United States District Court, W.D. Missouri, Central Division
MICHAEL VOGT, on behalf of himself and all others similarly situated, Plaintiff,
STATE FARM LIFE INSURANCE COMPANY, Defendant.
NANETTE K. LAUGHREY UNITED STATES DISTRICT JUDGE.
Michael Vogt claims that defendant State Farm Life Insurance
Company's deduction of certain charges from policy
owners' “Account Values” was not authorized
by the terms of Vogt's policy. State Farm moves for
summary judgment on all of Vogt's claims. Doc. 166. For
the reasons discussed below, Defendant's motion for
summary judgment is denied.
1999, Vogt purchased policy form 94030, a flexible premium
adjustable whole life insurance policy, from State Farm. Doc.
200, Statement of Facts (“SOF”), at I, ¶ 1.
Unlike standard term life insurance policies, this type of
policy provides an investment, savings, or interest-bearing
component in addition to the usual death benefit. Under this
policy, State Farm maintains an interest-bearing account for
the insured, and this account's value, which is owned by
the insured, grows over time.
month, State Farm was permitted to make a deduction from the
Policy that included “(1) the cost of insurance, (2)
the monthly charges for any riders, and (3) the monthly
expense charge.” Id. The monthly expense
charge was $5.00. Doc. 200, SOF, at II, ¶ 4. With
respect to the COI, the policy states:
Insurance. This cost is calculated each month. The cost is
determined separately for the Initial Basic Amount and each
increase in Basic Amount.
cost of insurance is the monthly cost of insurance rate times
the difference between (1) and (2), where:
(1) is the amount of insurance on the deduction date at the
start of the month divided by 1.0032737, and
(2) is the account value on the deduction date at the start
of the month before the cost of insurance and the monthly
charge for any waiver of monthly deduction benefit rider are
the account value exceeds the Initial Basic Amount, the
account value is part of the Initial Basic Amount. Once the
account value exceeds that amount, if there have been any
increases in Basic Amount, the excess will be part of the
increases in order in which the increases occurred.
Id., at II-III, ¶ 5.
section entitled “Guaranteed Values Provisions, ”
the Policy states:
The guaranteed values and maximum cost of insurance rates are
based on the Insured's age last birthday and sex. The
interest rate is 4% a year. The Commissioners 1980 Standard
Ordinary Mortality Table is used. Modifications are made for
rate classes other than standard.
Id., at III, ¶ 6. The same section also
Monthly Cost of Insurance Rates. These rates
for each Policy year are based on the Insured's age on
the Policy anniversary, sex, and applicable rate class. A
rate class will be determined for the Initial Basic Amount
and for each increase. The rates shown on page 4 are the
maximum monthly cost of insurance rates for the Initial Basic
Amount. Maximum monthly cost of insurance rates will be
provided for each increase in the Basic Amount. We can charge
rates lower than those shown. Such rates can be adjusted for
projected changes in mortality but cannot exceed the maximum
monthly cost of insurance rates. Such adjustments cannot be
made more than once a calendar year.
Id., ¶ 7. Expenses and profits are not
mentioned in the “Monthly Cost of Insurance
Rates” provision. Id., at XV, ¶ 33.
maximum COI rates used to determine guaranteed values for
standard health rate classes were 98% of each rate listed in
the 1980 Commissioners Standard Ordinary mortality tables,
which is on an attained age basis. Id., at IV,
¶ 8; id. at XIV-XV, ¶ 32. The maximum rate
tables are sorted by attained age, sex, and rate class, such
that the maximum rate in the table applicable to any
particular Policyholder in a standard health rate class is
based on the Policyholder's age and sex. Id.,
¶ 10. The Policy shows that the “Maximum Monthly
Cost of Insurance Rates” increase as the Insured's
age increases and double in less than 10 years. Id.,
at XIII, ¶ 30.
are differences in the mortality expectations associated with
policyholders based on the number of years that elapsed since
they applied for the policy. Id. at XIV-XV, ¶
32. Age, sex and rating class are factors used to
differentiate policyholders in developing mortality tables.
Id. The parties agree that expenses and profits are
not mortality factors, meaning that they do not bear on the
life expectancy of an insured. Id., at XIX, ¶
Farm developed mortality tables using proprietary data
reflecting its mortality experience with its own insureds,
including the 88-91 SFL and 93-97 SFL mortality tables.
Id., at VI-VII, ¶ 12. The COI rates were not
equal to the mortality rates in its proprietary mortality
tables. Id. XXXXX
Id., at VIII, ¶ 14.
Farm modifies the COI rates for rate classes other than the
standard rate class. Id., ¶ 16. State Farm
created a separate substandard rate table for insureds with
certain health conditions. Id., ¶ 17. Vogt was
assigned to the Table 4 Rate Class based on his health
conditions. Id., at IX, ¶ 18. At all times, the
COI rates actually used for Vogt have been less than the
maximum COI rates disclosed on page 4 of the Policy.
Id., ¶ 19. Since the issuance of Vogt's
Policy, State Farm never increased the current COI rate
schedule used to determine Vogt's COI deduction.
Id., ¶ 20. In fact, in 2002, State Farm elected
to reduce COI Rates for insureds at most attained ages in the
COI Rates scales. Id., ¶ 21.
Farm had the option to “defer paying [Vogt] a
withdrawal for up to 6 months” after a request for
such. Id., at X-XI, ¶ 24. If Vogt chose to
surrender his Policy, State Farm could likewise “defer
paying [him] the cash surrender value for up to 6 months
after receiving [his] request.” Id.
Vogt did not personally consult an actuarial expert in 2016,
his counsel consulted with an actuarial expert on his behalf.
Id., at XI, ¶ 26. Between the time that Vogt
surrendered his Policy in 2013 and the point at which he
consulted counsel in 2016, he received no new information
that led to discovery of his claim against State Farm.
Id., at XIII, ¶ 29. State Farm does not deny
that it did not disclose to policy owners the assumptions
underlying the current COI rates. Id., at XII,
¶ 27, and at XXII, ¶¶ 43-44. There is no
dispute that a policyholder without knowledge, experience or
training likely would not be able to understand, ...