marked Exhibit Kamen-8 for identification. --- October 17, 1979 - Mauer)
  • p27 - Q: Did that safeguard, that mechanism that he established in October of 1979, get dismantled at some point prior to 1993? --- [he = Mauer]
    • A: Prior to 1988 or something like.
    • Q: It did get dismantled?
    • A: I mean, '93, the problems, for example with Urso started in '88, '89.
  • p27 - A: ... When interest rates are 15 percent and the policy loan has a guaranteed interest rate, you know, a maximnm of 5 or 6 percent, 5 percent in New York, then 6, it's financially desirable often for the policyholder to borrow at 5 percent when rates are 15 percent and buy another policy or buy stocks or buy bonds, and that is a severe cost to the company. 
  • p28 - A: ... Were you aware that Mr. Athanassiades wanted to, if he could, eliminate replacements or FIPs? - [president and chief operating officer]
  • p28 - [Company vs. Sales Rep vs. Consumer - Who Benefits / Loses?]
  • p28 - Q: You did testify at that time the red flag watermark of 15 percent did ring a bell with you as something that was ... companywide.
    • A: Yes
    • Q: Were you aware that in the late 1980s into the early 1990s there were some offices in Pennsylvania that had replacement ratios as high as 45 percent, some higher?
    • A: No.
  • p28 - Q: Now, inaddition to his concern, by his I mean Mr. Athanassiades, his concern about the replacement of policies, do you recall an April 1994 address, speech, given by Mr. Athanassiades at the president's conference, which I believe you were present at, in which Mr.Athanassiades stated, and I'm quoting, let's be frank with eacn other, since the early 1980s we, the industry, and MetLife have tended to
    highlight the savings/investment attributes of the product instead of what should have been emphasized,
    which was the fact that it was life insurance.
  • p28 - A: [History - UL, etc]
  • ------------------------------------------------------
  • p32 - Q: Yes.Did the replacement problem within Metropolitan accentuate or spike with the introduction of universal life in the early 1980s?
    • A: I'm assuming the correctness of this memo, and the memo does say that the introduction of universal life not only Metropolitan but the industry has heightened the concern with replacement and a measure here is provided to help MetLife's salespeople replace the customer's universal life policies where another company is seeking to replace --- [MORE] - [one-page memo dated December 5, 1983.]
  • p32 - (Document marked Exhlbit Kamen - 16 for identification.) -
  • p33 - Q: There's been a number of times that we referred to one of the safeguards that MetLife relied upon with the sales force was the honesty and integrity of the sales force.
    • A: Right.
  • p33 - Q: This memo's saying, we discontinued sending Mr. Maurer's letter back on April 3, 1980, and we're not going to send it anymore because, quote, we do not need to tell people we expect them to be honest.

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• • p35-36 - A: Well, this looks like the fines or penalties paid by MetLife as a result of Multistate determination.
    • p36 - A: This is the National Association of Insurance Commissioners
  • p36 - Q: Was that the position of MetLife in the payment of this, that the states were greedy
    • MS. TAYLOR: Objection as to form.
    • MR. DePASQUALE:I didn't use the word greedy, Ms. Taylor.
    • MS. TAYLOR: I know,but l don't think you were clear.
    • THE WITNESS: That's a personal view. I don't think that's the position of MetLife.
  • p36 - Q: Based·upon everything you know today, do you still hold to that personal view?
    • A: Yes, I still hold to that personal view because the amount of the fine is in relation to fines previously paid by insurance companies for all kinds of things as excessive and an insurance commissioner, who I won't name, told me that a number of the insurance commissioners thought the fine was excessive, but the Florida Commissioner insisted.
    • Q: Well,you're here under oath. Who is this insurance commissioner that told you that the fines were excessive?
    • A: I have to say because I'm under oath?
    • Q: This isn't a private conversation. We're doing a deposition.
    • A: The New York State Commissioner.