A recent Law 360 story by Tracey Read, “Susman Godfrey Attys To Get $101M From Life Insurance Co.”, reports that a New York federal judge has granted $101 million in attorney fees to Susman Godfrey LLP following a $307.5 million class action settlement resolving claims that AXA Equitable Life Insurance Co. targeted policyholders with unlawful and excessive "cost of insurance" increases. According to Judge Jesse M. Furman's order, Susman Godfrey will receive attorney fees of $101.08 million and must be reimbursed $4.1 million in costs and expenses. "Class counsel may in its sole discretion allocate and distribute the fees and expenses it receives pursuant to this order among other counsel," Judge Furman wrote.
The settlement stems from a 2016 class action filed by the nonprofit Brach Family Foundation Inc. against AXA on behalf of nearly 1,700 policyholders who had flexible-premium, universal life policies issued between 2004 and 2007. "Despite the fact that UL policies are marketed and sold to enable policyholders to minimize their premium payments and keep policy account values as low as possible, AXA has unlawfully sought to punish policyholders for doing exactly that," the foundation said in the original complaint.
AXA's cost-of-insurance increases were directed only at those with issue ages above 70 and current face value above $1 million. The increases ranged from 25% to 70% and up, the lawsuit alleged. "AXA cannot reasonably expect that the insured on a policy that issued at age 70 with $1,000,000 in face value is likely to die materially sooner than the insured on a policy that issued at age 70 with $900,000 in face value," the foundation said in the suit.
By increasing cost-of-insurance rates, AXA sought to force AXA policyholders to either "pay exorbitant premiums that AXA knows would no longer justify the ultimate death benefits" or lapse or surrender their policies and forfeit the premiums the policyholders previously paid, the suit stated. The foundation noted that in its 2016 Securities and Exchange Commission filing, AXA said the increase would result in a $46 million jump in its net earnings.