Litigation Involving the Trust

Information regarding litigation involving the Trust

From time to time the Trust becomes involved in lawsuits regarding matters affecting the Trust. These various lawsuits are listed below. The ones which reference COI (Cost of Insurance) are class action lawsuits in which the Trust (specifically Advance Trust & Life Escrow Services on behalf of the Trust) joins the class action to bring claims against an insurance company for wrongfully increasing the amount of premium due in violation of the language of the insurance policy. Each of these COI lawsuits is being handled by the Susman Godfrey law firm, a nationally recognized leader in this type of litigation. These lawsuits are being handled on a contingency fee basis which means the Trust does not pay legal fees for the representation. Instead, the law firm takes a percentage of what it recovers as a result of the lawsuit once those funds are actually paid out by the insurance company. The end result of this litigation is that excess premiums are usually refunded and the premium going forward is reduced to what the insurance policy actually allows. If premiums are refunded with respect to a policy you own, then your share of the excess premiums refunded is sent to you. There is no cost to the Trust other than the percentage paid to the law firm if they are successful. Additional information regarding each lawsuit is set forth below when you click on the specific lawsuit.

COI Litigation

ReliaStar COI

Advance Trust & Life Escrow Services, LTA as securities intermediary for Life Partners Position Holder Trust & Alice Curtis v. ReliaStar Life Insurance Company, Case No. 18-cv-2863-DWF-ECW (D. Minn.) This is a class action lawsuit alleging that the ReliaStar Life Insurance Company overcharged owners of universal life policies for monthly cost of insurance rates.  The complaint alleges that the defendant failed to reduce cost of insurance rates as its mortality experience improved, in violation of its contractual obligation to base those rates on its expectations of future mortality experience.

Hancock COI

Leonard, et al. v. John Hancock Life. Ins. Co. of New York, et al., Case No. 18-cv-4994-AKH (S.D.N.Y.). In 2018, John Hancock raised cost-of-insurance rates on approximately 1,500 Performance Universal Life (“PUL”) policies. In this class action, Plaintiffs allege that Hancock violated the plain language of the PUL policies, which impose limitations on Hancock’s ability to increase cost-of-insurance rates. The complaint also alleges that Hancock circulated false illustrations to PUL policyowners that materially misrepresented Hancock’s expectations of the future performance of these policies.

Lincoln COI

In re: Lincoln National 2017 COI Rate Litigation, Case No. 17-cv-04150-GJP (E.D. Pa.)  This is a class action brought on behalf of owners of JP Legend 3000, LifeSight 30, LifeSight 31, LifeSight 32, JP UL 101, JP UL 102, JP UL 103, JP UL 130, JP UL 131, and Vision 20 life insurance policies issued by Jefferson-Pilot Corporation, and now insured by Lincoln National. The complaint alleges that the defendants have unlawfully increased the cost of insurance, in violation of the plain language of the policies.

North American COI

Advance Trust & Life Escrow Services, LTA, as securities intermediary for Life Partners Position Holder Trust v. North American Company for Life and Health Insurance, Case No. 18-CV-00368 (S.D. Iowa). This is a class action lawsuit alleging that the North American Company of Life and Health Insurance overcharged owners of universal life policies for monthly cost of insurance rates.  The complaint alleges that the defendant failed to reduce cost of insurance rates as its mortality experience improved, in violation of its contractual obligation to base those rates on its expectations of future mortality experience.

PHL Variable COI

Advance Trust & Life Escrow Services, LTA as securities intermediary for Life Partners Position Holder Trust & James Kenney v. PHL Variable Insurance Company, Case No. 18-cv-03444-MKV (S.D.N.Y.) Plaintiffs in this class action challenge PHL Variable Insurance Company’s (“PHL”) increase of cost of insurance rates on thousands of universal life policies. Plaintiffs allege that PHL’s increase violates the terms of the policies by (i) discriminating unfairly within classes of insureds, (ii) basing the increase on factors other than those enumerated in the policies, and (iii) increasing PHL’s profits and recouping past losses.

Protective COI

Advance Trust & Life Escrow Services, LTA, as securities intermediary for Life Partners Position Holder Trust v. Protective Life Insurance Company. Case No. 18-cv-01290-KOB (N.D. Ala.). This is a class action lawsuit alleging that the Protective Life Insurance Company overcharged owners of universal life policies for monthly cost of insurance rates.  The complaint alleges that the defendant failed to reduce cost of insurance rates as its mortality experience improved, in violation of its contractual obligation to base those rates on its expectations of future mortality experience.

Security Life of Denver COI

Advance Trust & Life Escrow Services, LTA, as securities intermediary for Life Partners Position Holder Trust v. Security Life of Denver Insurance Company, Case No. 18-cv-01897-DDD-NYW (D. Colo.). In 2015, Security Life of Denver increased cost-of-insurance rates by 42% on its Strategic Accumulator Universal Life insurance policies and by 9.25% on its Life Design Guarantee Universal Life insurance policies.  The lawsuit alleges that the increases violated the plain language of the policies, which impose limitations on SLD’s ability to increase cost-of-insurance rates.

Other Litigation

The litigation involving the US Trustee fees is an action brought by the Trust against the United States Trustee’s Office for wrongfully increasing the number of quarterly fees the Trust has to pay while the case remains in bankruptcy. More information regarding these claims is found by clicking below.

US Trustee Fees

This litigation involves a dispute over the amount of US Trustee Fees that are paid by the Trust as a result of an amendment to the statute that was written after the Bankruptcy Plan was confirmed. In 2018 the government raised the amount of fees to be paid by a company in bankruptcy from a maximum of $30,000 per quarter to $250,000 per quarter or an 833% increase. Because of the amount of money involved with the Trust we generally had to pay the maximum each quarter. We filed papers with the bankruptcy court challenging the right of the US Trustee to raise the amount as to cases such as ours where the plan was confirmed prior to the increase and we claimed it was unconstitutional to do so and that the Trust should only have to pay $30,000 per quarter. On August 22, 2019 the bankruptcy court issued a ruling agreeing with the Trust’s position. Click here to receive a copy of the ruling. The US Trustee has appealed this decision to the Fifth Circuit Court and it remains pending before that court at this time.