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USPS agrees to $49 million settlement for ‘dawdling’ in paying life insurance beneficiaries

It’s bad enough for family members when a loved one dies.

Getting cheated by Uncle Sam afterward makes it worse.

He did that in cases involving more than 2,000 beneficiaries who didn’t get the full benefit of U.S. Postal Service life insurance policies. After waging a losing fight, the Postal Service surrendered, agreeing to a settlement of up to $49 million. The agency is now sending checks to the beneficiaries it can find, but some of them may never know they are owed money.

They would have been easier to find if postal officials had not taken decades to resolve the situation.

The case started with Pamela McKinney, a former federal employee and now a local government worker in Chicago. When her father, a postal employee and decorated Army veteran, died in 1982, the life insurance payments were short because they did not include calculations covering cost of living increases that boosted her dad’s wages. She did get the additional payments much later, in 2008, but without interest.

Just this month she received a check for $25,000 in back interest.

Anyone who has ever had a tax problem knows Sam demands interest on late payments. But when he is late — more than 20 years behind in this case — he reacts to interest he owes as if it were a rash.

When McKinney began asking about the interest, she received a curt email in response. The relevant agreements “do not state that the USPS is obligated to pay any interest on the monies due to the beneficiaries,” the message from a payroll benefits supervisor said. “Payment of interest to one beneficiary without any legal precedent or valid reason would be fiscally irresponsible and a clear violation of our fiduciary responsibility . . . there will be no additional response from this office.”

U.S. District Court Judge Christopher Cooper had a response.

“Rather than promptly locating and paying eligible beneficiaries, the Postal Service dawdled,” he wrote in a ruling against USPS. “Many beneficiaries were made to wait decades to receive payment and some still have not been located and paid.”

[More at ChicagoTribune.com…]

 

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