Pennsylvania Court Approves Conseco LTC Class Settlement

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A proposed settlement in a class action long term care suit against Conseco Inc., Carmel, Ind., has been approved by a Pennsylvania court.

The case, Irene Milkman v. American Travellers Life Insurance Company, et al. (case #3775), was filed because of large premium rate increases in long term care contracts issued by American Travellers Life Insurance Company, a Pennsylvania insurer acquired by Conseco.

A settlement developed by plaintiffs’ attorney, Allan Kanner of Allan Kanner & Associates, New Orleans, and Conseco offered 751,374 plaintiffs several options. The settlement is valued at approximately $34.7 million.

According to the court opinion, fewer than 200 objections to the settlement were received and fewer than 5,000 class members opted out of the settlement.

Approximately 85,000 actively participated in the settlement and half of an estimated 246,585 eligible participants are expected to do so at a later date, according to Conlee Whiteley, the attorney representing Kanner & Associates. In addition, nearly 250,000 policyholders will be eligible to participate in the settlement if they experience premium increases in their contracts in the future, she adds.

Options in the settlement include accepting a new Conseco policy, accepting a nonforfeiture benefit or holding existing Conseco LTC contracts.

The settlement also offers policyholders the option of purchasing a new Conseco annuity contract or indexed universal life policy.

In his order, signed on April 1, Judge John Herron of the Philadelphia Court of Common Pleas, declares that the stipulation is binding on all class members as well as being preclusive in all pending and future lawsuits.

The court also found that objections made to due process, constitutionality, procedures, substance and compliance with the law are overruled.

The order also states that plaintiffs and the settlement class discharge Conseco from any claims, actions and suits in the future.

Additionally, the order states that the settling parties shall seek to dismiss two related California cases within 30 days of the order. The two cases are Larry Blau and Janet Blau v. American Travellers Life Insurance Company, et al., (Orange County Superior Court Case No. 00C03063), and Alva Lane and Linda Pequegnax v. American Travellers Life Insurance Company, et al. (San Diego Superior Court Case # GIF 746641.)

The court also enjoined and barred plaintiffs and settlement class members from bringing a class action on behalf of settlement class members or from seeking to certify a class based on released transactions.

It also awarded $4.5 million to plaintiffs’ attorneys.

The court’s opinion, among other points, noted that the plaintiffs would have difficulty in establishing liability and damages. It also noted that the lower, underpriced premiums paid and the protection offered under these policies “could negate some, if not all, damages incurred by the Class.” It continued, “additionally, if the [higher] rates were justified, the Plaintiffs would find it even more difficult to prove their claim of damages.”

Commenting on the order, Whiteley says the firm is pleased with the settlement.

Since the cases in California were essentially consolidated with the Milkman case, they would also be settled unless an appeal of the Philadelphia court’s decision is filed, she says.

As of April 8, there was no indication that an appeal was in the offing, Whiteley adds.

“We are pleased with the approval and look forward to implementing benefits that people have opted for,” says Mark Lubbers, a Conseco spokesman.

The American Association of Retired Persons, Washington, is still reviewing the court opinion and order and could not immediately comment, according to Deborah Zuckerman, an AARP attorney.

The Texas Attorney General’s office is disappointed with the order, says Tom Kelley, a spokesman for Texas Attorney General John Cornyn.

Kelley says the decision will not affect a Texas case currently being heard. The case, Texas vs. Conseco Senior Health Insurance Company (Judicial District Court, Travis County, Texas, GV102103), will be the focus of the Texas Attorney General’s office, he says.

The Texas AG’s office was one of the lead Attorneys General’s offices in a drive that resulted in 34 states signing an amicus brief counseling against the approval of the class action settlement.


Reproduced from National Underwriter Life & Health/Financial Services Edition, April 15, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.