IN THE CIRCUIT COURT OF THE SECOND JUDICIAL CIRCUIT, IN AND FOR LEON COUNTY, FLORIDA

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1 ~. IN THE CIRCUIT COURT OF THE SECOND JUDICIAL CIRCUIT, IN AND FOR LEON COUNTY, FLORIDA TOTAL ASSET RECOVERY SERVICES, LLC, On Behalf of the State of Florida, Plaintiff/Relator, v. METLIFE, INC., d/b/a/metropolitan LIFE INSURANCE COMPANY, and all subsidiaries And affiliates, MANULIFE FINANCIAL CORPORATION, d/b/a, JOHN ~IANCOCK LIFE INSURANCE COMPANY, d/b/a JOHN HANCOCK LIFE INSURANCE COMPANY (U.S.A.), d/b/a JOHN HANCOCK LIFE &HEALTH INSURANCE COMPANY, and all subsidiaries and affiliates, and PRUDENTIAL FINANCIAL INC., d/b/a THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, PRUDENTIAL INSURANCE AGENCY, LLC, and all subsidiaries and affiliates, CASE NO.2010-CA-3719 Defendants. ORDER GRANTING PRUDENTIAL FINANCIAL, INC'S MOTION TO DISMISS This cause is before the Court for consideration of the Motion to Dismiss by Prudential Financial, Inc. ("Prudential"). Being duly advised in the premises, the Court ORDERS and ADJUDGES: This action against Prudential by Total Asset Recovery Services, LLC ("Relator" or "TARS") is barred by section (2), Florida Statutes (2009). TARS' allegations are based upon transactions that are the subject of administrative proceedings in which the affected agency, the Florida Department of Financial Services ("DFS") is a party. In March 2009, l

2 pursuant to its statutory authority, DFS undertook an extensive audit of Prudential's compliance with unclaimed property obligations under Florida law. In addition, in January 2010, the Florida Office of Insurance Regulation ("OIR") initiated a market conduct examination of Prudential's claims settlement and unclaimed property practices. These administrative proceedings resulted in a comprehensive settlement designed to resolve all outstanding claims by the State against Prudential relating to its unclaimed property practices. All of the transactions at issue in the TARS complaint involving proceeds of policies that were subject to Prudential's demutualization were included in these administrative proceedings, and allegations concerning compliance with Florida's Unclaimed Property Law were at the heart of these administrative proceedings. On February 2, 2012, Prudential, DFS, OIR, and the Office of the Attorney General finalized a settlement that resolves claims under the state's unclaimed property and insurance laws relating to both the remittance of unclaimed property within the scope of DFS's audit and Prudential's claims settlement practices as they relate to matching prospectively its policyholders and annuitants against the database known as the "Death Master File" maintained by the Social Security Administration. The transactions alleged in the TARS complaint Prudential's purported failure to escheat life insurance proceeds belonging to policyholders where Prudential had previously escheated unclaimed demutualization proceeds to policyholders are explicitly dealt with in Prudential's settlement agreement resolving the DFS audit, which includes provisions describing the process for escheatment of "proceeds due under life insurance policies... [for] owners who could not be located at the time of demutualization." The False Claims Act bars private actions that are "based upon allegations or transactions that are the subject of... an administrative proceeding in which the [affected] agency is already a party." (2), Fla. Stat. Because TARS' complaint is based entirely upon transactions and 2

3 allegations that the State has already resolved in administrative proceedings and does nothing to further the purposes of the False Claims Act, this Court lacks jurisdiction over TARS' suit under section (2), Florida Statutes.' 2. Even if TARS' claims were not jurisdictionally barred by section (2), Florida Statutes, the TARS complaint must be dismissed for additional reasons. 3. TARS has not alleged facts sufficient to show a violation of section (2)(g), Florida Statutes, which imposes liability on one who "[k]nowingly makes... a false record or statement material to an obligation to pay or transmit money or property to the state, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the state" (in this case, the escheatment of life insurance proceeds allegedly due to DFS under section , Florida Statutes). Section (1)(e), Florida Statutes, defines an "obligation" to mean "an established duty, fixed or otherwise, arising from....statute or regulation..." Section (1)(c), Florida Statutes, defines "knowing" or "knowingly" to mean that a person either has "actual knowledge of information" giving rise to 1 Section (2), Florida Statutes, is jurisdictional. See, e.g., Costner v. Urs Consultants, 153 F.3d 667, (8th Cir. 1998) (discussing counterpart administrative procedure bar of the federal FCA's "jurisdictional scheme"); U.S. ex rel. S. Prawer & Co. v. Fleet Bank of Maine, 24 F.3d 320, 326 (1st Cir. 1994) (resolving "the jurisdictional question" raised pursuant to the administrative proceeding bar of the federal FCA); U.S. ex rel. Davis v. Prance, 753 F. Supp. 2d 569, 578 (E,D. Va. 2011); U.S. ex rel. Merena v. Smithkline Beecham Corp., No , 1997 U.S. Dist. LEXIS 19896, at *15-*16 (E.D. Pa. July 21, 1997); U.S. ex rel. Dugan v. ADT Security Servs., Inc., No. DKC , 2009 WL , at *12 (D. Md. Sept. 29, 2009) ("Plaintiffs action is jurisdictionally barred under In resolving this jurisdictional issue, the Court has considered evidence beyond the four corners of the complaint. Morgan v. Dept of Envtl. Prot., 98 So. 3d 651, 653 (Fla. 3d DCA 2012) ("A trial court may look to facts gathered outside the pleadings, including affidavits, to determine subject matter jurisdiction. ") (citing Seminole Tribe of Fla. v. McCor, 903 So.2d 353, 357 (Fla. 2d DCA 2005). See also Gleneagle Ship Management Co. v. Leondakos, 602 So. 2d 1282, 1284 (Fla. 1992); United States ex rel. Ramseyer v. Century Healthcare Corp., 90 F.3d 1514, 1518 (10th Cir. 1996); United States ex rel. Eitel v. Reagan, 898 F. Supp. 734, 737 (D. Or. 1995). As noted in Eitel v. Reagan, when faced with. a factual attack on subject matter jurisdiction, such as that under section (2), Florida Statutes), "the trial court may proceed as it never could under Rule 12(b)(6) or Fed. R. Civ. P. 56. * * * [N]o presumptive truthfulness attaches to plaintiffs allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims." Id. at 737 (quoting Thornhill Pub. v. Gen. Tel. & Elecs. 594 F2d 730, 733 (9th Cir. 1979)). 3

4 an obligation to transmit money or property to the state, or acts in "deliberate ignorance" or "reckless disregard" of the truth or falsity of information. Thus, in order to state a viable cause of action under section (2)(g), TARS must allege facts showing that Prudential had an obligation under section , Florida Statutes, to report and remit specific insurance proceeds to DFS, but Prudential knowingly submitted false reports to DFS omitting those insurance proceeds. Section imposes an obligation on Prudential to report and remit insurance proceeds under the following conditions: (1) when Prudential has actual knowledge that the person whose life is insured under a Prudential life insurance policy died more than 5 years previously, or (2) when Prudential knows the person whose life is insured under by Prudential policy has attained or should have attained the limiting age under the policy, the policy was in force at that time, and Prudential is on notice from its own records that no one has indicated an interest in the policy for two years thereafter. TARS has not alleged facts showing the occurrence of either of the two statutory conditions specified in section as to any Prudential life insurance policy. Florida has not adopted a law requiring Prudential to consult the Death Master File, averred by TARS, in connection with payment or escheatment of life insurance benefits. Likewise, Florida has adopted no law imposing an obligation on Prudential to engage in elaborate data mining of external databases, such as TARS alleges it performed, in connection with payment or escheatment of life insurance benefits. Therefore, TARS has alleged no facts showing an obligation on Prudential to report and remit life insurance proceeds pursuant to section , Florida Statutes, in respect to any Prudential insurance policy. Since TARS has not alleged facts sufficient to show an obligation on Prudential to report and remit insurance proceeds, TARS likewise has not alleged facts G!

5 sufficient to show that Prudential knowingly submitted a false record or report to DFS material to such an obligation, or that Prudential knowingly concealed or avoided an obligation to remit insurance proceeds to DFS. 4. Moreover, as previously articulated by the Court in State ex rel. Stevens v. GE Money Bank, (Fla. 2d Jud. Cir., case no CA 2701, Feb. 18, 2013), the elevated pleading standards of Florida Rule of Civil Procedure Rule 1.120(b) apply to complaints arising under the Florida False Claims Act. See United States ex rel. Heater v. Holy Cross Hosp., Inc., 510 F. Supp. 2d 1027 (S.D. Fla. 2007) (applying Florida law and stating qui tam plaintiff was required to plead with particularity). TARS has failed to: (i) identify any specific facts relating to Prudential and its alleged fraudulent conduct, (ii) identify specific false reports or records that were submitted by Prudential to the State, (3) allege facts establishing scienter, in other words, that anyone at Prudential knew that it had submitted false unclaimed property reports to the State. Accordingly, TARS has failed to plead its claims with the requisite specificity. 5. The deficiencies in the TARS complaint cannot be cured through re-pleading. Moreover, TARS declined to amend the complaint upon the filing of Prudential's Motion to Dismiss. 6. The Motion to Dismiss by Prudential Financial Inc. is granted and the complaint filed by Total Asset Recovery Services, LLC in this cause is dismissed with prejudice as to Plaintiff and without prejudice to the State of Florida. ~_ DONE and ORDERED in chambers at Tallahassee, Leon County, Florida this ~~ day ~ '~%' 1 j'- Copies to counsel of record

6 Counsel of Record: Joy M. Ryan, Esq. F. Philip Blank, Esq. Blank, & Meenan, P.A. 204 South Monroe Street Tallahassee, Florida Carol Lynn Thompson, Esq. Sidley Austin LLP 555 California Street Suite 2000 San Francisco, California Kathleen L. Carlson, Esq. Sidley Austin LLP One South Dearborn Street Chicago, Illinois Jeffrey H. Sloman, Esq. Melissa D. Visconti, Esq. The Ferraro Law Firm 4000 Ponce de Leon Blvd. Suite 700 Miami, Florida Russell S. Kent, Esq. Special Counsel for Litigation Office of the Attorney General The Capitol, PL-01 Tallahassze, Florida Daniel C. Brown, Esq. Carlton Fields 215 South Monroe Street Suite 500 Tallahassee, Florida Edwin Schallert Debevois &Plimpton, LLP 919 Third Avenue New York, New York Gwynne Young, Esq. Carlton Fields, P.A. P. O. Box 3239 Tampa, Florida Copies Mai(ed By SB ~ ~~-3