Executive Life policyholders to finally get payments from class action case
A class action lawsuit filed six years ago against The Pennsylvania Life and Health Insurance Guaranty Association will finally end soon with payments to Executive Life Insurance Co. policyholders in Pennsylvania who alleged the guaranty association did not fulfill contract obligations after the insurer declared insolvency.
|On Dec. 8, 2001, the court approved a plan to distribute $15 million to policyholders.|
On Dec. 8, 2001, the court approved a plan to distribute $15 million from the Association to approximately 18,000 policyholders. The plaintiffs' attorneys will receive approximately $4 million. That is not included in the $15 million to be paid to policyholders.
Malone says that class members do not need to file claims to receive money. Plaintiffs' attorneys already have policyholders' addresses and policy information, and should receive payments in the mail by early 2001. "We are pleased that we will be able to distribute the funds without the delays and inequities that can result from a claims process," says J. Dennis Faucher, an attorney who also represents the plaintiffs.
Class members are those who owned whole life policies or deferred fixed annuities as of December 1991.
The lawsuit against the Association was originally filed in April 1994 in the Philadelphia Court of Common Pleas. The suit alleged the Association did not fulfill obligations that policyholders had with Executive Life Insurance Co., formerly of Los Angeles, Calif., which declared insolvency in 1991. The Association assumed the life insurance policies and annuities belonging to Executive Life policyholders after the insurer was declared insolvent.
James Malone, an attorney for the plaintiffs, says that while interest rates on whole life insurance policies and deferred fixed annuities were comparable under the Association as they were under Executive Life, the policy premiums and associated fees were significantly higher. "Under the Pennsylvania guaranty statute, the Association had a duty to reinsure the covered contractual obligations of the insurer," Malone says.
In June 1998, Malone and other plaintiffs' attorneys won the case against the Association in the Philadelphia Court of Common Pleas.