Kurt v. Platinum Supplemental Insurance, Inc., 19 C 4520

CourtU.S. District Court — Northern District of Illinois
Writing for the CourtJohn J. Tharp, Jr., United States District Judge.
PartiesLARITA KURT, JOLENE KRAMER, FRANK BANISTER, CAROLYN BANISTER, DON BURDOCK, and CARLA BURDOCK, on behalf of themselves and all others similarly situated, Plaintiffs, v. PLATINUM SUPPLEMENTAL INSURANCE, INC., WAYNE BRIGGS, TYLER BRIGGS, MEDICO CORP LIFE INSURANCE COMPANY, and GUARANTEE TRUST LIFE INSURANCE COMPANY, Defendants.
Decision Date22 July 2021
Docket Number19 C 4520

LARITA KURT, JOLENE KRAMER, FRANK BANISTER, CAROLYN BANISTER, DON BURDOCK, and CARLA BURDOCK, on behalf of themselves and all others similarly situated, Plaintiffs,
v.

PLATINUM SUPPLEMENTAL INSURANCE, INC., WAYNE BRIGGS, TYLER BRIGGS, MEDICO CORP LIFE INSURANCE COMPANY, and GUARANTEE TRUST LIFE INSURANCE COMPANY, Defendants.

No. 19 C 4520

United States District Court, N.D. Illinois, Eastern Division

July 22, 2021


MEMORANDUM OPINION AND ORDER

John J. Tharp, Jr., United States District Judge.

Plaintiffs Larita Kurt, Jolene Kramer, Carolyn Banister, Frank Banister, Don Burdock, and Carla Burdock have brought this action against defendants Platinum Supplemental Insurance, Inc., Wayne Briggs, Tyler Briggs, Medico Corp Life Insurance Company, and Guarantee Trust Life Insurance Company, alleging that the defendants devised, directed, participated in, or benefitted from a life insurance “twisting” scheme that targeted senior citizens in primarily rural communities. Each defendant has moved to dismiss the plaintiffs' claims: Guarantee Trust Life Insurance Company, for failure to state a claim [83]; Tyler Briggs, Wayne Briggs, and Platinum Supplemental Insurance, Inc., for failure to state a claim and lack of standing [86], [90]; and Medico Corp Life Insurance Company, for lack of personal jurisdiction [85]. Defendants Platinum Supplemental Insurance, Inc. and Tyler and Wayne Briggs also move to strike the plaintiffs' class allegations [82]. For the reasons stated below, defendants GTL and Medico Corp's motions are granted; Tyler Briggs and Platinum's motion to dismiss is granted in part and denied in part; Wayne Briggs' separate motion to dismiss is denied; and the Briggses and Platinum's motion to strike class allegations is denied.

BACKGROUND

Platinum Supplemental Insurance, Inc., is a Dubuque-based Iowa corporation that markets and sells insurance policies on behalf of insurance underwriters, primarily through door-to-door sales and with a special focus on reaching potential customers in rural communities. Third Am. Compl. ¶¶ 16-17. Wayne Briggs founded and is the current president of Platinum; his son, Tyler Briggs, works as a sales associate. Id. at ¶¶ 18-19. Both Wayne and Tyler Briggs reside in Galena, Illinois. Id.

From 2002 through 2015, Platinum had a Development and Exclusive Marketing Agreement with Guarantee Trust Life, an Illinois mutual legal reserve company that develops, underwrites, issues, and administers life and health insurance products. Id. at ¶¶ 39-40, 5. Under their agreement, Platinum and GTL jointly developed cancer, heart attack, stroke, and longer-term care supplemental medical insurance policies, and Platinum sold these GTL-underwritten products as GTL's exclusive agent. Id. at ¶¶ 39-40. Unlike comprehensive health insurance coverage, supplemental insurance policies are “sold on an individual basis and [are] designed to put cash in the patient's pocket upon the occurrence of a specific medical event”-like a cancer diagnosis or heart attack-“to help mitigate the costs, burdens, and other indirect expenses associated with diagnosis and treatment” of that medical event not otherwise covered by comprehensive insurance policies. Id. at ¶ 29. GTL's policies also included a “return of premium” benefit rider, which provided that, under certain circumstances, the supplemental insurance policyholder would be entitled to the return of premiums paid on the policy, less any benefits paid out during the policy term. Id. at ¶ 30. In the plan booklet, the benefit was described as follows:

Return of Premium - We'll return all premiums paid (less any claims paid) at the end of 15 years, or on the plan anniversary after you reach age 75 (whichever is sooner). If you are 65 or older when your plan is issued, we will return premiums at the end of 10 years (less any claims). Benefits are payable only upon cancellation of the policy or death of the primary insured Premiums will be returned provided your coverage is still in force

Id. at ¶ 31. This policy, the plaintiffs allege, “guarantees that the policyholder will realize some minimum cash benefit in an amount equal to the total premium he or she pays into the policy, ” in either benefit payments for covered medical events, return of premium payments, or some combination of the two, depending on the insured's subsequent medical history. Id. at ¶ 32. The benefit is forfeited, however, if the insured either cancels the GTL policy or allows it to lapse. Id. at ¶ 33.

The relationship between GTL and Platinum deteriorated after GTL was named a party in several lawsuits “arising from misrepresentations Platinum agents made to customers regarding GTL's insurance products.” Id. at ¶ 43. In one case, Platinum's conduct led to a $4 million punitive damage verdict against GTL that Platinum refused to indemnify it for, in violation of the terms of the parties' agreement. Id. at ¶ 43-44. GTL terminated the sales and marketing agreement effective July 17, 2015. Id. at ¶ 44.

Shortly after its agreement with GTL ended, Platinum entered new sales and marketing agreements with State Mutual Insurance Company, Inc., a Georgia insurance company, and Medico Corp Life Insurance Company, a Des Moines, Iowa-based corporation. Id. at ¶¶ 20-21. The plaintiffs allege that “[i]n response to the loss of GTL's business, and armed with a list of GTL policyholders, Platinum-at the direction of W[ayne] Briggs and with the assistance of T[yler] Briggs-endeavored to ‘flip' each and every one of GTL's policyholders to policies issued by its new underwriting partner, Medico.” Id. at ¶ 46. They did so, the plaintiffs claim, through “high pressure, door-to-door sales encounters” with GTL supplemental insurance policy customers and a range of misrepresentations about Platinum's relationship with GTL, GTL's relationship with Medico, and the insurance products being sold, including that Platinum was “upgrading” existing GTL policies for its customers; that Platinum “is GTL, ” though their affiliation had been severed; that Medico had either merged with or been bought by GTL; that Platinum had the authority to cancel existing GTL policies; that GTL supplemental polices were “no longer available” or that GTL was “going out of business.” Id. at ¶ 51(a)-(j). Sales representatives also omitted the crucial fact that the insured's decision to cancel their existing GTL policy “would cause the policyholder to forfeit his or her return of premium benefit” and “otherwise obscure[ed], conceal[ed], or deceiv[ed] policyholders about the consequences of cancellation on their return of premium benefits.” Id. When sales representatives' tactics paid off, GTL alleges, Platinum was rewarded two-fold: first, with the satisfaction of having successfully “flipped” a GTL customer to Medico, and second, with a “first year” commission for the agent from the sale of a new policy. Id. at ¶ 36.

The plaintiffs in this case are alleged victims of Platinum's multi-state “twisting”[1] scheme. Larita Kurt, an 80-year-old resident of Monticello, Iowa, paid more than $46, 700 in premiums under her GTL Long-Term Care Insurance Policy between 2002 until 2017, when she terminated it and forfeited her right-and that of her daughter, Jolene Kramer, the named beneficiary-to any benefit under the policy's return of premium rider. Id. at ¶¶ 9-10. Frank Banister and his wife, Carolyn, of Hartford, Kansas, had a GTL Cancer/Heart Attack/Stroke Policy with a return of premium rider from 2008 until 2017. Id. at ¶ 12. Mr. Banister had paid GTL more than $21, 400 in premiums at the time the policy was terminated. Id. Carla Burdock, a 75-year-old resident of Keswick, Iowa, was protected under a GTL Cancer/Heart Attack/Stroke Policy with a return of premium rider until 2017. Id. at ¶¶ 13-14. She forfeited more than $51, 000 in policy premiums when she terminated her policy. Id. at ¶ 14. Her husband, plaintiff Don Burdock, was the named beneficiary under the policy. Id. All three of the insureds allege that they were “duped” into terminating their GTL supplemental policies by Platinum and its agents. See Id. at ¶¶ 9, 12, 14; see also Id. at ¶¶ 53-56. They also allege that Platinum engaged in the same high-pressure twisting scheme with customers across Arkansas, Colorado, Iowa, Illinois, Kansas, Minnesota, Missouri, Nebraska, Oklahoma, South Dakota, Texas, Wisconsin, and Wyoming, among others. Id. at ¶¶ 48, 57-76.

Based on the alleged conduct, the plaintiffs have filed a putative class action against Platinum, Wayne and Tyler Briggs, Medico Corp Life Insurance Company, and Guarantee Trust Life Insurance Company. The complaint includes 9 counts as to Platinum, Wayne and Tyler Briggs, and Medico Corp, outlining a variety of legal theories by which they seek damages from these defendants. They assert fraudulent misrepresentation (Count I), fraud by concealment, silence, or omission (Count II), negligent misrepresentation (Count III), negligence per se (Count IV), violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq. (Count V), and the Illinois statute regarding financial exploitation of elderly persons, 720 ILCS 5/17-56 (Count VI), tortious interference with contract (Count VII), civil conspiracy (Count VIII), and unjust enrichment (Count IX). In Count X, the plaintiffs bring a separate unjust enrichment claim against GTL. Each defendant has moved to dismiss under Rule 12(b) for lack of standing, lack of personal jurisdiction, or for failure to state a claim. The Briggs defendants and Platinum also separately move to strike the plaintiffs' class allegations. Those motions are taken in turn.

DISCUSSION

1. The Plaintiffs Failed to State a Claim Against Guarantee Trust Life.

The plaintiffs raise just one unjust enrichment claim against Guarantee Trust Life Insurance Company. They argue that GTL has unfairly benefitted through “its retention...

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