That didn’t take long. In my post yesterday about the retained-asset accounts maintained by MetLife and Prudential, I predicted that a class action would be filed against the insurers based on their allegedly deceptive practices, such as not adequately disclosing that the accounts are not insured by the Federal Deposit Insurance Corporation and are invested in the insurance companies’ general corporate accounts, and that the rate of return paid to the beneficiaries is far less than what the insurance companies earn for themselves, which means that the difference is profit to the insurance companies.

Yesterday, in the United District Court for the District of Massachusetts, plaintiffs filed a putative class action against Prudential Insurance Company of America. Lucey v. Prudential Ins. Co. of America, 3:10-CV-30163 (W.D. Mass.)

Here is the complaint, which is filed on behalf of a class defined as "All persons who were/are beneficiaries of SGLI [Servicemembers Group Life Insurance Program] , VGLI [Veterans’ Group Life Insurance Program] and/or TSGLI [Traumatic Injury Protection] benefits dating back to six years from the date of filing on this Complaint."

The suit alleges that Prudential failed to pay "monies generated by the benefit owed to Plaintiffs and the Class between the time of accrual of the benefit upon the death or traumatic injury of the insured and the time at which the full value of the benefit was eventually paid to Plaintiffs and the Class." The complaint alleges claims for breach of contract, breach of fiduciary duty, and breach of the implied duty of good faith and fair dealing, and seeks compensatory damages for the income earned by Prudential on its investment of the beneficiaries’ proceeds, establishment of a constructive trust, and attorney’s fees and expenses.

The representative plaintiffs include Kevin and Joyce Lucey, the parents of Jeffrey Lucey, who died on June 22, 2004. The complaint alleges that the Luceys received $53,000 (out of a benefit of $250,000) in July of 2004, and the balance of $197,000 by March 2009. Prudential paid interest of approximately 1% per year to the unpaid balance of the policy at the time of distribution of the funds.

The other representative plaintiff is Tracy Eiswert, the widow of Scott Eiswert, who died on May 16 , 2008. According to the complaint, Ms. Eiswert received the entire benefit of $400,000 on February 26, 2009, plus interest of approximately 1% for the period Prudential held the funds.

The complaint provides a detailed history of the laws that entitle service members and their families to benefits, as well as the types and amounts of available coverage. The complaint also provides some actual numbers to support the plaintiffs’ allegations that the insurance companies — in this case, Prudential — have profited handsomely on the difference between the rate of return paid to beneficiaries and the companies’ own rate of return:

37. For the year 2009 alone, the US Department of Veterans Affairs (“VA”) reports that [Prudential], as Administrator of the SGLI and VGLI programs, collected $982,811,925 in premiums, $213,241,777 in contributions from the various service branches, and $144,088,273 in investment income, and that it held reserves amounting to $2,529,652,423, indicating earnings exceeding $5.69% per year. [Prudential], in turn, paid to beneficiaries on the accrued claims only 1% interest on the accrued monies as of the day of death or traumatic injury of the insured.

38. For the year 2009 alone, the VA reports that [Prudential], as Administrator of the SGLI and VGLI programs, paid 1,125,569,521 in death claims for members and their families, and added $191,423,248 to [Prudential]’s reserves.

And not surprisingly, there are millions of potential class members: 

42. The number of persons in the class makes joiner of all members impracticable. The VA reports that, in 2009 alone, there were 2,371,000 members covered by SGLI as well as 3,133,000 spouses and children and that [Prudential] paid, on death claims under SGLI, $921,967,073. VA reports that in 2009 alone there were 432,000 insureds and that [Prudential] paid, through VGLI, death claims totaling $206, 602,448. VA finally reports that [Prudential] paid $86,625,000 in 2009 under the TSDGLI program.

Stay tuned.