Sylvia Mathews Burwell, President Obama’s nominee to lead the country’s health care overhaul, remains entangled in a lawsuit brought by shareholders of MetLife accusing her of misleading investors as a director of one of the country’s biggest insurance companies.
The federal lawsuit, filed in New York, says the company used a Social Security death index to stop making payments when beneficiaries died, but the company wasn’t as diligent about using the database to track deaths of its policyholders, which triggers payouts, the lawsuit said.
Last year, a judge refused to toss a federal lawsuit against the company, including claims against Ms. Burwell and other directors, ruling that they “were board members and signed various financial statements and registration statements that contained the alleged misstatements.”
Ms. Burwell served as head of the corporate governance committee on the board of MetLife until she joined the Obama administration as White House budget director last year. Last week, Mr. Obama nominated her to be secretary of the Health and Human Services Department, where she would troubleshoot the botched Obamacare rollout.
“Regarding the litigation, we believe the case is without merit and we intend to defend this action vigorously,” company spokesman John Calagna said in an email.
White House Office of Management and Budget officials declined to comment on whether Ms. Burwell’s ongoing role as a defendant in a lawsuit against MetLife required any additional recusal requirements. In an ethics agreement signed before she became OMB director last year, Ms. Burwell said she would not participate “personally or substantially” in any particular matters involving MetLife for one year.
Craig Holman, legislative representative for the watchdog group Public Citizen, said Ms. Burwell is prohibited from taking any official actions that could affect the case.
“She is restricted from taking official actions that singularly and substantially benefit her former employer on all other matters for two years,” he said.
As he announced Ms. Burwell as his pick last week to take over at HHS, Mr. Obama singled out her years at MetLife as an example of how she “gained firsthand experience into how insurance markets work.”
Her former employer has a big presence in Washington, spending millions of dollars last year to lobby HHS and other agencies on a host of issues, including Obamacare, according to Senate lobbying registration forms.
At HHS, Ms. Burwell would be tasked with overseeing the implementation of Obamacare, an issue that is important to her former employer.
In a Securities and Exchange Commission filing signed by Ms. Burwell last year, the company noted that Obamacare could “result in increased or unpredictable costs to provide employee benefits, and could harm our competitive position.”