Metropolitan Life Insurance Co. executives knew that their salespeople used deceptive sales tactics and that they used them nationwide.
That is the conclusion of a report detailing the state's comprehensive investigation into the company's sales practices.
It shows that several states tried to stop the illegal practices as long ago as 1990, but the company's response was less than thorough.
And it shows that even when the company's attorneys passively tried to stop the practices, key managers stepped in and supported the salespeople and eventually helped convince the attorneys to drop their concerns.
"Met's management style, that of ignoring the problem in the hope it will disappear, (was) like an ostrich burying its head in the sand," independent investigator Thomas Tew wrote in the report.
On Monday, MetLife felt the results of ignoring the problems. The company agreed to pay an unprecedented $20-million in fines across the nation and agreed to a comprehensive restitution package that offers refunds to 60,000 customers who may have been duped. If all of the customers opt for refunds, it would cost $76-million.
"We've said all along that the efforts we took . . . were not as effective as we would have wished," said MetLife spokesman Charles Sahner. "There were warning signs . . . but our efforts were just not effective."
Tew, a Miami lawyer, also found:
MetLife was warned in 1990 by Texas, Tennessee and North Carolina that its salespeople were misleading customers with illegal sales literature.
MetLife officials again passively warned the Tampa office about using deceptive sales practices in 1991 _ while at the same time rewarding it as the most productive sales office in the nation. The practices still were used.
When MetLife attorneys tried to stop Tampa district sales manager Daniel "Rick" Urso and his salespeople from misleading customers, top managers intervened.
In one confidential letter obtained by Tew, William Goggans, officer-in-charge of MetLife's southeastern headquarters office in Tampa, pleads with his boss to get the legal department to quit hassling Urso and let him continue making money.
"We need his production and retention," Goggans wrote in June 1993 _ just two months before the state threatened to revoke MetLife's license to do business in Florida.
Urso was manager of the MetLife district office in Tampa thought to be the source of most of the illegal sales tactics, the investigative report confirms. His 125 employees traveled nationally, selling whole life insurance policies disguised as retirement savings plans, the report said.
The business was lucrative. Urso's office was consistently the most profitable for MetLife in the country. Urso was the sixth-highest paid MetLife employee in the world, making $986,000 last year.
At one point in Goggans' letter to MetLife senior vice president Richard Maurer, he compares Urso's battle with company attorneys to "the plight of Gen. George Patton."
"He (Urso) is in the field setting records every day, that others dare to dream . . . he strives to continue to improve performance with hard work, honesty and integrity!" Goggans wrote.
Goggans was isolated from the scandal before the report. Maurer, his boss, was pressured to retire.
Urso, whom MetLife fired in December, has not responded to numerous requests from the Times for interviews. Goggans asked a company spokesman to answer questions for him Monday.
Sahner, the spokesman, said he thought Goggans was simply supporting Urso because he was one of his employees, and that Goggans wasn't necessarily supporting Urso's selling techniques.
According to Tew's report, Goggans and Urso met with Richard Mandel, MetLife's associate general counsel; Ted Athanassiades, MetLife's president; and others on July 15, 1993, to discuss the concerns over the use of deceptive sales literature.
"At the close of Urso's July 15 presentation, Mandel, in a gesture of conciliation, ripped up the notes he had prepared to rebut Urso's position and suggested instead that all parties move forward and refrain from looking back," Tew wrote.
MetLife's vice president for personal insurance, Robert Crimmins, knew about the unauthorized literature by 1991, the report shows.
Even MetLife's highest-ranking officer, company chairman Harry Kamen, was warned of the illegal sales techniques in February 1993.
Mark Moser, an account representative in Tampa, warned Kamen of the problems in a letter. Kamen said that he didn't see the letter and that his secretary passed it on to a lower-level manager. Moser later filed a so-called "whistle-blower" suit against the company that MetLife settled late last year.
In April 1991, a MetLife executive in Colorado complained about illegal material being used in Illinois by MetLife's Tampa salespeople.
Harold J. Harrison's complaints about the solicitation letters were succinct: "1. They don't mention life insurance," he wrote. "2. Life insurance cannot be marketed as a "savings plan.' 3. It is not in the clients' best interest. 4. I sincerely doubt that Mr. Mandel would approve of these letters. 5. The client is being misled."
As with the other complaints, MetLife executives' responses were to send memos to Tampa managers saying the tactics were improper.
"If you want to criticize us, you can criticize us for being too trusting," said Sahner, the MetLife spokesman. "The orders went down (to Tampa) . . . but they just weren't followed."
Boss backed sales tactics
When Daniel "Rick" Urso, district sales manager for MetLife in Tampa, came under criticism from some of the company's lawyers in the summer of 1993, his boss came to his defense.
William L. Goggans, officer-in-charge of the company's Southern Territory, wrote a letter to Richard Maurer, MetLife's senior vice president for career agency operations in New York.
Here is a portion of Goggans' letter, which is reprinted verbatim.
Attached is a letter from Rick Urso which addresses some serious concerns. He is obviously asking for help because we have left him to dangle in the breeze of innuendo, confusion, half-truths and almost a total lack of understanding of his problems in running a hundred plus Account Representative Agency.
His situation reminds me a little of the plight of General George Patton. He is in the field setting records every day, that others dare to dream, his people are well trained and focused, he shares his strategies with those willing to listen, he loves his work and Company, and he strives to continue to improve performance with hard work, honesty and integrity!
For at least the last three or four months some people in our company have had a feeding frenzy at the expense of Rick and his people. Their entire selling system has been placed on hold (on again--off again) for too long. Commissioned sales people can't continue to support their families with indecisive and untimely decisions from some of our attorneys, on sales material. When one looks at their apparent, confusion one can only conclude that the involved attorneys are either naive concerning the principals of insurance or for some reason they have been sent on a mission to undermine the success of this particular sales organization.
Hopefully, after you have read Rick's letter, you will conclude that it is time for us to give Rick and his associates the type of support they need in order to keep their selling system on the move. We need his production and retention, but more important--its the right thing to do!