JULY/AUGUST 1996 · VOLUME 17 · NUMBERS 7 & 8
N A M E S I N T H E N E W S
JULY/AUGUST 1996 · VOLUME 17 · NUMBERS 7 & 8
N A M E S I N T H E N E W S
A MULTISTATE TASK FORCE, led by New Jersey Banking and Insurance Commissioner Elizabeth Randall, recommended in July that Prudential Insurance Company of America be fined $35 million for widespread abuses by the company in its sales of life insurance.
The fine against Prudential represents the largest penalty assessed against an insurer.
"Consumers put their confidence and their money into Prudential and the company's agents led them astray," said Randall at a press conference in Trenton, New Jersey. "The abuses reviewed by the Task Force involved more than simply a few rogue agents or isolated instances of improper sales presentations."
"Prudential failed to act responsibly when it learned of agent misconduct, including misrepresentation and instances of forgery," added Randall.
The 232-page Task Force report details deficiencies found across the country. The abuses include the practices called "churning" and "twisting." Churning is a term normally associated with the securities industry and refers to repeated sales to generate commissions. Twisting is the sale of insurance based upon incomplete or fraudulent comparisons.
Shortly before the Task Force issued its report, the Los Angeles Times reported that a regional headquarters of Prudential Insurance Co., believing that one state had begun investigating possible company misconduct, ordered managers in 14 states to destroy documents that might be sought in the inquiry.
An internal Prudential memo obtained by the Times referred to sales material Prudential agents used to urge older people to take money out of other investments, such as certificates of deposit, and invest it with Prudential's private pension program for retirement income.
According to the Times, the memo read: "We just learned this morning that one state is looking into possible violations regarding our 'private pension' materials. You must destroy all private pension letters other than the approved versions I referred to in my earlier focus message today. ... Again, destroy and discard any other letters."
A Prudential spokesperson confirmed the authenticity of the memo and told the Times that the order to destroy the documents was countermanded nearly a month after it was sent. The Times reported that Prudential was not yet under investigation when the memo was sent.
Rotten Eggs
CALLING THE WORKING CONDITIONS "ATROCIOUS" and the housing conditions "deplorable," Labor Secretary Robert B. Reich in July proposed more than $3.6 million in penalties against Decoster Egg Farms, one of the largest egg producers in the country.
The Labor Department cited the Turner, Maine worksite for numerous alleged egregious and willful violations of health and safety and wage and hour laws. Decoster also owns farms in Iowa, Ohio and Minnesota.
"The conditions at this migrant farm site are as dangerous and oppressive as any sweatshop we have seen," Reich said at a press conference in Boston. "Fear and intimidation kept these workers in this unsafe, unhealthy atmosphere and living in totally unsanitary conditions."
"Workers toiled 10 to 15 hours a day, with no equipment to protect them from disease, picking up dead chickens with their bare hands and handling manure potentially infected with the salmonella virus," Reich said. "They were exposed to life-threatening electrical hazards and workers injured on the job often went untreated."
Workers at the Turner, Maine facility said they doubted that the OSHA action would improve conditions.
"For us it is the same," Felipe Limon told reporters. "For us nothing changes. We have a job we survive from and that's all. In reality, we gain nothing."
"I agree with many of OSHA's findings," company owner Austin Decoster says. "OSHA has made findings which I am told are not violations but are suggestions for improvement. I intend to review all of them and give serious consideration to implementing them."
In addition to OSHA citations, the Wage and Hour Division of the Employment Standards Administration cited Decoster for violations of the Fair Labor Standards Act (FLSA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA).
Criminal Bumper
AMERICAN BUMPER AND MANUFACTURING COMPANY of Ionia, Michigan was sentenced in July to five years probation in connection with the 1991 deaths of two workers.
On September 21, 1991, Ricky Dora and Steven Eilar, two press operators, were crushed to death in the press they were operating at the American Bumper facility.
Michigan Attorney General Frank Kelley filed charges alleging that the company was criminally negligent in the deaths of the two employees.
On January 29, 1996, the company entered no contest pleas to two counts of involuntary manslaughter.
Iosco County Circuit Court Judge J. Richard Ernst sentenced the company to five years probation. Under the sentence, the company must maintain safety programs and company officials will be held personally liable for violations of state occupational safety and health law.
In addition, the judge ordered the company to hold a moment of silence every year on the anniversary of the deaths of the two workers. Earlier this year, the company agreed to pay a $100,000 civil penalty to settle charges it violated state law.
-- Russell Mokhiber