On December 12, 2006, the United States District Court for the Eastern District of Pennsylvania dismissed with prejudice a putative nationwide class action regarding "guaranteed renewable" Long-Term Care insurance. Dismissal of this case is a welcome departure from the prevailing trend in "guaranteed renewable" Long-Term Care litigation where plaintiffs have avoided summary judgment and, in some instances, achieved certification of statewide or nationwide classes.

In Alvarez v. Insurance Company of North America, the plaintiff filed suit after the insurer raised premiums on his group policy for the first and only time in the sixteen years since the policy had been issued, alleging that prior to his purchase, the insurer knew but failed to disclose that the coverage was "underpriced" and that the insurer planned to increase premiums in the future. The complaint was initially filed in the District of Columbia federal court asserting claims for fraud, constructive fraud, violation of the D.C. Consumer Procedures and Protection Act ("CPPA"), breach of the implied covenant of good faith and fair dealing and punitive damages. Defendants successfully sought transfer of the case to the Eastern District of Pennsylvania.

On November 21, 2006, the court determined that D.C. law governed plaintiff's claims and dismissed the cause of action for breach of the implied covenant of good faith and fair dealing, holding that the claim was not cognizable where the insurer's conduct was expressly permitted under the terms of the contract. The court also dismissed the claim for punitive damages, holding it was not an independent cause of action under D.C. law. After requesting supplemental briefing by the parties, the court dismissed plaintiff's remaining claims with prejudice, holding that under D.C. law, the insurer was under no duty to disclose the information allegedly omitted and therefore plaintiff could not state a claim for fraud, constructive fraud or violation of the CPPA.

Jorden Burt was counsel for the Insurance Company of North America. For more information, contact James F. Jorden at ( 202) 965-8135, Anthony N. Cicchetti at (860)392-5040 or Raul A. Cuervo at (202) 295-6505.