The US District Court for the Northern District of California recently allowed an estate’s special administrator to be substituted as a plaintiff in a class action alleging statutory violations, including California’s Unfair Competition Law. The plaintiff in Rand v. American National Ins. Co. claimed that the insurer made misrepresentations and omissions in the sale of deferred annuities to an 86-year-old who died shortly after bringing suit. The defendant claimed that the administrator could not be substituted because she was not present at the sale and therefore could not provide evidence of reliance or causation. The court found those issues were better determined on summary judgment and that, in any case, reliance was only necessary for the “fraud” prong of the UCL but not the “unfair” or “deceptive” prongs. The court also rejected the insurer’s argument that upon the annuitant’s death the interests of the beneficiaries became vested, because the plaintiff was claiming injury in the purchase of the policies and imposition of surrender charges prior to death.
Another insurer fared better in federal court in Pennsylvania, where a magistrate recommended granting summary judgment in its favor on Pennsylvania consumer protection law claims. In Smith v. National Western Life Ins. Co., plaintiff claimed that the insurer was liable for violating notice provisions and committing fraud. The court rejected the notice argument, finding that plaintiff had been given the required free look notification, and that the notice satisfied any other notification provisions in the Pennsylvania code. As to the fraud claim, the court found that the alleged deception concerned the suitability of the product, not the contract terms, that the salesperson was acting as the insured’s agent, and that National Western had not authorized the agent to sell an unsuitable policy.