Georgia Federal Judge Tosses Industrial Life Race Bias Claims

A federal judge in Savannah, Georgia, has dismissed a putative class action leveling claims of racial discrimination against an insurance company over its marketing of “industrial life” policies — relatively low value policies that can end up paying less than the accrued premiums.

The complaint accused United Insurance Company of America of targeting Black households for sales of its industrial life policies, described as those that usually have a face value between $1,000 and $5,000, generally intended to cover funeral and other end-life expenses.

The complaint filed in Georgia’s Southern U.S. District Court accused United of “unlawful, unconscionable and racially discriminatory conduct” in relation to the policies, asserting that the named plaintiff’s husband, Chester Barrett, paying monthly premiums of $36 for a policy he bought in 1984 that paid $5,000 upon his death; by then, he’d paid more than $14,600 for the coverage.

But Judge R. Stan Baker said there was no indication that United currently charged Black policyholders any more than it does white ones, nor that it misled the insurance purchasers about the cost or face value of the coverage.

In 2002, he noted, United had settled a discrimination class action over claims that it charged Black customers higher rates than whites.

But, he said, “[a]ccording to United’s in-house counsel, who investigated the allegations in the 2002 class action, United ‘stopped selling policies with race-based rate scales and using race-based underwriting practices by the 1970s.”

Additionally, he said, “neither party disputes that United stopped selling life insurance policies that used a different rate scale for African American customers and Caucasian customers ‘well before Mr. Barrett purchased his policy,’ and they “also agree that United did not have ‘a policy or practice of marketing or underwriting life insurance policies based on the race of its customer[s] at the time that Mr. Barrett purchased his policy.’”

In any case, Baker said, the claims were also barred by the statute of limitations.

While the lawyers for Barrett’s widow, Minerva Barrett, had argued that the statute was tolled by United’s fraudulent actions in marketing the policies, she “has failed to provide any evidence that United committed fraud when it sold Mr. Barrett his policy,” the judge said.

He also discounted the testimony of an expert, Emeritus Professor Robert Klein of Georgia State University’s Department of Risk Management and Insurance, who “states that Mr. Barrett had a type of ‘policy that is heavily market[ed] to low-income [individuals], particularly African Americans’ and that ‘[g]enerally, industrial life policies are directly linked to, and reliant upon racial discrimination.’

“Dr. Klein’s affidavit makes broad statements about industrial life policies in general and, despite providing no data or analysis concerning United’s policies or practices, it leaps to the conclusion that ‘United engaged in unfair practices in its marketing, sale, and administration of Mr. Barrett’s policy,’” the judge said.

“Notably, however,” wrote Baker, “the affidavit does not include an opinion regarding whether United exclusively marketed its insurance policies with high premiums towards African Americans or that African Americans were by and large the only group who purchased these policies from United.”

In addition to claims that United’s practices violated Section 1981 of the U.S. Civil Rights Act, the suit included state law claims for money had and received, fraudulent inducement and negligent misrepresentation.

The complaint had requested class certification for anyone who has or had an ownership interest in a United industrial policy that was in force on or after Jan. 1, 1970, that charged higher rates for Black policyholders than for whites and/or anyone who had one of the “non-discriminatory” policies issued after January 1, 1988.

“Because the Court finds that Plaintiff has put forth insufficient evidence to support any of her substantive claims, no claims remain for the Court to consider whether class certification is appropriate,” Baker wrote, dismissing the case on summary judgment.  .

Barrett’s attorney, R. Bart Turner of Savannah’s Savage Turner Pinkney & Savage, said he had not yet discussed the order with his client and was reviewing it for a possible appeal.

The lawyers representing United, Locke Lord partners Taylor Brinkman, Elizabeth Campbell and Roger Cowie, did not respond to a request for comment Monday.

The case in the U.S. District Court for the Southern District of Georgia is captioned Barrett v. United Insurance Company of America, No. 4:17-cv-00215.

Judge. R. Stan Baker (Photo: Baker)