Subject to the United States District Court for the District of Maryland’s final approval, Banner Life Insurance Company (Banner) and William Penn Life Insurance Company of New York (William Penn) have reached a class action settlement valued at $40,749,525 with the named Plaintiffs in two class actions and a proposed settlement class consisting of more than 12,000 policyholders of Banner and William Penn universal life insurance policies.
Plaintiffs and the proposed settlement class are represented by Beasley Allen lawyers Dee Miles, Rachel Boyd, and Paul Evans, along with Wally Walker and Geoff McDonald & Associates PC, as well as local counsel Christopher T. Nace of Paulson & Nace, PLLC.
On Oct. 15, 2019, the District of Maryland preliminarily approved the proposed settlement, preliminarily certified the proposed settlement class, and appointed Dee Miles and Wally Walker as co-lead class counsel. The court ordered the dissemination of class notice to proposed class members.
The proposed settlement relates to class action complaints filed in Dickman v. Banner, No. 1:16-cv-00192-RDB (D. Md. filed Jan. 19, 2016) and Rich v. William Penn Life Insurance Co. of New York, No. 1:17-cv-02026-GLR (D. Md. filed July 20, 2017), which were consolidated for purposes of settlement approval.
Plaintiffs’ class action complaints asserted claims for breach of contract and fraud against Banner and William Penn, alleging the companies unjustifiably increased the cost of insurance (COI) charges on certain universal life products in 2015. These COI increases in 2015 affected approximately 7,631 universal life policyholders, who are included in the proposed settlement class definition. Another 4,482 universal life policies were considered by Banner and William Penn for future COI rate increases, and the policyholders that currently own such policies are also included in the proposed definition of the settlement class.
The settlement agreement reached with Banner and William Penn, which is subject to final approval by the District of Maryland, provides the proposed class members with several valuable benefits.
- Banner and William Penn will create a common settlement fund in the amount of $22.5 million. This fund will be distributed to settlement class members, pro rata, based on the proportion of COI collected for each Class Policy after the 2015 cost of insurance rate increases. The distributions will go to in-force policyholders by an increase to the account value of each in-force policy owned by the Settlement Class Member; terminated policyholders will be paid their share by check.
- The proposed settlement provides that Banner and William Penn agrees not to impose any COI rate increases on policies of class members for five years unless ordered to do so by a state regulatory body.
- Policies that received cost of insurance rate increases to the guarantee maximums set for in their policies will be provided with an additional forty-five days added to the length of their grace period if their policy is subject to lapse.
- Banner and William Penn agree to not seek to void, rescind, cancel, have declared void, or otherwise deny coverage or death claims submitted by settlement class members based on any alleged lack of insurable interest or misrepresentations made in connection with the original application process.
- Following the final approval of the settlement, Banner and William Penn will provide proposed class members with a free illustration upon request depicting the impact of the proposed settlement benefits on the anticipated future performance of their policies.
In total, the collective value of the proposed settlement benefits amounts to $40,749,525. This total value is comprised of the $22.5 million Common Settlement Fund and the valuation of the other relief detailed above at $18.2 million, which is supported by formal and informal discovery as well as valuations by Defendants’ and independent actuaries that were confirmed by Plaintiffs’ experts.
Subject to the requirements of any orders entered by the court, the Settlement Administrator will send a Class Notice by first-class mail to the last known address of each reasonably identified person and entity in the Settlement Class. Settlement Class Members will have 45 days after notice is sent to either exclude themselves from the Settlement Class by sending a written Request for Exclusion to Co-Lead Class Counsel, or object to the proposed Settlement by filing a written statement of objections with the Court. If you have any questions, contact Rachel Boyd or Paul Evans in our firm’s Consumer Fraud Section.
This story appears in the November 2019 issue of The Jere Beasley Report. For more like this, visit the Report online and subscribe.