Jun 2023

Life Insurance Class Action Decision Win

Doug Johnson and Earp Cohn P.C. recently prevailed against out-of-state plaintiffs who had attempted to file a federal class action against American Century Life Insurance Company in federal court in Philadelphia involving life insurance policies issued on the lives of persons living in states other than Pennsylvania.  Chief Judge Juan Sanchez of the Eastern District of Pennsylvania was assigned the case and ruled in favor of Earp Cohn’s client, American Century, in all respects.

In the case of Rivers, et al. v. American Century, two life insurance policy beneficiaries, purportedly on behalf of a class of such beneficiaries, contended that American Century was engaged in improperly denying life insurance claims based upon misrepresentations made by the insured persons on their life insurance applications.  Doug Johnson, on behalf of American Century, pointed out to the Court, that these policies were all issued under Texas law.  Further, unlike many other states, Texas has an incontestability provision that allows a life insurance company to challenge claims, even after two years, if the life insurance policy was issued based upon material misrepresentations by the insured, which were intentionally made to defraud the insurance company.  As a preliminary matter, Judge Sanchez had allowed certain jurisdictional discovery concerning the number of possible plaintiffs, what states their policies were issued in, and other facts relating to the Court’s jurisdiction in Pennsylvania.

After reviewing the claims made and the evidence produced by American Century and its attorneys, Judge Sanchez agreed with American Century that the Court in the Eastern District of Pennsylvania did not have specific personal jurisdiction over American Century since these policies involved citizens of other states and were unrelated to any business which American Century has done in Pennsylvania.  The evidence showed that American Century has only ever sold annuities in Pennsylvania and only began doing so after the two insured persons in this case had already died.

The Court also found that it lacked subject matter jurisdiction over the lawsuit since there was no way that the complaint and the purported class cobbled together by the plaintiffs could possibly involve the requisite five-million-dollar amount in controversy (the necessary predicate to invoke federal court jurisdiction under the Class Action Fairness Act).  As a result, the class action lawsuit in Philadelphia against American Century was dismissed and has not been appealed.