Two judges in the United States District Court for the Central District of California recently reached contrary conclusions as to whether a class could be certified in actions challenging cost of insurance charges.
In Yue v. Conseco life Insurance Co., the named plaintiff alleged that when policyholders were procuring coverage, the defendant life insurer did not disclose its intent to impose COI increases beginning in policy year 21, and that the increases were unrelated to the defendant’s expectations as to future mortality increases. The court certified nationwide and Californiaonly class claims for declaratory and injunctive relief, finding that because the defendant had decided to increase the COI for all policies in uniform fashion, it was appropriate to evaluate the claims on behalf of the class as a whole to determine the increases’ permissibility. Among other things, the court rejected the defendant’s argument that differences in state contract law precluded certification.
The named plaintiff in Gregurek v. United of Omaha Life Insurance Co. represented a class of universal life insurance policyholders. The parties’ central dispute concerned the interpretation of the COI charge, the plaintiff asserting that the charge should be calculated exclusively using factors related to a policyholder’s mortality risks. According to the plaintiff, non-mortality costs such as profits and administrative costs were concealed in the COI. On the defendant’s motion to decertify an earlier-certified class, the court held the class claims required a determination as to whether each policyholder actually knew that the COI charge covered non-mortality expenses, and whether it was reasonable for the defendant to believe that a policyholder knew the COI charge covered non-mortality expenses. Certification was improper because the parties’ varying states of mind depended upon individualized sales presentations between policyholders and their sales agents.