The Halcom Lawsuit
On January 11, 2021, Judy Halcom and three other individuals filed a class action lawsuit against Genworth Life Insurance Company (GLIC) and Genworth Life Insurance Company of New York (GLICNY). In this case, the two defendants collectively are referred to as "Genworth." (See Halcom v. Genworth, U.S. District Court, Eastern District of Virginia, Case No. 3:21-cv-19.)
A Brief Summary
The introduction in the Halcom complaint describes the nature of the lawsuit. Here is the third paragraph of the introduction:
3. Since 2008, Genworth has steadily and substantially increased the premiums on these policies. To be clear, this case does not challenge Genworth's contractual right to increase these premiums, or its need for premium increases given changes in certain of Genworth's actuarial assumptions and the historical experience of these policy blocks. Nor does this case ask the Court to reconstitute any of the premium rates or otherwise substitute its judgment for that of any insurance regulator in approving the increased rates. Rather, this case seeks to remedy the harm caused to Plaintiffs and the Classes from Genworth's partial disclosures of material information when communicating the premium increases, and the omission of material information necessary to make those partial disclosures adequate. Without this material information, Plaintiffs and the Classes could not make informed decisions in response to the premium increases and ultimately made policy option renewal elections they never would have made had the Company adequately disclosed the staggering scope and magnitude of its internal rate increase action plans in the first place.
The Halcom case was assigned to U.S. Senior District Court Judge Robert E. Payne. President George W. Bush nominated him in November 1991. The Senate confirmed him in May 1992. He assumed senior status in May 2007.
The Halcom Settlement
On August 30, 2021, Judge Payne issued an order granting preliminary approval of the Halcom settlement and directing notice to the class of over 146,000 members in all 50 states and the District of Columbia. He appointed Epiq Class Action & Claims Solutions, Inc. (Epiq) as administrator of the settlement, approved the class notice and the publication notice, and ordered Epiq to disseminate the class notice to class members within 60 days. He approved the form of the Special Election Letter to be mailed to class members, subject to possible changes by state insurance regulators. He described the procedure for exclusions and objections, set the final approval hearing for February 9, 2022, and attached a list of all the policy form numbers. He also attached the notice to class members (nine pages) and the publication notice (one page), which are here.
In the notice to class members, there is a section on attorneys' fees and litigation expenses. It says the class attorneys (the same attorneys who filed the Skochin complaint mentioned later), as part of the request for final approval of the settlement, will request (a) $1 million relating to the injunctive relief that is in the form of the disclosures, and (b) an additional contingent payment of 15 percent of certain amounts related to the class members' selection of options, but no greater than $18,500,000. None of the attorneys' fees will be deducted from the payments made to class members. Also, the class attorneys will request an award of litigation expenses of no more than $50,000. Genworth has agreed to pay all fees and expenses. The class attorneys will also request approval of payment of up to $15,000 for each of the four named plaintiffs.
Genworth's Comments on the Halcom Settlement
On August 5, 2021, Genworth filed its 10-Q report for the quarter ended June 30, 2021, with the Securities and Exchange Commission. On pages 66-67 of the report, Genworth made these comments on the proposed settlement of the Halcom case:
If we enter into a settlement consistent with the agreement in principle reached on June 18, 2021, we do not anticipate the result to have a material negative impact on our results of operations or financial position. If we do not enter into a final settlement, we intend to continue to vigorously defend this action.
The Eastern District of Virginia
The United States District Court for the Eastern District of Virginia (where Genworth is based) has a reputation as the fastest civil trial court in the United States. The Halcom case is an example. The complaint was filed on January 11, 2021. Genworth's answer to the complaint was filed on March 15. A pretrial conference was held on April 21. A scheduling order was issued on May 3. The parties were engaged in private mediation on May 27. The parties agreed to a settlement on June 30. The proposed settlement was filed on August 23. Preliminary approval of the settlement was granted on August 30. The settlement approval hearing on February 9, 2022 was set on September 2, 2021.
The Skochin Lawsuit
The Halcom case resembles the case of Skochin v. Genworth. My most recent update on Skochin is in No. 398 (November 13, 2020).
General ObservationsI plan to post a follow-up to this blog post after Judge Payne grants final approval of the Halcom settlement.