Wal-Mart Stores Inc. has agreed to pay $2.02 million to settle a class-action lawsuit alleging it inappropriately bought corporate-owned life insurance policies on some of its employees in Florida during the 1990s.
The U.S. District Court for the Middle District of Florida certified a class consisting of the estates of about 200 people whose lives allegedly were insured under the COLI policies bought by Wal-Mart while they worked as associates in Florida and whose deaths occurred by Jan. 31, 2000, and allegedly resulted in the payment of insurance policy benefits to Wal-Mart, according to court papers.
Plaintiffs' attorney Mike Myers issued a statement on behalf of his clients and Wal-Mart, which said: "The settlement is the result of significant arms-length negotiations and is fair and reasonable. Wal-Mart has not bought company-owned life insurance...in 15 years and it just makes sense to settle this matter."
In this case, AIG Life Insurance Co. insured the hourly wage employees and Hartford Life Insurance Co. insured the management employees, Myers said in an email. The insurers are not parties to the suit, he said.
Attempts to get comment from AIG or Hartford Financial Services Group were unsuccessful.
COLI is a sometimes controversial practice whereby an employer purchases a life insurance policy, often without the worker's knowledge or consent, and names the company as beneficiary. Opponents say employers often collect the death benefit long after the employee has retired or left the company, without the knowledge of family members.
U.S. District Judge James Moody also approved an award of $10,000 to be paid by Wal-Mart from the settlement trust to each of the class representatives, separate from any funds to be paid from the settlement trust. He also preliminarily approved an award of attorneys' fees to class counsel in an amount equal to one-third of the settlement amount.
A fairness hearing will be held on Oct. 17 to consider final approval of the settlement.