State Farm Life Insurance must pay $34M class-action plaintiffs, federal appeals court

State Farm Life Insurance - Law - Justice
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The 8th US Court of Appeals has upheld the ruling that policyholders in Missouri must be repaid.

State Farm Life Insurance must repay Missouri policyholders more than $34 million for having charged them undisclosed fees, ruled the 8th US Court of Appeals.

The class action lawsuit was filed on behalf of 25,000 policyholders back in 2016.

The plaintiffs in the class action lawsuit were people who had purchased policies from State Farm Life Insurance between 1994 and 2004. The lawsuit alleged that the insurer’s policy premiums were said to be based on the age, sex, and applicable rate class of the customer, it had also been applying “non-mortality factors” for price calculations. These included profit assumptions, taxes, investment earnings, and capital & reserve requirements. Those additional hidden fees were added to the total cost of coverage.

A Missouri federal judge ruled against the insurance company in pretrial rulings of a 2018 jury verdict in the case. The insurer went on to later appeal to the 8th US Court of Appeals, seeking to have the prior ruling overturned. However, the federal court ruled that the language used by the insurer was ambiguous. It pointed out that Missouri law requires that in cases of ambiguous statements, the interpretation will favor the customers.

The court also rejected the argument from State Farm Life Insurance regarding the case’s class certification.

In the appealed argument, the insurer argued that the term “based on”, which was used to define the contributing factors for the premiums calculation, does not imply exclusivity. It cited case law and US criminal case sentencing guidelines. However, the judges found other precedent that pointed to the opposite conclusion regarding the phrase “based on”.

In that argument, the insurer stated that the class certification in the case was inappropriate as some of the class members had not suffered any damages, reported Bloomberg Law.

Another report in the Kansas City Business Journal pointed out that the insurer still had the opportunity to appeal the ruling of the 8th US Court of Appeals, requesting a case review by the US Supreme Court.

By the time of the writing of this article, the company had not yet disclosed what its State Farm Life Insurance - Law - Justiceintentions would be in terms of moving forward with appealing the case or paying the plaintiffs the identified total amount of $34 million.

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