Universal Life / Insurance Class Action


Class Action Settlement (relief value available through settlement) -- 8/12/04. Robert C. McBride, Individually and in a representative capacity on behalf of a class of all persons similarly situated v. Life Insurance Company of Virginia, d/b/a GE Life and Annuity Assurance Company, United States District Court, Middle District of Georgia, Columbus Division. Butler Wooten & Peak LLP served as class counsel in a groundbreaking settlement of a nationwide class action against GE Life Assurance and Annuity Company (formerly Life of Virginia) over its universal life insurance policies. The settlement, which was finally approved by Judge Duross Fitzpatrick on August 12, 2004, came nearly four years after the firm first filed suit for Robert and Barbara McBride.

Mr. McBride's monthly premium increased dramatically after he had been paying on the policy for about 13 years. The overarching issue was whether GE Life had the contractual right to administer its universal life policies so that additional or high premiums could be required to keep the policies in force. The settlement included three types of claims for premium relief: a level premium claim for policy holders who believed premiums would stay the same over time; a single premium claim for policyholders who believed that only one premium payment would ever be required; or a vanishing premium claim for policyholders who believed they had an obligation to pay premiums for only a limited amount of time, after which no more premiums would be required to keep the policy in force.

The settlement made more than $153 million worth of relief available to the class members, who could receive nearly full economic damages through a streamlined claims process. Depending on their claim, class members could be entitled to a variety of relief including (a) the dollar-for-dollar return of higher or additional premiums required by GE Life to keep the policy in force; (b) premium reduction back to original levels for class members whose premiums have already increased; (c) the freezing of premiums for policyholders who have not yet experienced a premium increase; (d) a paid up policy for qualifying single premium claimants; (e) a reinstated policy; or (f) an accidental death benefit. Retired Federal Judge Sam Pointer analyzed the settlement and concluded that "All in all, the McBride settlement provides benefits to class members that are the equal of if not superior to those afforded under any other pretrial class settlement."

The McBride settlement came after years of hard fought litigation. After the court denied GE Life's motions for summary judgment, plaintiffs' counsel forced GE Life to provide discovery of electronic user-created documents scattered throughout a fragmented and previously unsearchable computer system. Serious settlement negotiations began almost immediately after the parties agreed on a revolutionary framework for locating and producing the documents. This agreement materialized under pressure from then presiding Judge Wilbur D. Owens, Jr., who was considering a motion to compel filed by plaintiffs.

On other discovery fronts, GE Life produced nearly 100 boxes of documents and millions of pages of electronic policyholder information. The electronic policyholder information proved to be crucial in negotiating and implementing the settlement. The parties crafted relief criteria to make sure that harmed class members received full economic damages. This innovative structure allowed the most significant relief to be delivered to the most seriously harmed class members. Plaintiffs' team of lawyers, along with experts in computer science, statistics, and insurance constantly evaluated the impact of these criteria during negotiations to make sure any settlement would be fair to the class.

The electronic information allowed the parties to create a settlement claims process where no class member had to go through a cumbersome, expensive, company-controlled, and time-consuming ADR process to receive full relief. Instead, the class member simply needed to check a box next to a statement which reflected his understanding of his premium obligation when he purchased the policy. Comparing this simple form to the policyholder's payment history determined the appropriate relief.

Harvard law professor and class action authority Arthur Miller praised the settlement for its streamlined process and because of the significant relief available to the class members. Having examined more than 70 class actions as a lawyer or expert, professor Miller stated that he could recall only two or three settlements that rivaled this one in making almost complete relief available to harmed class members. In fact, none of the more than 350,000 class members objected to the settlement.