Collins v. Metro. Life Ins. Co.

• Decision Date: 03 February 2023
• Docket Number: 4:22-CV-129 RLW
• Parties: DENNIS COLLINS, on behalf of himself and all others similarly situated, et al., Plaintiffs, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Eastern District of Missouri

DENNIS COLLINS, on behalf of himself and all others similarly situated, et al., Plaintiffs,
v.
METROPOLITAN LIFE INSURANCE COMPANY, Defendant.

No. 4:22-CV-129 RLW

United States District Court, E.D. Missouri, Eastern Division

February 3, 2023

MEMORANDUM AND ORDER

RONNIE L. WHITE, UNITED STATES DISTRICT JUDGE

Plaintiffs Dennis Collins, Suzanne Collins, David Butler, and Lucia Bott bring this suit against Metropolitan Life Insurance Company (“MetLife” or “Defendant”) for the recovery of the premiums they paid for inflation protection under their long-term care (“LTC”) insurance policies. Plaintiffs allege that MetLife made fraudulent misrepresentations and concealed material facts about the effects of the inflation rider on their premiums. Plaintiffs bring suit on behalf of themselves and those similarly situated. This matter is before the Court on MetLife's motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (ECF No. 20). Plaintiffs oppose the motion, which is fully briefed and ripe for review. For the reasons that follow, the Court grants MetLife's motion to dismiss for failure to state a claim.

I. Background

In their Complaint, Plaintiffs allege that on or around February 2007, they purchased MetLife LTC policies all of which were issued under the same plan number.^[1] Plaintiffs attached

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copies of the policies to their Complaint. (ECF No. 1, Exs. A-B at 1). In conjunction with their MetLife LTC policies, Plaintiffs also purchased the “5% Automatic Compound Inflation Protection Rider” (hereinafter the “Inflation Rider”). In the policies, MetLife described the Inflation Rider as follows:

Automatic Compound Inflation Benefit. Your benefit will automatically increase each year with no corresponding increase in premium. The amounts of the increases are equal to five percent (5%) of the benefit amounts in effect at the end of the prior Policy Year.... The benefit amount increases will occur on each Policy Anniversary for the lifetime of Your policy, even when you are receiving Benefits. These increases will be made without regard to Your age, claim status, claim history, health, or the length of time You have been covered under the policy. Your premium is not expected to increase as a result of the benefit amounts increases provided by this Rider. However, We reserve the right to adjust premiums on a class basis

(ECF No. 1 at 5).

According to the Complaint, Plaintiffs paid substantially more in premiums for the promises made and benefits provided by the Inflation Rider. In fact, Plaintiffs allege that the Inflation Rider more than doubled the price of their annual base premium. For example, Plaintiff Dennis Collins alleges that his initial base annual premium was $2,182.61, and the amount for the Inflation Rider was an additional annual charge of $2,334.96.

Beginning in or around February 2015, and then subsequently in February 2018 and February 2019, MetLife notified Plaintiffs of substantial increases in premiums for all policyholders. At the time it announced the increases, MetLife informed Plaintiffs that when it initially priced the long-term care insurance products that it considered many factors including persistency rates, mortality, rates and morbidity rates, and that after an in-depth analysis, it determined “a premium increase is necessary on certain long-term care insurance policies.” (ECF No. 1 at 6).

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Plaintiffs maintain that between the time they purchased their policies and when MetLife implemented each of the rate increases, the persistency rates, mortality rates, and morbidity rates did not change. Plaintiffs allege that the only “appreciable change” between when they purchased their initial policies and when MetLife implemented the class-wide rate increases, “was that the future daily benefit amount for purchasers of the rider, projected over decades, increased to an unrealistic number and provided the sole basis for the implementation of classwide rate increases.” (ECF No. 1 at 6). In other words, the Inflation Rider was the justification for the increase in premiums.

According to Plaintiffs, what “MetLife knew when it sold the products and each time it implemented premium increases, but did not tell insureds, was that the projected daily benefit amounts, inflated to unreasonable levels, would be used to establish projected future losses and provided the primary basis and support for the rate increases.” (Id. at 7). Plaintiffs allege that MetLife knew at the time it sold the policies and the Inflation Riders that it would determine future rate increases based on projected future losses, and that the increase in daily benefits due to purchasers of the Inflation Rider would generate future losses. Put another way, the increased daily benefits promised to purchasers of the Inflation Rider would in time generate losses for MetLife, and MetLife would use these projected loses “to justify raising premiums” on all purchasers of MetLife's LTC policies, including on those who had purchased the Inflation Rider. (Id. at 8). Plaintiffs contend MetLife fraudulently concealed its plan from LTC policyholders, and more specifically, to purchasers of the Inflation Rider.

According to the Complaint, MetLife knew its statement in the policies that the Inflation Rider “provided an increase in daily benefit amount without a ‘corresponding increase' in premium[s] was and is false” as was the statement that “[y]our premium is not expected to increase

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as a result of the benefit amount increases provided by this Rider.” (Id. at 89). Plaintiffs claim MetLife knew at the time it sold the LTC policies and the Inflation Riders that it would increase premiums on a class-wide basis based on the future daily benefit amount increases, including for purchasers of the Inflation Rider.

The Complaint further alleges MetLife intended for purchasers of the Inflation Rider to rely on its statement that “[y]our premium is not expected to increase as a result of the benefit amount increases provided by this Rider.” (Id. at 10). Plaintiffs assert they reasonably believed that by purchasing the Inflation Rider they were limiting the risk of future rate increase as they were paying more than double in premiums to secure an increasing daily benefit. In reality though, they were, “merely providing MetLife with the basis on which to demonstrate projected future losses which MetLife deliberately exploited to justify the need for future rate increases.” (Id. at 10). Plaintiffs maintain that MetLife concealed material information that it was under a duty to disclose; the Inflation Rider has no benefit; and MetLife is charging Plaintiffs double their premiums to give MetLife the basis to charge higher premiums to all purchasers of its LTC policies, including Plaintiffs. Plaintiffs claim that through its misconduct, MetLife has charged and collected tens or even hundreds of millions of dollars in unwarranted premiums. (Id.)

Plaintiffs' Complaint asserts four causes of action: common law fraud (Count I), fraudulent concealment (Count II), violation of state consumer unfair and deceptive practices protection acts (Count III), and breach of the implied covenant of good faith and fair dealing (Count IV).

Plaintiffs seek to bring a class action against MetLife. They ask that they be allowed to represent the following class of insureds:

All persons in the United States who purchased an individual long-term care insurance policy from MetLife (or a subsidiary or affiliate thereof) and selected the “5% Automatic Compound Inflation Protection Rider” at any time during the period from January 1, 1986 to the present and have been subjected to a class-wide

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rate increase that increased their base premium and the premium/charge paid for the “5% Automatic Compound Inflation Protection Rider.

(ECF No. 1 at 11-12).

Defendant did not answer the Complaint, but rather filed a motion to dismiss pursuant to Rule12(b)(6) of the Federal Rules of Civil Procedure. MetLife moves to dismiss based on the following arguments: (1) Plaintiffs' claims should be dismissed because they are barred by the filed-rate doctrine; (2) the Missouri Plaintiffs' claims must be dismissed because the Missouri Plaintiffs did not exhaust the required administrative process for challenging insurance rates or rules; and (3) Plaintiffs' claim for breach of the implied covenant of good faith and fair dealing is deficient because the Complaint fails to plead any specific contract provision from which the alleged covenant of good faith and fair dealing arises.

II. Legal Standard

As an initial matter, Plaintiffs argue in response to Defendant's Motion to Dismiss that the motion is not properly before the Court on a Rule 12(b)(6) motion, but rather should have been brought as a motion for judgment on the pleadings under Rule 12(c) because Defendant is raising affirmative defenses.

Motions for judgment on the pleadings under Rule 12(c) are determined under the same standards that are applied to a motion under Rule 12(b)(6). Ginsburg v. InBev NV/SA, 623 F.3d 1229, 1233 n.3 (8th Cir. 2010). To survive a Rule 12(b)(6) motion to dismiss for failure to state a claim, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “where the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Blomker v. Jewell, 831 F.3d 1051, 1055 (8th Cir. 2016)

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(quotation omitted). The facts alleged must “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. A complaint must offer more than “‘labels and conclusions' or...