I’ve previously posted regarding class actions against life insurers involving the use of “checkbook” accounts to pay policy proceeds, including posts about the denial of a motion to dismiss in a case against Prudential in Massachusetts federal court and the denial of a motion to dismiss in a case against MetLife in Nevada federal court.
In Otte v. Life Insurance Company of North America, Judge Stearns of the District of Massachusetts recently granted class certification in a case brought against affiliates of CIGNA on this issue. This case involved life insurance policies issued as part of employee benefit plans governed by ERISA. The insurers paid benefits using “checkbook” accounts known as CIGNAssurance accounts. Interest was paid to the named plaintiffs at rates ranging from 0.39% to 0.74%.
On class certification, the defendants did not dispute numerosity or commonality (notably, this was briefed and decided before the Wal-Mart decision came down). On typicality, the defendants argued that there was significant variation among the summary plan descriptions and other governing plan documents for each employer’s benefit plan, thereby precluding a finding of typicality. The court rejected this based on the First Circuit decision in Mogel v. UNUM Life Ins. Co., but the court did not provide much explanation as to what the claimed variations were in the plan documents or why they would not matter.
The court was more persuaded by the defendants’ argument on typicality and predominance that their statute of limitations defense required an individualized analysis because whether a claim was time-barred would depend on when class members obtained actual knowledge of the alleged breach of fiduciary duty. The court, however, concluded that sub-classing was appropriate, separating potentially-time barred claims from those that were clearly timely:
This issue . . . can be addressed by certifying two sub-classes, one consisting of persons whose claims arose within the three years before the filing of the Complaint, the other of persons whose claims arose three years prior to that date. A brief period of discovery should establish whether the second sub-class can survive the commonality test and whether a suitable representative of the sub-class can be identified.
With this decision granting class certification, it is likely that additional class actions will be filed on this issue. There may be additional arguments insurers have against class certification that we haven’t yet seen in these cases, based on the terms of their policies (or summary plan descriptions for ERISA plans), and based on the Wal-Mart decision’s reinvigoration of the commonality requirement. Stay tuned.