Litigation

Life, Annuities, and Disability Products Litigation

Rescission

Medical Misrepresentations

•  Court rejected plaintiff’s claim that court must balance the “equities” as it does with mandatory car insurance matters even where material misrepresentation is undisputed.
• Court declared policy void ab initio because owner planned to and did kill the insured, his wife; death benefit remained with insurer.
•  Obtained Appellate Court decision holding that insurer must have actual, not constructive, knowledge of misrepresentation during underwriting and rejecting claims that insurer should have ascertained health issues from records available. Court rejected allegation of post claim underwriting.
•  Obtained Court of Appeals decision affirming rescission of a million-dollar policy based upon material misrepresentations (smoking) where the plaintiff’s primary argument was that the insured did not understand the English language.
• Trial court granted partial summary judgment, dismissing extra-contractual damage claims, fraud claims, and failure to speak English claims. The court rendered judgment in the insurer’s favor after trial.
•  Obtained summary judgment rescinding a life insurance policy based upon health misrepresentations, holding that where the applicant complained to his doctor of chest pain and the applicant’s physician diagnosed the applicant with a shoulder injury, the applicant’s negative response to a question pertaining to whether he sought treatment for chest pain was nonetheless a material misrepresentation.
•  Obtained summary judgment in New York Surrogate’s Court rescinding two life insurance policies, with face values totaling $1,000,000, based upon misrepresentations in the application regarding the insured’s mental health and cardiac condition.
• Obtained summary judgment on claim for rescission based on equitable fraud as a result of insured’s material misrepresentation regarding his cardiac condition on limited insurance agreement and insured’s subsequent death during binder period.

 Financial Misrepresentation

• District Court granted Summary Judgment rescinding the policy in its entirety based upon material misrepresentations made in the application for insurance regarding the decedent’s employment status, salary, medical history, and drug addiction.
• Obtained Appellate Court decision affirming rescission of life policy based on material financial misrepresentations. Trial and Appellate Court rejected the claim that there was no financial misrepresentation because tax returns did not reflect actual earnings, and misrepresentation as to existing other insurance was not material.
• Obtained summary judgment rescinding a life insurance policy, finding that the insured’s misrepresentation in the application for insurance asking his annual earned income was material and “earned income” was unambiguous.

Broker/Agent Claims:

•  Appellate Court affirmed that an agent has no fiduciary duty to a beneficiary of a life insurance policy.
• District Court rescinded a life insurance policy, finding that the agent’s alleged knowledge of a material misrepresentation cannot be imputed to the company, as the insurer “could not be held responsible for … knowledge of an unfaithful employee.”

Suicide exclusions, foreign death claims, and lapses

• Resolved several litigations regarding the applicability of the suicide exclusion based on New York, Connecticut, and New Jersey presumptions after third-party subpoena discovery.
• Litigated and resolved many lapse cases alleging improper notice of lapse.
• Litigated foreign death claims, including in the interpleader context.
• Obtained Appellate decision affirming trial court’s dismissal of a complaint seeking benefits under a lapsed policy, rejecting the beneficiary’s claim that the grace period to pay premiums was extended by the agent, who did not have the authority to extend the grace period.
• COVID Notice Litigation where plaintiff alleged that that the insurer unlawfully lapsed a large life insurance policy for nonpayment due to its failure to comply with COVID-19 directives relating to extended grace periods and cancellation notices. One argument was based on New Jersey’s COVID-19 executive orders, which provided that a policy could be deemed lapsed, but would extend the grace periods if certain conditions were met. Another one arose from a 2020 lapse that occurred while the insured was confined to a nursing home that prohibited visitors per state COVID regulations.

Disability

• Successfully tried a disability insurance fraud rescission case (outside the contestability period) in the Federal District Court, Southern District of New York (Rakoff, J). The Second Circuit affirmed the district court’s holding that the insured’s misrepresentations “continued in her trial testimony” and that her fraudulent intent was clearly established by the record.
• Numerous resolutions of claims for individual disability benefits after discovery, including social media.
• Cases involving limitation of liability on disability policies concerning disputes regarding the interpretation of contractual terms, billing codes, and medical conditions.
• Dismissal of multimillion-dollar disability waiver of premium claim and resolution of disability waiver of premium claim where there were allegations of misrepresentations by customer service.
• Resolution of trial court disability action where the plaintiff attempted to extend coverage of the disability policy covering “outpatient surgery,” to include certain types of non-covered injections.
• Resolution of disability matter where the plaintiff attempted to enlarge the definition of “outpatient surgery,” to include certain types of non-surgical injections.
• Resolution of an action brought by plaintiff seeking benefits under an accident only policy where plaintiff failed to provide proof of loss in accordance with the terms of the policy.
• Resolution of a renewal disability income policy where plaintiff sought additional benefits for an alleged separate injury despite having failed to recover from his initial injury for which he received benefits. Stipulation of settlement included a non-purchase agreement where the plaintiff agreed not to purchase or seek to purchase any additional coverage.

Stranger-Owned Life Insurance Policies (“STOLI”)

The firm has successfully defended life insurers in claims brought by speculators in life insurance policies (commonly known as stranger-owned life insurance or “STOLI” policies). Litigants typically present complicated technical arguments to avoid the company’s determination that these policies have lapsed for various reasons. Over time and with the exception of a few states, the law has changed in favor of insurers, allowing them to rescind fraudulently obtained policies by speculators after the expiration of the two-year contestability clause.

For example, one of the firm’s clients was sued in a New York multi-party action where various investors in multimillion-dollar life insurance policies had allegedly secured multimillion-dollar loans with life insurance policies. The investors executed various life insurance documents to purportedly assign the policies away from the creditors. The issues also included a $6M SEC Receiver lien on the $15M policy due to the investor schemes of the insured. After the insured died in prison, the SEC Receiver moved in the United States District Court for the Southern District of Florida to enforce its lien, notwithstanding the competing claims to the entire policy made by the other entities. The Federal Judge brought all of the claimants before him and, pursuant to the client’s request, was able to order the consent of the parties to pay the SEC Receiver and file an interpleader action in the United States District Court for the Southern District of New York with respect to the remaining $9M.

The firm also represented a life insurer in a multi-layered lapse case where plaintiff challenged the placement of a legal hold on the policy. The hold was placed due to the premium payor investor’s federal court action disputing ownership as the policy. During the hold, the owner was prevented from selling the policy away and it lapsed. Discovery revealed a fraudulent STOLI transaction originating from the initial sale.

Speculative policies were identified in audit of a broker where the identity of the premium payor was misrepresented contrary to anti-money laundering and PATRIOT Act requirements. The firm successfully cross-claimed to add a cause of action under the New Jersey Fraud Protection Act and the decision was upheld by the Appellate Court.

Sales Practices

d’QM has handled many sales practices matters, including successfully moving to dismiss a matter against a financial institution brought by an investor alleging fraudulent sales practices. The firm’s unique understanding of sales practices matters was developed during the representation of MetLife by Michelle d’Arcambal and James Lenaghan while in-house attorneys in the vanishing premium sales practices class actions, both in nationwide MDL and in several states.

• Obtained summary judgment dismissing complaint alleging improper sale of annuities, including allegation that monies should have been invested in the stock market, and that agent exercised undue influence and recommended annuities solely to obtain commissions.
•  Obtained decision holding that plaintiff’s action was barred by his failure to opt out of a multi-state federal court class action settlement governing the policy.
•  Pension litigation involving the sale and administration of ESOPs, including civil RICO and other New Jersey state law claims.
•  Trial court dismissed an action brought by an investor alleging the sales representative committed fraud in connection with the sale of variable life and annuities products.
•  Action seeking to recover proceeds under a life insurance policy based upon an undated change of beneficiary form provided to the agent on the eve of the decedent’s death, and which she herself had executed pursuant to a power of attorney dismissed. Plaintiff also sought to hold the agent liable because the agent purportedly stated that the change forms “looked fine.”

 Other Litigation – interest on life insurance policy and age discrimination

• Obtained Appellate Court decision holding that, pursuant to the express terms of New York Insurance Law Section 3214, the interest to be awarded for the pre-judgment period is the interest settlement option rate of the life insurance policy at issue, and not the statutory nine percent rate.
• Obtained summary judgment and successfully opposed class certification in a class action alleging age discrimination in premium charged on life policies with continuation of premium provision.

 Nationwide Life and Annuity Interpleader Program

•  Obtained dismissal of a lawsuit pending in the Central District of California on the basis that it was an improperly filed anticipatory lawsuit in favor of a later-filed interpleader action filed by the insurer.
• Obtained a preliminary injunction and constructive trust over funds paid to a putative beneficiary in the face of a competing claimant’s post-payment claim for the proceeds in a New Jersey State Court action.
• Successfully argued to the District Court, Eastern District of Kentucky that the standard of review was arbitrary and capricious with respect to decision to interplead ERISA-governed life insurance benefits.
•  Successfully resolved through motion practice an interpleader action in U.S.D.C., S.D. Ala. concerning a dispute over the proper beneficiaries to a Transfer on Death mutual fund. Jurisdiction was contested and counterclaims for breach of fiduciary duty were asserted. The company succeeded on its motion to dismiss all counterclaims. The court determined that jurisdiction was proper, and our client was awarded its attorneys’ fees and costs.
• Successfully mediated claim brought by wife against life insurance company seeking annuity funded through estranged husband’s deferred compensation plan plus punitive damages. The annuitant, who took his own life, changed the beneficiary designation from his wife to his brother despite restraining order issued in pending divorce proceeding. Not being aware of the restraining order, Company rolled annuity over into new account for brother.
• Settled claim brought by insured’s second wife against life insurance company involving six policies totaling over $700,000 where insured’s children disputed online beneficiary designations naming second wife. Settlement also addressed reinstatement of various policies insuring the life of the deceased’s children, which were owned by the deceased and which had lapsed during the pendency of the litigation.
•  Successfully negotiated post-Removal dismissal of Breach of Contract and Bad Faith claims brought in California state court and granting of Interpleader relief, including a partial attorneys’ fee award in matter involving ERISA group plan.
• Successfully moved for interpleader relief including dismissal of counter claims of (1) Intentional/Negligent and/or Reckless Misrepresentations, (2) Negligence, (3) Wantonness.  Fees were awarded.
• Brighthouse Life Ins. Co. v. Walker Walton, No. 22-485, 2024 WL 580876 (E.D. Pa. Feb. 13, 2024) (At summary judgment, granting insurer’s request for declaratory judgment and dismissing breach of contract and bad faith counterclaims with prejudice.)
• Wilty v. Prudential Ins. Co. of Am., No. 18-02602, 2018 WL 7019197 (W.D. Tenn. Sept. 25, 2018) (Granting insurer a temporary restraining order freezing funds paid by the insurer to a beneficiary charged with murder of the insured, later resulting in the insurer’s discharge from the case without payment of extra-contractual damages to contingent beneficiaries.)
•  Prudential Annuities Life Assurance Corporation v. Estate of Adams, No. 18-11412 (D.N.J. Feb. 5, 2019) (Denying claimant’s motion to transfer insurer’s case to Eastern District of Louisiana.)
• New York Life Insurance Company v. Burns, No. 2022 WL 1504950 (D.N.J. May 12, 2022) (Denying claimant’s motion to dismiss or transfer insurer’s case to District of South Carolina and granting insurer’s motion to deposit funds.)
• Saba v. American Family Life Assurance Company of Columbus, 2018 WL 1535287 (D.N.J. Mar. 29, 2018) (Denying pro se plaintiff’s motion to reopen a case or amend a pleading on which the firm previously secured a dismissal without prejudice.)
• Sanchez v. Prudential Investment Management, Inc., No. 15-982, 2017 WL 5177644 (W.D. Tex. Jan. 6, 2017) (Awarding insurer attorneys’ fees/costs, over claimants’ objection, under five-factor test in light of insurer’s good faith and claimants’ counsel’s unreasonable conduct.)

Healthcare Litigation

• Mediated advantageous settlements on behalf of insurers in several actions involving provider fraud.
• Represented health insurers in obtaining temporary restraining orders to coerce egregious overpayments from insurer.
• Successful motions to dismiss provider actions for lack of standing. Several others were brought by providers who have been “red-flagged” by insurer, and in these instances we brought successful counterclaims for fraud. Significantly, in two matters, the providers brought multimillion dollar law suits for denied claims. The insurer counterclaimed for fraud based on improper billing and also for overpayment based on waiver of co-insurance and deductibles.
• Obtained summary judgment dismissing provider claim for health benefits due to plaintiff’s failure to exhaust administrative remedies and successfully opposed motion for summary judgment dismissing counterclaim to recover for fraudulent billing based on ERISA causes of action for unjust enrichment and equitable restitution.
• Obtained decision denying motion to remand based on assignment of claims to provider, and holding that ERISA preempted all of the state statutory and common law claims relating to claims under ERISA plans.
•  Represented insurers in actions brought by non-participating providers seeking to avoid ERISA protections and standing issues by claiming negligent misrepresentation, and other torts allegedly unique to the providers.
•  In denying motion to remand by providers to whom plan participants had “expressly assigned” their claims, court held that, nonetheless, the providers were subject to ERISA removal jurisdiction as mandated by MetLife v. Taylor. The court exercised supplemental jurisdiction over non-ERISA group plan because the claims were part of the same case or controversy. The Court preserved the state common law or statutory claims that related to the contracts themselves between the providers and a major health insurer. The settlement agreement included the provider’s agreement to collect co-insurance and deductibles as well as an agreement to bill correctly going forward.
•  Successfully moved to compel arbitration and stay litigation in action brought by hospital against insurance company regarding DRG payments under a hospital service agreement.
•  Obtained partial summary judgment based on affirmative defenses on behalf of a health insurer and plan sponsors defending against action brought by group of neurosurgeons seeking additional payments for over 190 surgeries paid by health insurer according to plan terms.
• Obtained full recovery of overpayments made by insurer under hospital contract. Successfully arbitrated claims brought by hospital that insurer has underpaid hospital pursuant to contract.
• Successfully opposed provider’s multiple motions to dismiss counterclaims for fraud stemming from provider’s failure to collect co-insurance and deductibles.
•  Resolved litigation brought by provider against insurer for alleged improper denial of payments for minimally invasive foot surgery. Insurer brought counterclaims for fraud and unjust enrichment based on improper billing and waiver of co-insurance. Part of settlement was provider agreeing to collect co-insurance and deductibles and change certain of their billing practices.
• Affirmative action against ophthalmologist who had repeatedly billed and received payment for eye surgeries he had never performed.
•  Dismissal of complaint brought by a provider alleging libel, tortious interference with contractual relations, and anti-trust violations in connection with a claims audit which was upheld on appeal.
• Plaintiff physician brought action against major insurer to recover benefits for services provided to participants in the plan, notwithstanding that the majority of claims were time-barred, and there was a lack of standing to sue as a non-participating party and as a result of bankruptcy filing. The trial court granted major health insurer’s motion for summary judgment and denied plaintiff’s motion for renewal and re-argument which was confirmed by court of appeals.
• In connection with a collectively bargained State Health Plan that reviewed and determined it was erroneously paying for 24-hour skilled nursing care for chronically ill insureds, our team successfully opposed motions for a preliminary injunction in several actions seeking to enjoin the decision to reduce the level of skilled nursing benefits provided; successfully litigated, through trial and appeal, a lawsuit challenging the reduction of skilled nursing benefits to two hours per day; obtained summary judgment dismissing RICO, fraud, and consumer fraud claims relating to the application of skilled nursing guidelines to determine whether skilled nursing benefits were available under the health plan at issue
• Obtained summary judgment and denial of a motion for class certification in connection with a putative class action under state law. The court rejected plaintiff’s attempt to convert a single “approval error” into a reason to “justify a ‘fishing expedition’ through the files of all potential class plaintiffs.”
• Obtained summary judgment upholding Medicare supplemental plan’s determination that plaintiff’s stay in skilled nursing facility was not covered under the terms of the health plan at issue, as her medical condition did not require skilled care.
• Obtained summary judgment dismissing a putative class action challenging secondary payer status of the group plan when the member was eligible for Medicare coverage. When the same class plaintiff commenced a similar putative class action in federal court, the court granted summary judgment and denied class certification.
•  Represented health insurers in the defense of actions brought based on denial of claims as experimental and investigational.
•  A breach of letter agreement between an insurer and a hospital, which contemplated a more comprehensive participating provider agreement between the parties, did not exempted it from being bound by insurer’s general claims processing and administrative policies for both its participating and non-participating provider hospitals.

Commercial, Financial & Banking Litigation

•  Representation in an international arbitration regarding high-dollar claims with respect to a mortgage servicing contract.
• Representation of financial services company regarding challenge by a mortgage broker to the existence of a web-based advertising agreement executed through a click through process.
•  Representation of a nationwide seller of home safety systems for breach of contract action in federal court for allegedly unilaterally amending the commission structure under an advertising contract.
• Representation of major hotel chains in class actions seeking payment of penalties due to alleged ATM notice defects.
•  Representation of hospitality corporation in action where plaintiff claimed unjust enrichment and quantum meruit in connection with identifying a potential real estate development for the company.
•  Representation of a hospitality company related to alleged breach of duty of good faith and fair dealing arising from termination of licensing agreement with a major food vendor.
• Representation of company against action alleging RICO, breach of contract, and fraud claims against the originating mortgage lender, MERS, and the trustee where claims were dismissed by the federal district court against all defendants.
• Successfully litigated matters where defendants alleged that a mortgage was invalid due to improper securitization or assignment, faulty lapses or defaults due to alleged failure to follow recording, and notice requirements.
• Defended the appeal of a successful motion to dismiss on behalf of a bank based on claims that a reverse mortgage was issued improperly, and an appeal of a successful trial verdict, also concerning a reverse mortgage.
• Successfully opposed class certification of claims that improper charges were assessed by a national bank in connection with providing a mortgage payoff statement. The plaintiff’s subsequent motion to amend the putative class action complaint to include claims relating to the alleged over-charging of interest also was successfully opposed and upheld on appeal.
• Representation of banks in mortgage fraud actions against brokers, title insurers, appraisers and settlement agents.
• Representation of state government entity in complex contested foreclosure actions.
• Representation of banks and MERS in quiet title actions and counterclaims brought by borrowers based on securitization and assignment of mortgages.
• Representation of banks in litigation to recover unpaid claims pursuant to home mortgage indemnity insura
• Representation of financial institutions in actions brought by investor alleging fraud.