Monday, August 19, 2019

No. 327: The Age 100 Problem—Update on the Lebbin Lawsuit Against Transamerica

I first wrote about "the age 100 problem" in the January 2001 and May 2001 issues of The Insurance Forum. Later, on my blog, I wrote extensively on the subject, including four posts about a lawsuit filed by Gary H. Lebbin, a centenarian, against Transamerica Life Insurance Company: No. 226 (July 20, 2017), No. 241 (November 17, 2017), No. 269 (June 6, 2018), and No. 296 (November 26, 2018). (In those posts I offered complimentary packages that include the two 2001 Forum articles and other items.) Here I provide an update on Gary's lawsuit.

Gary was born in Germany on September 6, 1917. He came to the U.S. in 1938 to escape Nazi persecution. He married Bernice in 1944; she died in 2015 at age 97. He has two children, four grandchildren, and seven great-grandchildren. In 1990 he and his children, Roger M. Lebbin and Carole Sue Lebbin, created the Lebbin-Spector Family Trust ("Trust"), which purchased two second-to-die universal life policies from Transamerica. The first, issued in 1990, had a face amount of $2 million. The second, issued in 1991, had a face amount of $1.2 million. When Bernice died, the policies became single-life universal life policies.

On July 20, 2017, shortly before Gary turned 100, he and the Trust filed a lawsuit against Transamerica. They alleged that the company had falsely represented the policies as "permanent insurance" for his "whole life," had refused his request to extend the policies beyond their terminal age of 100, and he was facing a potentially serious income tax problem. Initially the lawsuit was filed in federal court in Maryland, but later was transferred at Transamerica's request to federal court in Florida. (See Lebbin v. Transamerica, U.S. District Court, Southern District of Florida, Case No. 9:18-cv-80558.)

The case in Florida was assigned to U.S. District Judge Donald M. Middlebrooks. President Clinton nominated him in January 1997, and the Senate confirmed him in May 1997.

Recent Developments
On May 22, 2018, Judge Middlebrooks set a trial date of January 22, 2019 and alluded to the possibility of mediation. On December 14, 2018, Irma S. Raker, a retired Maryland appellate court judge, held a one-day mediation session that did not resolve the case. On December 21, 2018, Judge Middlebrooks changed the trial date to March 18, 2019 because of the "medical needs of the Plaintiffs' lead counsel."

On January 30, 2019, Transamerica filed a motion for summary judgment. On the same day, the Trust filed a motion for summary judgment.

Also on January 30, 2919, by which time Gary was afflicted with dementia and was no longer aware of the lawsuit, Transamerica offered him $10,000 in full and final settlement of all claims for damages that would otherwise be resolved in a final judgment between him and the company, including costs and attorney fees and any other money damages that could be awarded in a final judgment rendered between him and the company in the lawsuit. No portion of the offer was apportioned to settle any claim for punitive damages.

On February 5, 2019, Gary accepted the offer and withdrew from the lawsuit. On February 22, 2019, the Trust filed an amended complaint with Gary no longer listed as a plaintiff. The amended complaint has five counts: (1) declaratory relief, (2) breach of contract, (3) breach of the covenant of good faith and fair dealing, (4) reformation, and (5) rescission. Here is a paragraph from the introductory section of the amended complaint (the full complaint is in the complimentary package offered at the end of this post):
For decades, life insurance carriers, such as Transamerica, sold universal life insurance policies, marketed as "permanent life insurance" or "insurance for life," utilizing outdated mortality tables that did not take into account the fact that Americans were, and are, increasingly living to and past the age of 100. The result has been the improper termination of life insurance policies that were originally sold to policy holders as "permanent insurance." The life insurance industry has left its customers (who faithfully paid their premiums with the expectation that they would have coverage for the remainder of their lives) uninsured.
On February 26, 2019, with the March 5 trial date approaching, the judge postponed the trial until August 5, 2019. On March 22, 2019, Transamerica filed an amended motion for summary judgment. On July 19, 2019, the judge issued an order containing five conclusions (the full order is in the complimentary package offered at the end of this post):
  1. Plaintiff's Motion for Summary Judgment is GRANTED. Summary judgment is ENTERED in Plaintiff's favor on Plaintiff's claim for breach of contract (Count 2).
  2. Defendant's Amended Motion for Summary Judgment is GRANTED IN PART and DENIED IN PART.
  3. With respect to Plaintiff's claims for declaratory judgment (Count 1), reformation (Count 4), and rescission (Count 5), Defendant's Amended Motion for Summary Judgment is GRANTED and summary judgment is ENTERED in Defendant's favor.
  4. Defendant's Motion for Summary Judgment is DENIED with respect to Plaintiff's claims for breach of contract (Count 2) and breach of the covenant of good faith and fair dealing (Count 3).
  5. Calendar Call remains scheduled for July 31, 2019, and trial remains set for the two-week period beginning on August 5, 2019. The issues remaining for adjudication at trial are Plaintiff's claim for breach of the covenant of good faith and fair dealing (Count 3) and damages.
On July 29, 2019, the Trust filed a notice of voluntary dismissal of its claim for breach of the covenant of good faith and fair dealing (Count 3). On July 30, Transamerica filed a motion for reconsideration of the judge's July 19 order. On the same day, the judge denied Transamereica's motion for reconsideration. Also on the same day, the judge held a ten-minute conference. He canceled the trial set for August 5 because the "Parties have resolved the issues and will submit pleading(s) and/or order(s)."

On August 1, 2019, the parties jointly filed a "Notice of Submission of Proposed Order." On August 9, the judge issued an "Order Setting Briefing Schedule and Resolving Various Pre-Trial Motions." The briefing schedule is "to resolve the issue of damages, the sole remaining issue in this action." Here is the four-date briefing schedule:
  1. August 30, 2019: Plaintiff's motion for summary judgment.
  2. September 30, 2019: Defendant's response to plaintiff's motion and cross-motion, if any, for summary judgment.
  3. October 21: 2019: Plaintiff's reply to any cross-motion.
  4. November 8: 2019: Defendant's reply, if any, on cross-motion.
General Observations
In earlier posts about the Lebbin case, I predicted it would be settled, but I did not expect it would be settled only six days before the trial. It will be interesting to see the motions and cross-motions for summary judgment about damages, and what the judge says about them. Instead of waiting for completion of the briefings about damages, I decided to provide this update and write again after the case is fully settled.

Available Material
In previous posts (cited earlier) about the Lebbin case, I offered complimentary packages that are still available. Now I offer a complimentary 43-page PDF consisting of the Trust's February 22, 2019 amended complaint (20 pages) and the judge's July 19, 2019 order (23 pages). Email and ask for the August 2019 package about the Lebbin v. Transamerica case.


Monday, August 12, 2019

No. 326: Robert Mueller, Donald Trump, William Barr, Jerrold Nadler, Doug Collins, Adam Schiff, and Devin Nunes

Blogger's Note
I completed this post before President Trump's verbal attacks on Chairman Cummings and Baltimore, before the resignations of Director Coats and Principal Deputy Director Gordon, before the mass shootings in El Paso and Dayton, before the mass raids in Mississippi, and before the Strzok and McCabe lawsuits against the DOJ.

On July 24, 2019, I watched the televised hearings at which Robert S. Mueller III, the former Special Counsel, testified before the House Judiciary Committee in the morning and the House Intelligence Committee in the afternoon. Here I discuss the hearings.

On May 9, 2017, President Donald Trump fired James Comey, Director of the Federal Bureau of Investigation. On May 17, 2017, Deputy Attorney General Rod Rosensteim appointed Mueller as Special Counsel overseeing an investigation into allegations of Russian interference in the 2016 U.S. presidential election and related matters.

On March 22, 2019, Mueller submitted his report to Attorney General William P. Barr. On April 18, 2019, Barr released the report to the public, with redactions. On May 29, 2019, Mueller resigned as Special Counsel, closed his office, made a ten-minute oral statement to the public, and took no questions.

The Barr Memorandum
On June 8, 2018, Barr, then a private citizen, sent an unsolicited memorandum to Rosenstein and Assistant Attorney General Steve Engel about "Mueller's 'Obstruction' Theory." Here is the beginning of the memorandum (the full memorandum is in the complimentary package offered at the end of this post):
I am writing as a former official deeply concerned with the institutions of the Presidency and the Department of Justice. I realize that I am in the dark about many facts, but I hope my views may be useful.
It appears Mueller's team is investigating a possible case of "obstruction" by the President predicated substantially on his expression of hope that the [sic] Comey could eventually "let ... go" of its [the FBI's?] investigation of Flynn and his action in firing Comey. In pursuit of this obstruction theory, it appears that Mueller's team is demanding that the President submit to interrogation about these incidents, using the threat of subpoenas to coerce his submission.
Mueller should not be permitted to demand that the President submit to interrogation about alleged obstruction. Apart from whether Mueller [has?] a strong enough factual basis for doing so, Mueller's obstruction theory is fatally misconceived. As I understand it, his theory is premised on a novel and legally insupportable reading of the law. Moreover, in my view, if credited by the [Justice?] Department, it would have grave consequences far beyond the immediate confines of this case and would do lasting damage to the Presidency and to the administration of law within the Executive branch.
Six months later, on December 7, 2018, President Trump rewarded Barr for the unsolicited memorandum by nominating him to succeed Jefferson B. Sessions III as U.S. Attorney General. On February 14, 2019, the Senate confirmed Barr as Attorney General, thus placing him in charge of the Mueller investigation, on a largely party line vote of 54 to 45.

The Nadler Opening Statement
Chairman Jerrold Nadler (D-NY) of the House Judiciary Committee conducted the Committee's morning hearing on July 24, 2019. Here is the beginning of his opening statement (the full statement is in the complimentary package offered at the end of this post):
Director Mueller, thank you for being here. I want to say just a few words about our themes today: responsibility, integrity, and accountability. Your career, for example, is a model of responsibility. You are a decorated Marine officer. You were awarded a Purple Heart and the Bronze Star for valor in Vietnam. You served in senior roles at the Department of Justice and, in the immediate aftermath of 9/11, you served as Director of the FBI.
Two years ago, you returned to public service to lead the investigation into Russian interference in the 2016 election. You conducted that investigation with remarkable integrity. For 22 months, you never commented in public about your work—even when you were subjected to repeated and grossly unfair personal attacks. Instead, your indictments spoke for you, and in astonishing detail. Over the course of your investigation, you obtained criminal indictments against 37 people and entities.
The Collins Opening Statement
Doug Collins (R-GA) is Ranking Member of the House Judiciary Committee. Here is the beginning of his opening statement at the morning hearing on July 24, 2019 (the full statement is in the complimentary package offered at the end of this post):
For two years leading up to the release of the Mueller report and in the three months since, Americans were told first what to expect, and then what to believe. Collusion, we were told, was in plain sight, even if the special counsel's team didn't find it. When Mr. Mueller produced his report, and Attorney General Barr provided it to every American, we read no American conspired with Russia to interfere in our elections, but learned of the depths of Russia's malice toward America.
We are here to ask serious questions about Mr. Mueller's work, and we will do that. After an extended, unhampered investigation, today marks an end to Mr. Mueller's involvement in an investigation that closed last April. The burden of proof for accusations that remain unproven is extremely high—especially in light of the special counsel's thoroughness.
The Mueller Morning Statement
On July 24, 2019, at the morning hearing before the House Judiciary Committee, Mueller made an opening statement. Here is the beginning of the statement (the full statement is in the complimentary package offered at the end of this post):
Good morning Chairman Nadler, Ranking Member Collins and members of the Committee. As you know, in May 2017, the Acting Attorney General asked me to serve as Special Counsel. I undertook that role because I believed that it was of paramount interest to the nation to determine whether a foreign adversary had interfered in the presidential election.
As the Acting Attorney General said at the time, the appointment was "necessary in order for the American people to have full confidence in the outcome." My staff and I carried out this assignment with that critical objective in mind: to work quietly, thoroughly, and with integrity so that the public would have full confidence in the outcome.
The order appointing me as Special Counsel directed our Office to investigate Russian interference in the 2016 presidential election. This included investigating any links or coordination between the Russian government and individuals associated with the Trump campaign. It also included investigating efforts to interfere with, or obstruct, the investigation.
The Schiff Opening Statement
On July 24, 2019, Chairman Adam Schiff (D-CA) of the House Intelligence Committee conducted the afternoon hearing. Here is the beginning of his opening statement (the full statement is in the complimentary package offered at the end of this post):
At the outset and on behalf of my colleagues, I want to thank you, Special Counsel Mueller, for a lifetime of service to the country. Your report, for those who have taken the time to study it, is methodical and it is devastating, for it tells the story of a foreign adversary's sweeping and systematic intervention in a close U.S. presidential election. That should be enough to deserve the attention of every American, as you well point out. But your report tells another story as well. For the story of the 2016 presidential election is also a story about disloyalty to country, about greed, and about lies. Your investigation determined that the Trump campaign—including Trump himself—knew that a foreign power was intervening in our election and welcomed it, built Russian meddling into their strategy, and used it.
Disloyalty to country. Those are strong words, but how else are we to describe a presidential campaign which did not inform the authorities of a foreign offer of dirt on their opponent, which did not publicly shun it, or turn it away, but which instead invited it, encouraged it, and made full use of it?
That disloyalty may not have been criminal. Constrained by uncooperative witnesses, the destruction of documents and the use of encrypted communications, your team was not able to establish each of the elements of the crime of conspiracy beyond a reasonable doubt, so not a provable crime, in any event. But, I think, maybe, something worse. A crime is the violation of a law written by Congress. But disloyalty to country violates the very obligation of citizenship, our devotion to a core principle on which our nation was founded, that we, the people, not some foreign power that wishes us ill, we decide, who shall govern us.
The Nunes Opening Statement
Devin Nunes (R-CA) is Ranking Member of the House Intelligence Committee. Here is the beginning of his opening statement at the afternoon hearing (the full statement is in the complimentary package offered at the end of this post):
Welcome, everyone, to the last gasp of the Russian collusion conspiracy theory, as the Democrats continue to foist this spectacle on the American people as well as on you Mr. Mueller. As the American people may recall, the media first began spreading this conspiracy theory in the spring of 2016 when Fusion GPS, funded by the Democratic National Committee and the Hillary Clinton Campaign, started developing the Steele dossier, a collection of outlandish accusations that Trump and his associates were Russian agents. Fusion GPS, Steele, and other confederates fed these absurdities to naive or partisan reporters and to top officials in numerous government agencies including the FBI, the Department of Justice, and the State Department. Among other things, the FBI used dossier allegations to obtain a warrant to spy on the Trump Campaign.
Despite acknowledging dossier allegations as being "salacious and unverified," former FBI Director James Comey briefed those allegations to President Obama and President-elect Trump. Those briefings conveniently leaked to the press, resulting in the publication of the dossier and launching thousands of false press stories based on the word of a foreign ex-spy—one who admitted he was "desperate" that Trump lose the election and who was eventually fired as an FBI source for leaking to the press. After Comey himself was fired, by his own admission, he leaked derogatory information on President Trump to the press for the specific purpose, and successfully so, of engineering the appointment of Special Counsel, Robert Mueller.
The Mueller Afternoon Statement
On July 24, 2019, at the afternoon hearing before the House Intelligence Committee, Mueller made an opening statement. Here is the beginning of the statement (the full statement is in the complimentary package offered at the end of this post):
Good afternoon Chairman Schiff, Ranking Member Nunes, and members of the Committee. I testified this morning before the House Judiciary Committee. I ask that the opening statement I made before that Committee be incorporated into the record here.
I understand that this Committee has a unique jurisdiction, and that you are interested in further understanding the counter-intelligence implications of our investigation. So let me say a word about how we handled the potential impact of our investigation on counter-intelligence matters.
As we explain in our report, the Special Counsel regulations effectively gave me the role of a U.S. Attorney. As a result, we structured our investigation around evidence for possible use in prosecution of federal crimes. We did not reach what you would call "counter-intelligence conclusions."
We did, however, set up processes in the office to identify and pass counter-intelligence information onto the FBI. Members of our office periodically briefed the FBI about counter-intelligence information. In addition, there were agents and analysts from the FBI who were not on our team, but whose job it was to identify counter-intelligence information in our files and disseminate that information to the FBI.
For these reasons, questions about what the FBI has done with the counter-intelligence information obtained from our investigation should be directed to the FBI.
The Trump Questions and Responses
During the July 24, 2019 hearings, some lawmakers made reference to the written responses Trump provided under oath to Mueller's written questions. There were four groups of questions: (1) June 9, 2016 Meeting at Trump Tower, (2) Russian Hacking/Russian Efforts Using Social Media/Wikileaks, (3) The Trump Organization Moscow Project, and (4) Contacts with Russia and Russia-Related Issues During the Campaign. For example, here are question 1(f) and the response to it:
Question: Did you learn of any communications between Donald J. Trump, Jr., Paul Manafort, or Jared Kushner and any member or representative of the Agalarov family, Natalia Veselnitskaya, Rob Goldstone, or any Russian official or contact that took place after June 9, 2016 and concerned the June 9 meeting or efforts by Russia to assist the campaign? If yes, describe who you learned the information from, when, and the substance of what you learned.
Response: I do not recall being aware during the campaign of communications between Donald J. Trump, Jr., Paul Manafort, or Jared Kushner and any member or representative of the Agalarov family, Robert Goldstone, Natalia Veselnitskaya (whose name I was not familiar with), or anyone I understood to be a Russian official.
All the questions and responses are in Appendix C to Volume 2 of the Mueller report. The appendix is in the complimentary package offered at the end of this post.

General Observations
I found the Mueller hearings fascinating in some respects, and disappointing in other respects. Mueller handled himself as the patriot he is, but he showed his age. The hearings were held exactly two weeks before his 75th birthday.

Mueller had made it clear that his report was his testimony, and that he would not go beyond the report. Nonetheless, on the day before the hearings, he received a letter from the Justice Department instructing him on what he could and could not say. I am not aware of Mueller's personal reaction to the letter, but I found the letter insulting.

The lawmakers, each limited to five minutes, tried to squeeze in as many questions as possible. The result was that they often read a lengthy paragraph from the report very rapidly and asked Mueller about it. He had no opportunity to read the paragraph for himself, and therefore he often was forced to say that if it is in the report, he agreed with it.

At one point a lawmaker asked Mueller whether the Russians were still meddling. He responded that they certainly were, and that they would continue to meddle through the upcoming election.

At one point a lawmaker questioned the presence on Mueller's staff of several individuals who had made contributions to Democrats. Mueller fired back that not once in his entire career had he ever asked a prospective colleague about his or her political affiliation. He said he always tried to hire the people best qualified to handle the job.

Available Material
I am offering a 55-page complimentary PDF consisting of the Barr memorandum (19 pages), the Nadler opening statement (2 pages), the Collins opening statement (2 pages), the Mueller opening statement at the morning hearing (3 pages), the Schiff opening statement (2 pages), the Nunes opening statement (2 pages), the Mueller opening statement at the afternoon hearing (2 pages), and Appendix C to Volume 2 of the Mueller report (23 pages). Email and ask for the August 2019 package about the Mueller hearings.


Monday, August 5, 2019

No. 325: Long-Term Care Insurance and the Lawsuit against the California Public Employees' Retirement System

In No. 227 (July 27, 2017), I discussed a class action lawsuit against the California Public Employees' Retirement System (CalPERS). The case relates to large premium increases CalPERS imposed on owners of long-term care (LTC) insurance policies. During the past two years I have received many inquiries about the status of the case. An inquiry I received recently prompted me to prepare this update on the case. (See Wedding v. CalPERS, Superior Court of California, County of Los Angeles, Case No. BC517444.)

Early Developments
In August 2013 several plaintiffs filed the original complaint after CalPERS notified them of an 85 percent increase in the premiums for their LTC insurance policies. In January 2014 they filed an amended complaint. In March 2017 CalPERS filed a motion for summary judgment or, in the alternative, summary adjudication. In June 2017 the then judge in the case handed down a ruling. She denied the motion for summary judgment but granted the motion for summary adjudication. She allowed the case to proceed with three of the original causes of action, and it appeared the trial would begin early in 2018. The complimentary package I offered in No. 227 is still available.

The Current Situation
The case now is in the hands of California Superior Court Judge William F. Highberger. On July 1, 2019, he filed a draft of a proposed statement of decision. Here is the concluding section:
The Court rules for Plaintiffs on the interpretation of the "Inflation-Protection" clauses in the EOC [evidence of coverage document] and for CalPERS on the premium-adjustments permitted by the "Guaranteed Renewable" clauses (subject, however, to the override of the Inflation-Protection promise where the two terms appear to conflict). The Court agrees with CalPERS on the Cross-Claim for Declaratory Relief that CalPERS can subject insureds with Inflation-Protection benefits to future rate increases (and retroactive rate increases which are less than the disputed 85 percent increase actually imposed) insofar as CalPERS can persuade the fact-finder (now or in future litigation) that such rate increases are driven by cost factors other than the inherent escalation of daily/monthly limits on Inflation-Protection benefits over time as long as those increases are spread over the entire risk pool and not selectively imposed to a greater-than-average degree on the Inflation-Protection insureds.
Objections to this Proposed Statement of Decision must be served and filed within fifteen (15) calendar days plus two (2) court days for e-service from this date.
A Trial-Readiness Conference is set for August 21, 2019 at 10:00 a.m. with Joint Report due August 19, 2019. Final Status Conference set for October 3, 2019 at 10:00 a.m. Jury Trial (10 days) set for October 30, 2019 at 10:00 a.m. If the parties are making any progress with their settlement negotiations, the Court will be cooperative in continuing the trial date.
General Observations
When I wrote about this case in 2017, it had been going for four years. At the time, I did not believe that the parties would allow the case to go to trial, but I did not say so. Now that the case has been going for six years, I feel the same way. I think the parties, especially CalPERS, will not allow the case to go to trial. Should the parties reach a settlement, I think the terms of the settlement will be made public. I plan to continue reporting on the case.

Available Material
I am offering a 35-page complimentary PDF containing the draft of Judge Highberger's proposed statement of decision. Email and ask for the August 2019 package about the Wedding v. CalPERS case.