Disclaimer

The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.

 Skip to Content

California Becomes Hotbed for Policy Lapse Notice Claims
May 05, 2021
In our April 2020 issue, we discussed how policy lapse notice cases were on the rise in California after the state amended its insurance code, requiring policies to provide a 60-day grace period and notice before any policy lapsed for nonpayment. Among other things, we noted that the California Supreme Court had accepted review of the decision in McHugh v. Protective Life Insurance Co. that the amended regulations apply only to new contracts issued after January 1, 2013.

Since then, an avalanche of cases have been filed in federal courts, mostly by the same law firms, bringing the total number of such actions up to 18 at one point in California. Plaintiffs in these cases allege various claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and unfair competition. However, eight of these cases are stayed pending the outcome of McHugh and three others have been dismissed. The California Supreme Court has not yet held oral arguments in McHugh.

Nevertheless, an important development has occurred in the Ninth Circuit, as the circuit court will review the decision in Thomas v. State Farm Life Insurance Co., in which the trial court granted summary judgment in favor of the plaintiffs. The court held that although the amendments could not apply retroactively to existing policies, they do apply to existing policies that are renewed after January 1, 2013. It will be interesting to see whether the circuit court adopts the district court’s view that the “renewal” of a policy incorporates all statutory requirements enacted since the policy’s last renewal — which would appear to present a number of constitutional issues under the contracts clause — or whether it will reject this theory and interpret the contract as written. Oral argument in Thomas is currently scheduled for June 8, 2021.
Related Practices
Life, Annuity, and Retirement Litigation Life, Annuity, and Retirement Solutions
Related Industries
Life, Annuity, and Retirement Solutions Life, Annuity, and Retirement Solutions
©2024 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.