Major elements of proposed class-action lawsuit against Sun Life have been dismissed

See: Court will soon decide whether class-action lawsuit against Sun Life will be certified

In a reasons for decision document dated Nov. 12, the court paves the way for policyholders who bought two types of universal life insurance (UL) policies to continue to pursue certain claims with respect to increases in the costs of their insurance. The certification motion for these claims has been adjourned for more evidence to be presented about these causes of action.

Toronto-based law firm Kim Orr Barristers PC is prosecuting the proposed class-action lawsuit against Sun Life, related to the marketing, sale and administration of certain life insurance policies sold by the Canadian operations of New York-based Metropolitan Life Insurance Co. (MetLife) between 1985 and 1998. Sun Life acquired the policies through its 2002 acquisition of Clarica Life Insurance Co. (formerly known as Mutual Life Assurance Co. of Canada), which had acquired most of MetLife’s Canadian business in 1998.

The affected policies include four UL products created and sold by MetLife: Interest Plus, Universal Plus, Universal Flexiplus and Universal Optimet. The proposed class action alleges that these policies were sold on the basis of misrepresentations and that the marketing materials, descriptions and illustrations used in the sale of the products differed from how the policies worked in practice. The claims also include alleged breaches of contract related to certain provisions of the policies.

With respect to the claims related to sales misrepresentations, the court determined that the claims were too old and the circumstances too diverse to allow class treatment.

“As demonstrated by the stories of each of the proposed Representative Plaintiffs, their experiences in purchasing insurance policies were not common or uniform experiences,” Justice Paul Perell says in the decision.

However, with respect to claims that Sun Life has been collecting overcharges since 2008 for cost of insurance and administrative fees on two of the policies, Justice Perell says the claims may be certifiable as a class action.

Specifically, the plaintiffs claim that increases they have faced in the cost of insurance on Flexiplus and Optimet policies, and increases to administrative fees on Flexiplus policies, represented breaches of the terms of their insurance contracts. Approximately 47,000 policies are involved, with policyholders having faced increases in their cost of insurance of up to 37% in 2001 and 42% in 2006.

“These increases were substantial, and we never were able to figure out on our own whether there was any justification for them,” said Eldon Fehr, representative plaintiff, in a statement.

In the reasons for decision, Justice Perell says that in order to determine whether these claims are certifiable as a class action, more evidence is necessary from both the plaintiffs and Sun Life on how the rate increases were calculated.

Once additional materials are provided, a new hearing date can be set for the resumption of the certification motion.

“We appreciate that the court will be taking a close look at these circumstances,” Fehr said. “We expect a large refund if the increases were improper.”