Ohio Director Weighs In on Premium Payment Lawsuit

Ohio Insurance Director Lee Covington filed a court action seeking to persuade a New Mexico court not to impose another state’s insurance laws and increased costs on Ohio insurance consumers.

According to the Ohio Department of Insurance, Covington filed the motion June 10 in the Court of Appeals in Santa Fe County, New Mexico, to support the appellant Federal Kemper in Berry v. Federal Kemper Life Assurance Company, a suit filed in district court November 1, 2001. On May 31, 2002, the trial court entered an order certifying the case as a national class action suit, including policyholders residing in Ohio.

The lawsuit claims insurance policyholders who pay their premiums monthly or quarterly (modal) instead of annually are being unfairly discriminated against because they are required to pay an additional fee for the right to make modal premium payments. The suit also claims that the company fraudulently disclosed that information to policyholders.

While not taking a position on the nature of the premium payment dispute, Covington is seeking to intervene, claiming that a court in New Mexico cannot adequately address the concerns of Ohio policyholders. If this matter is certified as a national class action, the regulatory authority of the Ohio department and Covington will be undermined and a degree of uncertainty impermissible under current Ohio insurance law will be imposed upon the state’s insurance marketplace.

Covington is requesting the that appeals court reverse the decision of the trial court which certified the class action or that Ohio be permitted to opt-out of any settlement or judgment on behalf of all Ohio policyholders.

“The Ohio Department of Insurance has been given the responsibility to protect Ohio insurance policyholders and to address their concerns,” said Covington. “I am fundamentally against allowing a court in New Mexico or any other state to make policy that will affect Ohio insurers and insurance consumers.

“It is important that it remains clear that the Ohio Department of Insurance is the sole authority in this state to regulate the business of insurance,” added Covington. “Lawsuits such as these have the potential to significantly undermine the Department’s authority to fulfill its mission.”

The department’s mission is consumer protection and to that end, the department has filed amicus briefs in several related cases with the potential of eroding Covington’s authority to regulate the insurance industry in Ohio, including:

Enfield v. Old Line Life Insurance Company of America, a suit filed in district court in Bernaillo Co., New Mexico. The Department’s brief claimed that a court in New Mexico cannot adequately address the concerns of Ohio policyholders and does not have the jurisdiction to determine how or what insurance premiums will be charged in Ohio.

Lemm v. The Hartford. The Department filed two amicus briefs in the Ohio Supreme Court, asserting that it is the Department’s responsibility under Ohio law to review insurance policies and rates and to determine if coverage described in the Lemm’s homeowners policy should be interpreted to provide uninsured/underinsured motorists (UM/UIM) coverage.

In addition, Covington filed motions to intervene in four class action lawsuits that could have cost Ohio insurance consumers hundreds of millions of dollars by expanding the reach of UM/UIM coverage:

McDonald v. Westfield National Insurance Company (Wood County)

Baughman v. State Farm (Summit County)

Lazarus v. Ohio Casualty (Cuyahoga County)

Mager, et al. v. Erie (Erie County).

Topics Lawsuits Ohio Mexico New Mexico