Opinion ID: 4536657
Heading Depth: 3
Heading Rank: 1

Heading: The McBride Class Action

Text: In 2000, Robert McBride filed a putative class action against Genworth, then known as Life Insurance Company of Virginia, over the administration and marketing of its universal life insurance policies. Complaint, McBride v. Life Insurance Co. of Virginia, No. 4:00-cv-217 (M.D. Ga.) (“McBride”), ECF No. 1- 2. 1 The second amended complaint in McBride (the “McBride complaint”), which was the operative complaint when that case settled, alleged that Genworth deceived customers purchasing universal life policies by representing that their premiums would remain level, vanish, or not be required in the future. It also alleged that Genworth “wrongfully and improperly” assessed premiums in amounts 1 For the sake of clarity, we refer to Life Insurance Company of Virginia as “Genworth.” 3 Case: 19-11178 Date Filed: 05/26/2020 Page: 4 of 21 higher than the premiums contracted for by the parties by “applying an increased cost of insurance to cash value as policy holders grew older over time.” The McBride complaint further alleged that Genworth engaged in deceptive marketing practices by failing to disclose it charged cost of insurance rates, “or that cost of insurance is determined at the whim or discretion of [Genworth’s] management on a monthly basis.” In 2004, the parties entered into a settlement agreement that contained a broad release. Among other things, class members agreed to release all “past, present and future” causes of action that were “based upon, related to, or connected with, directly or indirectly, in whole or in part (a) the allegations, facts, subjects or issues set forth or raised in the [McBride action] or (b) the Released Conduct.” The release also provided that class members were precluded and estopped from bringing any future causes of action “related to in any way, directly or indirectly, in whole or in part (a) the allegations, facts, subjects or issues set forth or raised in the [McBride action] or (b) the Released Conduct, regardless of whether such Causes of Action accrue after the [settlement agreement] is approved.” “Released Conduct” was defined broadly to encompass essentially every aspect of Genworth’s universal life policies, including “the design, development, marketing, sale, suitability, administration, servicing, modification, underwriting, lapse, termination, performance, payments, cash values, premiums, cost of insurance 4 Case: 19-11178 Date Filed: 05/26/2020 Page: 5 of 21 rates and charges, death benefits, coverage, maturity date, policy loans, replacements, commissions, taxes, surrender charges, credited interest, expense charges, or other costs of any Class Policy” (emphasis added). A court-approved settlement notice was sent to the McBride class members. It described the issues in the lawsuit, including the allegation that Genworth breached the insurance policy by “increasing policy charges, including cost of insurance rates.” The notice also said that if class members did not opt out of the McBride settlement agreement, they might surrender claims relating to “cost of insurance charges” and “cost of insurance rates.” No class members objected to the settlement, and only 652 of over 350,000 total class members opted out. The final judgment, which adopted the McBride settlement, said the terms of the settlement would be “forever binding on the Plaintiffs, all other Class Members and all Releasors, and shall have res judicata and other preclusive effect in all pending and future claims, lawsuits or other proceedings . . . to the extent those claims, lawsuits or other proceedings involve matters that were or could have been raised in this Action or are otherwise encompassed by the Release.” Also relevant to this appeal, the McBride settlement provided that “Nothing in this Agreement shall prevent [Genworth] from increasing any Class Member’s monthly policy deductions (i.e., the monthly cost of insurance charges and 5 Case: 19-11178 Date Filed: 05/26/2020 Page: 6 of 21 expenses of the Class Policy) in accordance with Pre-Settlement Policy Administration.” The definition of Pre-Settlement Policy Administration (“PSPA”) states that Genworth will administer a Class Member’s Class Policy in the same manner that [Genworth] administered flexible premium adjustable life insurance policies prior to the Settlement. In particular, [Genworth] will administer a Class Member’s Class Policy in accordance with the terms of such policy and in accordance with [Genworth]’s interpretation of that policy’s provisions, such that the policy will stay in force only so long as the Class Policy’s cash value or cash value less surrender charges (whichever is applicable in the particular Class Policy) is sufficient to cover the monthly deductions (i.e. the monthly cost of insurance charges and expenses of the Class Policy), and that a Class Member may have to pay premiums in an amount or at a frequency greater than the Planned Premium or any other premium that the Class Member was paying or expected to pay in order to keep his/her Class Policy from lapsing.