Washington, D.C. – The United States District Court for the Northern District of California granted a motion for preliminary injunction against Conseco Life Insurance Company (“Conseco”) to stop the company from imposing unaffordable insurance charges on some members of a certified class of thousands of policyholders. Notwithstanding Conseco’s reliance on its previous settlement with state insurance regulators, the Court ordered that Conseco take immediate action to stop imposing the cost-of-insurance charges on this group of policyholders pending the outcome of a trial. In its opinion, the Court noted the case of a 91-year-old policyholder who already paid hundreds of thousands of dollars for his policy and recently faced deductions of over $7,000 per month in new cost-of-insurance charges. Without this injunction, many of these policyholders would lose their life insurance coverage before the end of next year because the cost of insurance and expense charges would deplete their policy accumulation accounts.
This lawsuit arose out of Conseco’s announcement in late 2008 that it intended to impose certain charges on the Lifetrend policies that Plaintiffs argue are invalid under the terms of the policies.
In a significant ruling, the Court held that the class of Plaintiffs is likely to prevail in the case based on the merits of its breach of contract claims against Conseco. The Court also held that the policyholders whose accumulation accounts will be exhausted before the end of next year face irreparable harm. The Court found that these policyholders who are unable to make the payments to sustain their policies will lose the peace of mind that comes with life insurance. That loss, the Court found, “cannot be remedied by money damages after the fact.”
Craig Litherland, of Washington, DC-based Gilbert LLP who represents the Plaintiffs, commented that this ruling “is an extremely well-considered and thorough decision.” He added that the ruling represents “an important milestone in this litigation, and demonstrates that the Judge found the merits of Plaintiffs’ case to be compelling.”
“This decision is a very good outcome for our clients,” said David Millstein of San Francisco-based Millstein and Associates who also represents the Plaintiffs. “The Plaintiffs now can have some temporary relief and peace of mind.”