IN THE ALLEN COUNTY CIRCUIT COURT ALLEN COUNTY, INDIANA

Transcription

1 IN THE ALLEN COUNTY CIRCUIT COURT ALLEN COUNTY, INDIANA If You Own or Owned an Ensemble I, Ensemble II, Heritage I, or Heritage II Flexible Premium Variable Life Insurance Policy, You May be Eligible for Term Life Insurance from a Class Action Settlement. A court authorized this notice. This is not a solicitation from a lawyer. You are not being sued. A Settlement has been reached with Lincoln in a class action lawsuit about the cost of insurance charges deducted from policyholders accumulation values. Generally, the Settlement includes persons or entities that owned certain life insurance policies issued or administered by Lincoln or its predecessors that were issued in certain states, subject to certain exclusions (see Question 4 below). As part of the Settlement, Settlement Class Members will be eligible to receive, free of charge, term life insurance that Lincoln will automatically issue to each eligible Settlement Class Member, without any application or underwriting (see Question 5 below). As of September 2, 2015, the total aggregate market value of the term life insurance is $171,800, As part of the Settlement, Lincoln has agreed not to raise COI rate scales for all Policies in the Settlement Class unless its expectations as to future mortality experience worsen. Your legal rights are affected even if you do nothing. Please read this notice carefully. YOUR LEGAL RIGHTS AND OPTIONS IN THIS SETTLEMENT DO NOTHING Automatically receive term life insurance from the Settlement. Give up certain rights to sue. ASK TO BE EXCLUDED Get no term life insurance from the Settlement. Do not give up certain rights to sue. OBJECT GO TO A HEARING Write to the Court if you don t like the Settlement. Ask to speak in Court about the fairness of the Settlement. These rights and options and the deadlines to exercise them are explained in this Notice. The Court in charge of this case still has to decide whether to approve the Settlement. Term life insurance will be automatically issued to each Settlement Class Member if the Court approves the Settlement and after any appeals are resolved. Please be patient. 1. Why is there a notice? A Court authorized this Notice because you have a right to know about the proposed Settlement of this class action lawsuit and about all of your options before the Court decides whether to give final approval to the Settlement. This Notice explains the lawsuit, the Settlement, and your legal rights. Judge Thomas J. Felts of the Allen County Circuit Court, Allen County, Indiana is overseeing this case. The case is known as Peter S. Bezich, individually and on behalf of a class of others similarly situated v. The Lincoln National Life Insurance Company, Cause No. 02C PL-73 (the Action ). The person who sued, Peter S. Bezich, is called the Plaintiff. The Lincoln National Life Insurance Company ( Lincoln ) is called the Defendant

2 The following is only a summary of the Settlement. A full description of the Settlement is contained in the Settlement Agreement. Nothing in this Notice alters the terms of the Settlement Agreement. A copy of the Settlement Agreement may be obtained by visiting 2. What is this lawsuit about? All of the Ensemble II policies affected by this lawsuit contained a provision stating that the cost of insurance ( COI ) rate, which is in turn used to determine the COI charge, is based on the sex, issue age, policy year and rating class of the insured and will be determined by the Company based upon expectations as to future mortality experience. They also contained a clause stating that the monthly administrative charge is equal to $6.00 per month. The Ensemble I, Heritage I and Heritage II policies are included in the Settlement because they contain similar provisions. Plaintiff alleged that Lincoln deducted more than the Policies allowed for COI because Lincoln considered factors other than sex, issue age, policy year, and rating class of the insured, and expectations as to future mortality experience in setting COI rates. Plaintiff also alleged that Lincoln accounted for expenses in the COI charge that exceeded the $6.00 per month administrative charge. Finally, Plaintiff alleged that Lincoln did not adjust its COI rates to reflect changes in expectations as to future mortality experience. Lincoln denies these claims and maintains it did nothing wrong and that its deductions were consistent with the terms of the Policy. 3. Why is there a Settlement? The Parties negotiated the Settlement with an understanding of the factual and legal issues that would affect the outcome of this lawsuit. Over the last six years, during the course of the lawsuit, Plaintiff, through his attorneys, thoroughly examined and investigated the facts and law relating to the issues in this case. Plaintiff and Lincoln believe that the final outcome of the lawsuit, if it were to proceed through trial and appeals, is uncertain. A settlement avoids the costs and risks of further litigation and provides immediate relief to the Settlement Class Members. Based on their evaluation of the facts and law, Plaintiff, Lincoln, and their respective attorneys have determined that this Settlement is fair, reasonable and adequate. They have reached this conclusion based upon the substantial benefits the Settlement provides to Settlement Class Members, the risks, uncertainties and costs inherent in this Action, and the desirability of continuing this protracted litigation. There has been no trial and there has been no final determination on the merits of the claims or defenses in this lawsuit, and there will be no trial or final determination on the merits of the claims and defenses if the Court approves the Settlement. The Settlement does not suggest that Lincoln or any Released Party has or has not done anything wrong, or that Plaintiff and the Settlement Class Members would or would not win if the lawsuit were to go to trial. 4. Who is included in the Settlement Class? The Settlement Class includes: (a) (b) All Owners who reside in the states of AL, AZ, CA, CO, CT, DE, FL, GA, IL, IN, KS, KY, LA, MD, MA, MI, MN, MO, NH, NC, OH, OK, PA, SC, TN, TX, UT, VA, WA, or WI and owned on or after June 1, 1999 an Ensemble II Flexible Premium Variable Universal Life Insurance policy that is a security that was issued or administered by Defendant. All Owners who reside in states or territories of the United States other than those identified in Paragraph (a) and owned on or after June 1, 2002 an Ensemble II Flexible Premium Variable Universal Life Insurance policy that is a security that was issued or administered by Defendant

3 (c) All Owners who owned on or after June 1, 2002 an Ensemble I, Heritage I or Heritage II Flexible Premium Variable Universal Life Insurance policy that is a security that was issued or administered by Defendant. Excluded from the Class are any employees or agents of Lincoln, and any officers or employees of the Court, or their respective immediate family members; Owners of Policies that were issued in the states of New York or New Jersey; and Owners of Policies terminated by reason of the death of the Policy Insured on or before the Class List Date, the date that the class list will be run, which will happen after the Order and Judgment approving the Settlement becomes final after appeals, if any, or expiration of the time for any appeals. However, if an Owner owns more than one Policy, the Owner will remain in the Settlement Class, but only with respect to those Policies that were not issued in the states of New York and New Jersey and that have not terminated by reason of death of the Policy Insured before the Class List Date. If someone who would otherwise be a Settlement Class Member is deceased, his or her legal heirs are Settlement Class Members. 5. What does the Settlement provide? Lincoln has agreed to automatically issue term life insurance at no charge to each Settlement Class Member who does not opt out of the Settlement in the form of a Term Life Insurance Certificate, if the Settlement is approved. Settlement Class Members will not be required to complete any applications or submit to any underwriting. The Term Life Insurance Certificate issued to each Settlement Class Member will have the following coverage amounts and durations according to (i) the Attained Age of the Policy Insured, (ii) the Face Amount of the Policy, and (iii) whether the Settlement Class Member is an In-Force Policyholder (i.e., a policyholder who owns a Policy that has not lapsed, has not been surrendered or canceled, and has not been terminated for any other reason, including by death) or a Terminated Policyholder (i.e., a policyholder who owned a Policy that has lapsed, been surrendered or cancelled or has terminated for any reason other than death) as indicated in Lincoln s records on the Class List Date: Attained Age of the Policy Insured Coverage Amount as a Percentage of Face Amount of Policy Coverage Period (Months of Coverage) Coverage Amount and Coverage Period for Terminated Policyholders % % % % 24 Coverage Amount and Coverage Period for In-Force Policyholders % % % % 24 If the Policy Insured for a Terminated Policy is deceased as of the Class List Date, the Term Life Insurance Certificate shall be issued with the following Coverage Amount and Coverage Period: Coverage Amount as a Percentage Coverage Period of Face Amount of Policy (Months of Coverage) 9.0%

4 If a Settlement Class Member owned more than one Policy, a separate Term Life Insurance Certificate will issue for each Policy. Lincoln has also agreed not to increase the COI rate scales for Settlement Class Members with current, In-Force Policies, except that it may do so to reflect worsening expectations of future mortality experience. You should consult your own tax advisors regarding the tax consequences of the proposed Settlement, including any benefits you may receive and any tax reporting obligations you may have as a result. 6. Why are the coverage periods and amounts different? Term life insurance costs more to obtain as insureds age. The Parties have taken this into account in allocating the Settlement benefits amongst different age groups. Also, Settlement Class Members with In-Force Policies receive a greater amount of term life insurance because they are agreeing that Lincoln may make future COI deductions that may include consideration of factors other than mortality, including without limitation expenses (such as, for example, administrative, maintenance, and acquisition expenses, sales commissions, taxes, and fees), reinsurance costs, persistency, future investment income, and profit, and that Lincoln may decline to adjust COI rates based on any changes in expectations as to future mortality experience or any changes in mortality rates. This allocation is intended to equitably distribute the settlement benefits among the Settlement Class Members. Independent actuarial consultants have provided declarations on the Settlement valuation, which are available for your review at 7. How do I participate in the Settlement? How do I make a claim? Settlement Class Members do not have to do anything to participate in the Settlement. No claims need to be filed. Lincoln will automatically issue the Term Life Insurance Certificates in the amounts and for the coverage periods described in Question 5 above to every Settlement Class Member. If a Policy Owner is deceased as of the Class List Date, the Policy Owner s heir(s) will be the Settlement Class Member(s) and Lincoln will issue a Term Life Insurance Certificate to the estate of the Policy Owner. If the Policy is Terminated and the insured under the Policy dies before the Class List Date, the insured under the Term Life Insurance Certificate will be determined as follows: (a) if one beneficiary is named under the Policy, the beneficiary; (b) if multiple beneficiaries are listed but a primary beneficiary is designated, the primary beneficiary; (c) if multiple beneficiaries are listed but no primary beneficiary is designated, a named beneficiary to be selected by Defendant. If no beneficiary is named, or all named beneficiaries are deceased, then no Term Life Insurance Certificate will issue. If you exclude yourself from the Settlement Class, you will not receive a Term Life Insurance Certificate. 8. When will I receive my Term Life Insurance Certificate? The Term Life Insurance Certificates will be issued to Settlement Class Members on the first day of the month following the Class List Date, which will be within thirty (30) days of the Final Settlement Date, unless otherwise agreed by the Parties or ordered by the Court. 9. What am I giving up to stay in the Settlement Class? Unless you exclude yourself from the Settlement, you cannot sue Lincoln (or certain other released parties included as Released Parties in the Settlement Agreement) or be part of any other lawsuit against Lincoln concerning the claims in this case or claims that could have been brought in this case, which arise from the same facts as the claims here. 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 Lincoln for the claims being resolved by this Settlement. You will be releasing Lincoln and all Released Parties as described in the Settlement Agreement

5 The Settlement Agreement is available at and describes the claims that you give up if you remain in the Settlement Class. If you have any questions, you can talk to the law firms listed in Question 11 for free, or you can, of course, talk to your own lawyer. 10. How do I get out of the Settlement Class and receive no benefits? If you do not want to participate in this Settlement, and/or you want to keep the right to sue Lincoln about the claims, facts, and issues in this case, then you must take steps to get out of the Settlement. This is called excluding yourself or it is sometimes referred to as opting out of the Settlement Class. To exclude yourself, you must sign a written statement expressing your desire to be excluded that includes: (a) the name of the lawsuit, Bezich v. The Lincoln National Life Insurance Co., Cause No. 02C PL-73; (b) your full name, address, telephone number, and address; (c) a statement that you wish to be excluded from the Settlement Class and from participating in the Settlement; and (d) your signature. You must mail this request postmarked by January 9, 2016, to the Settlement Administrator: Bezich v. Lincoln National Life Settlement Administrator, P.O. Box 40007, College Station, TX A request to be excluded from the Settlement Class applies to the Settlement Class Member regardless of the number of Policies he or she owns. An owner of multiple Policies cannot stay in the Class for some Policies and be excluded for others. You will not get a Term Life Insurance Certificate if you exclude yourself from the Settlement Class. 11. Do I have a lawyer in this case? Yes. The Court appointed the following lawyers as Class Counsel : Patrick J. Stueve Bradley T. Wilders Stueve Siegel Hanson LLP 460 Nichols Rd. Suite 200 Kansas City, MO John J. Schirger Matthew W. Lytle Miller Schirger LLC 4520 Main Street, Suite 1570 Kansas City, MO Matthew J. Connelly Blume Connelly Jordan Stucky & Lauer LLP 110 W. Berry St., Ste Fort Wayne, IN You will not be charged for contacting these lawyers. If you want to be represented by your own lawyer, however, you may hire one at your own expense

6 12. How will the lawyers be paid? Class Counsel have not been paid for their work in this case, which was filed more than six (6) years ago. In addition to thousands of hours of labor, Class Counsel have expended nearly $430,000 in expenses prosecuting this case. The Court will determine how much Class Counsel will be paid for fees and expenses, but any fees and expenses will be paid by Lincoln and will not reduce or diminish the relief to the Settlement Class. Class Counsel will seek an award for attorneys fees of up to $24 million, which is less than 14% of the aggregate market value of the term life insurance that Lincoln will automatically issue if the Settlement is approved. Class Counsel will also seek up to $430,000 as reimbursement for their expenses. You will not be responsible for payment of Class Counsel s fees and expenses. Class Counsel will also request a service award payment of $25,000 for Plaintiff, Peter S. Bezich, for his service as representative on behalf of the Settlement Class. This payment will be made by Lincoln and will not reduce or diminish the relief to the Settlement Class. 13. How do I tell the Court if I do not like the Settlement? You can object to the Settlement if you do not like some part of it. The Court will consider your views. To object to the Settlement, you must file a written objection in the case, Peter S. Bezich, individually and on behalf of a class of others similarly situated v. The Lincoln National Life Insurance Company, Cause No. 02C PL-73. You are required to include: Your full name, address, telephone number, and address if any; Policy number(s); A written statement of all grounds for your objection accompanied by any legal support for the objection (if any); Copies of any papers, briefs, or other documents upon which the objection is based; A list of all persons who will be called to testify in support of the objection (if any); A statement whether you intend to appear at the Fairness Hearing; and The signature of you or your counsel. You must file your objection with the Clerk of the Allen County Circuit Court at 715 S. Calhoun Street, Rm. 200A, Fort Wayne, Indiana 46802, no later than January 9, 2016, and serve copies by U.S. mail on Class Counsel at the addresses listed in Question 11, and counsel for Lincoln at: D. Randall Brown BARNES & THORNBURG LLP 110 E. Wayne Street, Suite 600 Fort Wayne, IN and - Elizabeth L. Deeley KIRKLAND & ELLIS LLP 555 California Street San Francisco, CA If you elect not to attend the Fairness Hearing, either in person or through counsel, you will not be permitted to appeal from any provision of the order approving the Settlement, the award of payments to Plaintiff, or the award of costs and fees to Class Counsel, unless the Court excuses your appearance

7 14. What is the difference between objecting to the Settlement and asking to be excluded from the Settlement Class? Objecting is simply telling the Court that you do not like something about the Settlement. You can object only if you do not exclude yourself from the Settlement Class. Any judgment entered in the lawsuit will be binding on all Settlement Class Members, even if you have objected to the proposed Settlement. Excluding yourself from the Settlement Class is telling the Court that you do not want to be part of the Settlement Class. If you exclude yourself, you have no basis to object to the Settlement because the case no longer affects you. 15. When and where will the Court decide whether to approve the Settlement? The Court will hold a hearing, the Fairness Hearing, to decide whether to approve the Settlement and any requests for attorneys fees and expenses. You may attend and ask to speak, but you do not have to. Attendance may be required, however, to preserve a right to appeal (see Question 13 above). The Court will hold a Fairness Hearing at 1:30 p.m. on February 4, 2016, at the Allen County Circuit Courthouse, 715 S. Calhoun Street, Room 300, Fort Wayne, Indiana The hearing may be moved to a different date or time without additional notice, so it is a good idea to check or call for any updates. At the hearing, the Court will consider whether the Settlement is fair, reasonable, and adequate and in the best interests of each Settlement Class Member. If there are objections, the Court will consider them and will listen to people who have asked to speak at the hearing. The Court will also decide how much to pay and reimburse Class Counsel. After the hearing, the Court will decide whether to approve the Settlement. We do not know how long the Court s decision will take. 16. Do I have to attend the hearing? You or your own lawyer are welcome to attend the Fairness Hearing at your expense. If you send a timely objection but do not attend the Fairness Hearing, the Court will still consider your objection, but you may waive any right to appeal (see Question 13 above). 17. May I speak at the hearing? You may speak at the Fairness Hearing by filing an objection that indicates your intention to speak at the hearing. If you wish to appear through counsel, your written objection must also state the identity of all attorneys representing you who will appear at the Fairness Hearing. Unless otherwise ordered by the Court, a Settlement Class Member who does not submit a timely objection with the proper notice will not be permitted to speak at the Fairness Hearing, and will not have the right to appeal the Court s approval of the Settlement. 18. How do I get more information? This Notice summarizes the proposed Settlement. More details are in the Settlement Agreement. You can get a copy of the Settlement Agreement at You may also send your questions to the Settlement Administrator, in writing, at Bezich v. Lincoln National Life Settlement Administrator, P.O. Box 40007, College Station, TX or call the Settlement Administrator at If your address has changed or will change, please notify the Settlement Administrator as soon as possible