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Frequently Asked Questions


What is this lawsuit about?

Answer:

The lawsuits claim that Phoenix’s decision to raise cost of insurance rates on certain Phoenix Accumulator Universal Life (“PAUL”) policies beginning in April 2010, and on other PAUL policies beginning in November 2011, was unlawful and in violation of the terms of the Policies. These complaints further alleged that Phoenix’s rate increases did not apply uniformly to a class of insureds, discriminated unfairly between insureds of the same class, and were improperly designed to recoup past losses. The lawsuits further claimed that Phoenix’s actions harmed affected policyholders.

 The Defendants deny these claims and maintain they did nothing wrong.

Why is there a notice?

Answer:

A Court authorized a notice because class members have a right to know about the proposed Settlement of these class action lawsuits and about all of the options, before the Court decides whether to give final approval to the Settlement. The notice explains the lawsuits, the Settlement, and class members' legal rights.

When will payment be sent?

Answer:

Class members who are entitled to payments will receive their settlement payments in the form of a settlement check, which will mail to the address of record on or around January 11, 2016.


The Settlement Check was lost / damaged / destoryed, what needs to  be done to get a replacement?

Answer:

If your settlement check has been lost or was damaged during mailing or the opening of the envelope, please provide a written request for a reissued check.   Be sure to include the original damaged check, if the original is available, and write void across the front of the check.  Otherwise, in your written request please include your name, policy number, current address, and “request for re-issued check” in the body of the letter.    Please provide your request, in writing, to Phoenix Cost of Insurance Settlement, c/o Rust Consulting, at  P.O. Box 2277, Faribault, MN 55021-2400. 

Please be aware that before re-issuing a check, the Settlement Administrator will be placing a stop payment on the original check, so in the event the original check is deposited, it would be returned as a bad check.   Please also note that if the original check has been cashed, the Settlement Administrator will not issue a replacement check.


How do I Get a Settlement Check Reissued for a Deceased Class Member?

Answer:

If your reissue request is in regards to a deceased Class Member, please provide your request, in writing, to Phoenix Cost of Insurance Settlement, c/o Rust Consulting, at P.O. Box 2277, Faribault, MN 55021-2400. 

Be sure to include the original payment instrument, if available, writing void across the front of the check. Please include your name and Trust Name if representing a Trust agency, the name of the deceased, the policy number, current address, copy of the death certificate, copy of the documents showing you are the authorized as a beneficiary or to act on the behalf of heirs of the deceased policyholder, and “request for re-issued check” in the body of the letter, and we will review for reissuance. 

If the requested reissue must be made payable to another party, it is required the requesting person submit a copy ofthe Last Will & Testament, Small Estate Affidavit or Probate Registered Court Documents demonstrating they have authority to receive the settlement payment in the requestor’s name.

Please be aware that before re-issuing a check, the Settlement Administrator will be placing a stop payment on the original check, so in the event the original check is deposited, it would be returned as a bad check.   Please also note that if the original check has been cashed, the Settlement Administrator will not issue areplacement check.

Please only send copies of any supporting documents, as they will not be returned.  

The payee in which the Settlement Check has been made payable has changed, how do I get a new check issued in the updated name?


Answer:

If you cannot cash the settlement check due to a name change of the Class Memberor Trust Agency representing the Class Member, please provide your request, inwriting, to Phoenix Cost of Insurance Settlement, c/o Rust Consulting, at P.O.Box 2277, Faribault, MN 55021-2400.  Be sure to include both the former and new name, policy number, current address, and “request for name change oncheck” in the body of the letter. Also write void across the front of the check and mail that with your request in writing. 

For instances of Trust Agency representing the Class Member, please send copies ofall documents supporting the authority to request the reissue in the manner outlined in the written request. 

Please be aware that before re-issuing a check, the Settlement Administrator will be placing a stop payment on the original check, so in the event the original check is deposited, it would be returned as a bad check.   Please also note that if the original check has been cashed, the Settlement Administrator will not issue a replacement check.


What is a “cost of insurance” rate?

Answer:

PAUL policies are a type of universal life insurance. Universal life insurance policies typically combine a death benefit component with a savings component, sometimes called the “policy value.” As PAUL policyholders pay premiums, the policy value accumulates. PAUL policyholders are not required to pay fixed monthly premiums so long as the policy value is sufficient to cover the monthly deductions and expenses called for by the policy. One of the charges included in the monthly deduction is the “cost of insurance” or “COI” charge. The COI charge typically represents, in part, Phoenix’s risk of paying the death benefit to the policy’s beneficiary upon the death of the insured. Each policy’s monthly COI charge is calculated by multiplying the applicable COI rate against the policy’s net amount at risk, which is essentially the difference between the policy’s total face amount and its policy value. At issue in these lawsuits are adjustments Phoenix made to the COI rates that go into calculating the monthly COI charge.

Why is this a class action?

Answer:

In a class action, one or more people called “class representatives” sue on behalf of themselves and other people with similar claims. All of these people together are the “class” or “class members.” In this case, the Class Representatives are Martin Fleisher, as Trustee of the Michael Moss Irrevocable Life Insurance Trust II, Jonathan Berck, as Trustee of the John L. Loeb, Jr. Insurance Trust, and SPRR LLC. One court resolves the issues for all Class members, except for those who exclude themselves from the Class.

Why is there a Settlement?

Answer:

The Court has not decided in favor of the Plaintiffs or the Defendants. Instead, both sides have agreed to a Settlement. The Settlement provides a method to resolve the claims made in the lawsuits that takes into consideration the best interest of the Class. The Settlement was the result of extensive, arms-length negotiations between Class Counsel and Phoenix, with the assistance of an experienced mediator, and is based upon a thorough examination of the facts and the law gained over years of litigation. By agreeing to settle, both sides avoid the cost and risk of a trial and appeal, and the people affected will get a chance to receive compensation. 


The Class Representatives and their attorneys believe the Settlement is in the best interests of the Class. The Settlement does not mean that the Defendants have conceded they did anything wrong. If the Settlement is approved by the Court, Class members will be entitled to participate in the Settlement, but they will not be able to sue Phoenix based upon the adjustments to their policies’ cost of insurance rates that are at issue in the underlying lawsuits, which will be dismissed.

Who is included in the Settlement?

Answer:

The Class includes the persons who own (or owned as of the date of policy termination) the PAUL Policies for which Phoenix sent notice that the Policy was subject to the 2010 Adjustment or 2011 Adjustment (the “Class Policies”). The 2010 Adjustment is the adjustment to COI rates, including the use of the Funding Ratio, on certain PAUL Series 2(c) and Series 3 policies, insured’s issue age 68 and over, face amount of $1 million and over, beginning on or about April 1, 2010. For the purposes of clarity, the 2010 Adjustment includes the adjustment to COI rates for Policies issued in New York originally included in the 2010 Adjustment, including those that began receiving different COI rates on or about January 1, 2012 due to a revised methodology for applying the COI rate adjustment for the Policies. The 2011 Adjustment is the adjustment to COI rates on certain PAUL Series 3(a) policies, insured’s issue age 68 and over, face amount of $1 million and over, and certain PAUL Series 3(b) and Series 3(c) policies, insured’s issue age 65 and over, face amount of $1 million and over, beginning on or about November 1, 2011.

Excluded from the Class are any officers, directors, or employees of any Defendant; the affiliates, legal representatives, attorneys, successors, or assigns of any Defendant; Class Counsel and their employees; and any judge, justice, or judicial official presiding over the Actions and the staff and immediate family of any such judge, justice, or judicial official.

Also excluded from the Class are the owners of (1) policies that received a decrease in their COI rates or whose COI rates were unchanged as part of the 2011 Adjustment, (2) policies for which a prior settlement bars their claim, or (3) policies that are subject to separate, ongoing legal proceedings as identified by caption in the Settlement Agreement.

Anyone who would otherwise be a member of the Class, but who decides to “opt out” of the Class, see Question 14 below, will not be included in the Settlement. At present, the Parties are aware of only one entity that definitively intends to “opt out” of the Settlement. That entity is the plaintiff in two other lawsuits pending in the Southern District of New York against Phoenix that raise the issue of cost of insurance rates. Those lawsuits involve 33 Class Policies. These two lawsuits – U.S. Bank Nat 'l Assoc., as securities intermediary for Lima Acquisition LP v. PHL Variable Insurance Co., Case No. 12- CV-6811 (CM) and U.S. Bank Nat'l Assoc., as securities intermediary v. PHL Variable Insurance Co., Case No. 13-CV-1580 (CM) – are scheduled to go to trial on September 21, 2015 before Judge McMahon. That trial is estimated to last three weeks.

 

That same entity is also the plaintiff in two other lawsuits pending in the District of Connecticut against Phoenix that raise the issue of cost of insurance rates. Those two lawsuits are U.S. Bank Nat’l Assoc., as securities intermediary for Lima Acquisition LP v. PHL Variable Insurance Co., Case No. 14-CV-0555 (WWE) (D. Conn.) (lead case), and U.S. Bank Nat’l Assoc., as securities intermediary for Lima Acquisition LP v. PHL Variable Insurance Co., Case No. 14-CV-01398 (WWE) (D. Conn.) (consolidated with 14-CV-0555). Trial has not yet been scheduled for those two cases.

What if I am not sure whether I am included in the Settlement?

Answer:

If you are not sure whether you are included in the Settlement, you may call 1-888-773-8396

with questions or write with questions to Phoenix Cost of Insurance Settlement, P.O. Box 2277, Faribault, MN 55021-2400. 

ALL DEADLINES HAVE NOW PASSED TO REQUEST INVESTIGATION FOR INCLUSION IN THE SETTLEMENT CLASS.


What does the Settlement provide?

Answer:

The Defendants will pay $42.5 million into a Settlement Fund for eligible Class members. The Settlement Fund will be reduced proportionally if there are any opt-outs from the Class.  After payment of the cost to administer the Settlement as well as attorney fees and expenses and the payments to the Class Representatives, the Settlement Administrator will distribute the remaining amounts to eligible Class members.  No portion of the Settlement Fund will be returned to the Defendants.
Phoenix has also agreed not to:
• Implement any new rate increases on Class members’ policies through December 31, 2020.
• Cancel, void, rescind, or deny a death claim submitted under the Class members’ policies or contest the validity of a policy based on:
o A lack of valid insurable interest under any applicable law or equitable principles; or
o Any misrepresentation made on the application while applying for the policies (this excludes any misrepresentations made in connection with any past or future application to reinstate a Policy, and is subject to a two-year contestability period)
o This agreement does not prevent Defendants from raising a defense to coverage under, or seeking to cancel a policy for, nonpayment of premiums.

More details are in a document called the Settlement Agreement, which is available under the Court Documents tab, or by writing to Settlement Administrator.

How do I participate in the Settlement?

Answer:

Class members do not have to do anything to participate in the Settlement. The Settlement Administrator will calculate the amount that is payable to eligible Class members and will send out the payment.

Will I receive a payment? How much will my payment be?

Answer:

Class members are eligible to receive a cash payment from the Settlement Fund if they either (1) paid a higher COI rate as a result of the 2010 and 2011 Adjustments than they would have but for the adjustments (a “COI overcharge”) or (2) lapsed their policy after receiving notice of a COI increase but before ever paying an overcharge.

After reducing the Settlement Fund for opt-outs, costs, fees, expenses, and the payments to the Class Representative, the remaining cash will be divided into two funds: a fund for those who paid a COI overcharge and a fund for those who lapsed after receiving notice of a COI increase but before ever paying an overcharge. The fund for such lapsed policies will consist of $2 million, and the rest of the distributable funds will go to the overcharge fund. Both funds will then be distributed to Class members on a pro rata (or proportional) basis as follows:
• The fund for overcharges will be paid to Class members in proportion to their share of the overall COI overcharges paid by Class members through March 2015.
• The fund for eligible lapsed policies will be paid to Class members in proportion to the amount of premiums each lapsed policyholder paid into their policies before termination, as compared to the amount paid by all eligible policyholders.

By definition, no Class member can receive payments from both funds. The actual amount available for each eligible Class member will not be determined until after December 9, 2015.


You should consult your own tax advisors regarding the tax consequences of the proposed Settlement, including any payments you may receive and any tax reporting obligations you may have as a result.

How do I get out of the Settlement?

Answer:

To exclude yourself, send a letter that says you want to be excluded from the Settlement in Martin Fleisher, as trustee of the Michael Moss Irrevocable Life Insurance Trust II, et al. v. Phoenix Life Insurance Company, Case No. 11-CV-8405(CM) and SPRR LLC, on behalf of itself and all others similarly situated v. PHL Variable Insurance Company, Case No. 14-CV-8714(CM). You are required to include your name (or the name of the company or entity that owns the PAUL policy), address, and signature. You must mail your Exclusion Request postmarked by July 17, 2015, to: 
Phoenix Cost of Insurance Settlement 
P.O. Box 2277
Faribault, MN 55021-2400 

A request to be excluded from the Class applies to the Class member regardless of the number of Class Policies he or she owns. An owner of multiple Class Policies cannot stay in the Class for some policies and be excluded for others. However, if you own multiple Class Policies in a representative or agency capacity (such as a trustee, securities intermediary, or other similar agency) for more than one principal, you may request to exclude Class Policies from the Settlement held on behalf of one principal while participating in the Settlement with respect to Class Policies held by other principals.

ALL DEADLINES HAVE NOW PASSED TO BE EXCLUDED FROM THE SETTLEMENT.

What am I giving up to stay in the Class?

Answer:

Unless you exclude yourself from the Settlement, you can’t sue the Defendants (or certain other released parties included as “Releasees” in the Settlement) or be part of any other lawsuit against Phoenix about the issues in this case. Unless you exclude yourself, all of the decisions by the Court will bind you. If the Settlement becomes final, you will give up your right to sue the Defendants for the claims being resolved by this Settlement. You will be “releasing” the Defendants and all related people as described in Section VII of the Settlement Agreement.

This release includes all claims that were asserted in the lawsuit, as well as claims that could have been asserted related to the 2010 and 2011 COI rate adjustments, including, without limitation, claims, causes of action, debts, liabilities, damages, restitution, equitable, legal and administrative relief, known and unknown, at law or in equity, whether brought directly or indirectly, including any further claim to recovery or relief as a result of actions by any state or federal government agencies, arising out of or relating to any and all matters concerning the COI rates and COI charges assessed in the past or in the future by Defendants as a result of the 2010 Adjustment or 2011 Adjustment. This release includes but is not limited to (a) the decision to adjust COI rates as part of the 2010 Adjustment or 2011 Adjustment, including the design, development, and implementation of the COI rates that were the subject of the 2010 and 2011 Adjustments and the prior and ongoing use of the Funding Ratio as part of the 2010 Adjustment; (b) any payments made in the past or future as a result of the 2010 Adjustment or 2011 Adjustment; (c) the marketing or sale of any Policy in connection with claims relating the 2010 Adjustment or 2011 Adjustment; (d) the determination of the class subject to the 2010 Adjustment and 2011 Adjustment including without limitation any alleged targeting of or discrimination against life settlement investors or under any consumer protection laws or regulations in connection with the 2010 Adjustment or 2011 Adjustment; and (e) any and all matters concerning or relating to this Settlement (including, without limitation, the award and/or implementation of any Settlement Relief with respect to a Policy), except matters concerning or relating to the enforcement of the Settlement provisions.

This release does not include any future COI rate adjustments assessed by Defendants, except as described in the Settlement Agreement, and does not include claims arising from any failure by Defendants to pay future death benefits owed under a subject policy.

Settlement class members expressly waive any and all rights that they may have under any law that would limit the release to claims actually known or suspected to exist at the time of the settlement, including the provisions of Section 1542 of the California Civil Code, which provides as follows: “GENERAL RELEASE-CLAIMS EXTINGUISHED. A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.” 


ALL DEADLINES HAVE NOW PASSED TO BE EXCLUDED FROM THE SETTLEMENT.



If I do not exclude myself, can I sue the Defendants for the same thing later? 

Answer:

No. Unless you exclude yourself, you give up the right to sue Phoenix (and certain other released parties included as “Releasees” in the Settlement) for the claims that this Settlement resolves.

ALL DEADLINES HAVE NOW PASSED TO BE EXCLUDED FROM THE SETTLEMENT.

If I exclude myself, can I still get a payment?

Answer:

You will not get a payment from this Settlement if you exclude yourself from the Settlement.

ALL DEADLINES HAVE NOW PASSED TO BE EXCLUDED FROM THE SETTLEMENT.

Do I have a lawyer in the case?

Answer:

Yes. The Court appointed the following as “Class Counsel”:

Steven G. Sklaver
Frances S. Lewis
Seth Ard
SUSMAN GODFREY L.L.P.
1901 Avenue of the Stars, Suite 950
Los Angeles, CA 90067
310-789-3100

You will not be charged for contacting these lawyers. If you want to be represented by your own lawyer, you may hire one at your own expense

How will the lawyers be paid?

Answer:

The Court determined what Class Counsel was paid for fees and expenses. Class Counsel sought an award for attorneys’ fees of $6 million for, among other things, the non-monetary benefits conferred, to be paid for by Phoenix and not from the Settlement Fund, and up to one-third of the Settlement Fund after any reduction for Class members who opt-out, plus reimbursement of expenses, to be paid for out of the Settlement Fund. You will not be responsible for direct payment of Class Counsel’s fees and expenses.


Class Counsel also requested that incentive award payments of up to $25,000 to Martin Fleisher and up to $5,000 each to Jonathan Berck and SPRR, LLC be paid from the Settlement Fund for their services as representatives on behalf of the Class.

How do I tell the Court if I do not like the Settlement?

Answer:

You can object to the Settlement if you don’t like some part of it. The Court will consider your views. To do so, you must file written objections in these cases, Martin Fleisher, as Trustee of the Michael Moss Irrevocable Life Insurance Trust II, et al. v. Phoenix Life Insurance Company, Case No. 11-CV-8405(CM) and SPRR LLC, on behalf of itself and all others similarly situated v. PHL Variable Insurance Company, Case No. 14-CV-8714(CM). You are required to include:
• Your full name, address, telephone number; your signature;
• The specific reasons why you object to the settlement;
• Whether you plan on appearing at the Fairness Hearing, and
• Any legal support or evidence that supports your objection that you wish to bring to the Court’s attention.

Mail your objection to these addresses postmarked no later than July 17, 2015:

COURT
Clerk of the Court
Hon. Colleen McMahon
Courtroom 17C
Daniel Patrick Moynihan
United States Courthouse
500 Pearl St.
New York, NY 10007-1312

CLASS COUNSEL
Steven G. Sklaver
Frances S. Lewis
Seth Ard
SUSMAN GODFREY L.L.P.
1901 Avenue of the Stars, Suite 950
Los Angeles, CA 90067

DEFENSE COUNSEL
Thomas A. Hetherington
David T. McDowell
Jarrett E. Ganer
EDISON, MCDOWELL, & HETHERINGTON L.L.P.
3200 Southwest Freeway,
Suite 2100
Houston, TX 77027

Waldemar J. Pflepsen, Jr.
Jason H. Gould
CARLTON FIELDS JORDEN BURT, P.A.
1025 Thomas Jefferson Street, NW
Suite 400 East
Washington, DC 20007

ALL DEADLINES HAVE NOW PASSED TO OBJECT TO THE SETTLEMENT.


What is the difference between objecting and asking to be excluded? 

Answer:

Objecting is simply telling the Court that you don’t like something about the Settlement. You can object only if you don’t exclude yourself from the Class. Any judgment entered in the Actions will be binding on all Class Members, even if you have objected to the proposed Settlement. Excluding yourself is telling the Court that you don’t want to be part of the Class. If you exclude yourself, you have no basis to object because the case no longer affects you.


ALL DEADLINES HAVE NOW PASSED TO BE EXCLUDED FROM OR TO OBJECT TO THE SETTLEMENT.


When and where will the Court decide whether to approve the Settlement?

Answer:


The Court  held a Fairness Hearing on September 9, 2015, at the United States District Court for the Southern District of New York, Daniel Patrick Moynihan United States Courthouse, Courtroom 17C, 500 Pearl St., New York, NY 10007-1312.  At this hearing, the Court considered whether the Settlement was fair, reasonable, and adequate. If there were objections, the Court would consider them and listened to people who have asked to speak at the hearing. The Court decided how much to pay and reimburse Class Counsel. After the hearing, the Court would decide whether to approve the Settlement.

FINAL JUDGMENT WAS ENTERED ON DECEMBER 9, 2015.


Do I have to attend the hearing?

Answer:


No. But, you or your own lawyer is welcome to attend at your expense. If you send an objection, you do not have to come to Court to talk about it. As long as you mailed your written objection on time, the Court will consider it.

FINAL JUDGMENT WAS ENTERED ON DECEMBER 9, 2015.


May I speak at the hearing?

Answer:


You may ask the Court for permission to speak at the Fairness Hearing. To do so, you must do two things. First, you must object to the Settlement in accordance with the objection procedures.  Second, you must send a letter that includes the following language: “Notice of Intention to Appear in Martin Fleisher, as Trustee of the Michael Moss Irrevocable Life Insurance Trust II, et al. v. Phoenix Life Insurance Company, Case No. 11-CV-8405(CM) and SPRR LLC, on behalf of itself and all others similarly situated v. PHL Variable Insurance Company, Case No. 14-CV-8714(CM)." Be sure to include your name, address, telephone number, and your signature. Your Notice of Intention to Appear must be postmarked no later than July 17, 2015, and must be sent to these addresses:

COURT
Clerk of the Court
Hon. Colleen McMahon
Courtroom 17C
Daniel Patrick Moynihan
United States Courthouse
500 Pearl St.
New York, NY 10007-1312

CLASS COUNSEL

Steven G. Sklaver
Frances S. Lewis
Seth Ard
SUSMAN GODFREY L.L.P.
1901 Avenue of the Stars, Suite 950
Los Angeles, CA 90067

DEFENSE COUNSEL

Thomas A. Hetherington
David T. McDowell
Jarrett E. Ganer
EDISON, MCDOWELL, & HETHERINGTON L.L.P.
3200 Southwest Freeway,
Suite 2100
Houston, TX 77027

Waldemar J. Pflepsen, Jr.
Jason H. Gould
CARLTON FIELDS JORDEN BURT, P.A.
1025 Thomas Jefferson Street, NW
Suite 400 East
Washington, DC 20007

 

 

 

How do I get more information?

Answer:

More details are found in the Settlement Documents section of this website.  You also may write with questions to Phoenix Cost of Insurance Settlement, PO Box 2277, Faribault, MN 55021-2400 or call the toll-free number, 1-888-773-8396.

Disclaimer

This website is supervised by counsel and is controlled by Rust Consulting, the Settlement Adminstration firm that handles all aspects of administration.

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