united states district court district of montana helena division · 6 which a class member resides,...
TRANSCRIPT
1
UNITED STATES DISTRICT COURT DISTRICT OF MONTANA
HELENA DIVISION ––––––––––––––––––––––––––––––––––––x PAMELA K. GUSCHAUSKY, individually and on behalf of all others similarly situated,
Plaintiffs, - against - AMERICAN FAMILY LIFE ASSURANCE COMPANY OF COLUMBUS AND DOES 1-10,
Defendants.
: : : : : : : : : : : :
Case No. CV-10-59-DWM STIPULATED CLASS ACTION SETTLEMENT AGREEMENT
––––––––––––––––––––––––––––––––––––x
This Stipulated Settlement Agreement and Release is made and entered into
this 22nd day of November, 2011, by and between American Family Life
Assurance Company of Columbus and Pamela K. Guschausky, individually and on
behalf of all other persons similarly situated.
This Settlement Agreement is intended to fully, finally, and forever to
resolve, discharge and settle the above-captioned litigation with prejudice, upon
and subject to the terms and conditions hereof, and subject to the approval of the
United States District Court for the District of Montana. Capitalized terms shall
have the meaning set forth in Section 2 of this Settlement Agreement.
2
SECTION 1 RECITALS
1.1 This Settlement Agreement is a compromise of disputed claims, and
the Parties agree that this Settlement Agreement shall not be deemed or construed
to be an admission or evidence of any violation of any statute or law or any
liability of wrongdoing by Aflac or of the truth of any of the claims or allegations
in the Litigation.
1.2 The Litigation was initially filed in this Court on December 16, 2010,
by Pamela K. Guschausky as a putative nationwide class action on behalf of all
similarly-situated individuals.
1.3 The Amended Complaint asserts claims for legal and equitable relief
seeking restitution of unearned policy premiums, disgorgement of profits, interest,
and attorneys’ fees, as well as declaratory and injunctive relief concerning the
subject conduct.
1.4 Aflac moved to dismiss the Complaint pursuant to Fed. R. Civ. P.
12(b)(1) and (6), which after briefing and a hearing, the Court denied on May 10,
2011. Aflac denies the allegations in the Amended Complaint and denies all
liability for the claims asserted or for any other theory of liability.
1.5 Plaintiffs commenced extensive class discovery, serving 26
interrogatories, 81 requests for production, and noticing eight depositions. In
response, Aflac produced over 40,000 pages of documents.
3
1.6 Prior to the deadline for class certification, Class Counsel and
Defendant’s Counsel initiated settlement discussions.
1.7 As part of those settlement discussions, which occurred over the
course of several months, Class Counsel conducted an investigation into the facts
with the cooperation of Defendant’s Counsel. Class Counsel has analyzed the
relevant legal issues, as well as the benefits expected to be obtained under the
terms of the proposed settlement, and have further considered the costs, risks and
delays associated with the continued prosecution of this complex and time-
consuming litigation and the likely appeals of any favorable rulings.
1.8 Class Counsel believe that, in consideration of all the circumstances
and after prolonged and serious arm’s length negotiations, the terms of this
Settlement Agreement are fair, reasonable and adequate and in the best interests of
all members of the Settlement Class.
1.9 Aflac contends that it is not liable for the claims asserted and it has
not engaged in any legally actionable activity with regard to Plaintiffs and with
regard to the subject matter of either the Complaint or the Amended Complaint.
Aflac has concluded that it will enter into this Settlement Agreement to avoid
further expense, inconvenience and burden imposed by protracted litigation, and
the distraction and diversion of its personnel and resources.
4
1.10 The Parties jointly agree that the terms and conditions of this
Settlement Agreement are fair, reasonable and adequate, particularly due to the
likelihood that continued litigation would be protracted, entail risks and involve
substantial expense.
SECTION 2 DEFINITIONS
The following terms used in this Settlement Agreement have the meaning
specified below:
2.1 “Amended Complaint” means the pleading attached as Exhibit A to
Plaintiff’s Unopposed Motion for Leave to File Amended Complaint in the
Litigation, filed concurrently with the Motion for Preliminary Approval of this
settlement.
2.2 “Claim” means a Class Member’s submission of a Claim Form for
Monetary Benefits.
2.3 “Claim Form” means the Aflac Dependent Claim Form, attached
hereto as Exhibit A that must be submitted by a Class Member in order to be
eligible to receive a monetary payment.
2.4 “Class Counsel” means Dennis P. Conner and Gregory G. Pinski,
Conner & Pinski, PLLP, 520 Third Avenue North, Great Falls, MT 59401.
2.5 “Class Member” means a person included within one of the subclasses
described in Section 3.1.
5
2.6 “Class Notice” or “Notice” means the Court-approved form of notice
of the conditional certification of the Settlement Class and Notice of the Final
Approval Hearing. The proposed Class Notice is attached hereto as Exhibit B.
2.7 “Complaint” means the initial pleading in the Litigation filed by
Plaintiffs with the Court on December 16, 2010.
2.8 “Court” means the United States District Court for the District of
Montana.
2.9 “Defendant” or “Aflac” means American Family Life Assurance
Company of Columbus.
2.10 “Defendant’s Counsel” means Thomas S. Carlock of Carlock,
Copeland & Stair, LLP, 191 Peachtree Street NE, Suite 3600, Atlanta, GA 30303,
Bradley J. Luck of Garlington, Lohn & Robinson, 350 Ryman Street, Missoula,
MT 59802, and/or Nancy B. Pridgen of Monnolly, Pridgen, Colon-Machargo &
Ellenberg, LLC, 3340 Peachtree Road, Suite 1800, Atlanta, Georgia 30326.
2.11 “Final Approval” means the last day by which all of the following
have occurred:
(a) Pursuant to the Class Action Fairness Act of 2005, 28 U.S.C.
§ 1715, the Attorney General of the United States and the appropriate Department
of Insurance official in any other state, territory, and the District of Columbia in
6
which a Class Member resides, have been sent all documents required by 28
U.S.C. § 1715(b);
(b) The Court has entered a Settlement Order and Final Judgment,
following the ninety-day notice period required by the Class Action Fairness Act,
28 U.S.C. § 1715(d);
(c) The Court has entered a final order pursuant to Fed. R. Civ. P.
23(h) awarding and/or allocating attorneys’ fees and expenses, if any; and
(d) Thirty-one days have passed after entry of the Settlement Order
and Final Judgment without any appeal of the Settlement Order and Final
Judgment being taken, or, if appeals or requests for review of the Settlement Order
and Final Judgment have been taken, orders have been entered affirming said
Settlement Order and Final Judgment or denying review after exhaustion of all
appellate remedies. Any appeal of the separate final order concerning attorneys’
fees and expenses shall not affect Final Approval under this Section.
2.12 “Final Approval Hearing” means the final fairness hearing.
2.13 “Funding Date” means the date Aflac will transmit the Settlement
Funding to the Claims Administrator, which such date will be no later than
fourteen (14) days after the Claims Administrator certifies the amount of
Settlement Funding required to cover all Valid Claims.
7
2.14 “Monetary Relief Settlement Subclass” means the Fed. R. Civ. P. 23
(b)(3) damages class, designated in Section 3.1(A).
2.15 “Neutral Arbitrator” means the Court-approved attorney-designee
nominated by the Parties to review and determine, as necessary, any Appeal Notice
from Aflac’s decision to deny payment of a Claim under Section 5.
2.16 “Claims Administrator” means Garden City Group, Inc., or other such
entity agreed upon by the Parties to administer the Claims and assist with the
mailing of the Class Notice required by this Settlement Agreement, provided the
Parties represent and warrant that they have no financial interest in or other
relationship with such entity that might give rise to a conflict of interest.
2.17 “Parties” means the Plaintiffs and Defendant, and “Party” means any
of said Parties.
2.18 “Plaintiffs” mean the Representative Plaintiff and all Class Members.
2.19 “Preliminary Approval” of this Settlement Agreement means that the
Court has entered an order in substantially and materially the same content as
Exhibit C attached hereto, preliminarily approving the terms and conditions of this
Settlement Agreement.
2.20 “Prospective Equitable Relief Settlement Subclass” means the Fed. R.
Civ. P. 23(b)(2) mandatory non-opt out injunctive class, designated in Section
3.1(B) of this Settlement Agreement.
8
2.21 “Released Claims” means those claims set forth in Section 9 of this
Settlement Agreement.
2.22 “Released Parties” means American Family Life Assurance Company
of Columbus, and its respective past and present parents (only to the extent of the
conduct of Aflac and not the conduct of any other subsidiary or affiliate),
predecessors, successors, assigns, attorneys, accountants, representatives, trustees,
officers, directors, employees, agents, sales associates and independent insurance
agents. For avoidance of doubt, “Released Parties” does not include American
Family Life Assurance Company of New York or its past and present parent,
subsidiaries, predecessors, successors, assigns, attorneys, accountants,
representatives, trustees, officers, directors, employees, agents, sales associates and
independent insurance agents.
2.23 “Representative Plaintiff” means Pamela K. Guschausky.
2.24 “Settlement Agreement” means this Stipulated Settlement Agreement
and Release.
2.25 “Settlement Class” means both of the two subclasses set forth in
Section 3.1 of this Settlement Agreement.
2.26 “Settlement Funding” means the money Aflac is required to transmit
to the Claims Administrator to cover the Settlement Payments for all Valid Claims
as of the Funding Date.
9
2.27 “Settlement Payment” means the monetary relief payment made for
each Valid Claim as set forth in Section 3.4 of this Settlement Agreement.
2.28 “Settlement Order and Final Judgment” means the order and final
judgment approving and incorporating this Settlement Agreement as binding upon
the Parties.
2.29 “Summary Notice” is the Court-approved summary of the Class
Notice, attached hereto as Exhibit E, which is to be publicly disseminated by Aflac
through newspaper advertisements under this Settlement Agreement.
2.30 “Valid Claim” means a claim that provides all necessary information
for processing of a premium refund in accordance with Section 5.
2.31 As used herein, the plural of any defined term includes the singular
thereof, and the singular of any defined term includes the plural thereof as the
context may require.
SECTION 3 CERTIFICATION OF THE SETTLEMENT CLASS
FOR SETTLEMENT PURPOSES 3.1 The Parties hereby agree, subject to the approval of the Court pursuant
to Fed. R. Civ. P. 23, and for settlement purposes only, that the Settlement Class
for all monetary and prospective equitable relief shall be subdivided into two
subclasses as follows:
10
(A) Monetary Relief Settlement Subclass. All policyholders who
are residents of the United States, its Territories, and the District of Columbia, who
purchased a “One-Parent Family” or “Two-Parent Family” coverage insurance
policy from Defendant, who had their dependent claims denied during the time
period from December 16, 2002 to present for “Claimant Excluded from
Coverage” or “Dependent Not Covered” (Denial Codes 3 and 12), and for whom
Defendant retained the premiums paid for coverage for dependent children when
such policyholder had and currently has no children eligible for dependent
coverage under the terms of the policy.
This Monetary Relief Settlement Subclass necessarily excludes
policyholders who, at the time of the claims denial, had or currently has a child
eligible for dependent coverage under the policy. This class also excludes any
agents, employees, officers, and/or directors of American Family Life Assurance
Company of Columbus, American Family Life Assurance Company of New York
policyholders, counsel of record, and members of the judiciary overseeing this
action.
(B) Prospective Equitable Relief Settlement Subclass. All
policyholders who are residents of the United States, its Territories, and the
District of Columbia, who have purchased, or will in the future purchase, a “One-
Parent Family” or “Two-Parent Family” coverage insurance policy from
11
Defendant, who in the future have a dependent claim denied for “Claimant
Excluded from Coverage” or “Dependent Not Covered” (Denial Codes 3 and 12),
and for whom Defendant is receiving premiums for coverage for dependent
children, but such policyholder has no children eligible for dependent coverage
under the terms of the policy.
This Prospective Equitable Relief Settlement Subclass excludes
agents, employees, officers, and/or directors of American Family Life Assurance
Company of Columbus, American Family Life Assurance Company of New York
policyholders, counsel of record, and members of the judiciary overseeing this
action.
3.2 The Monetary Relief Settlement Subclass shall be an opt-out class
pursuant to Fed. R. Civ. P. 23 (b)(3). The monetary relief to this subclass is
specified in Section 3.4 of this Settlement Agreement.
3.3 The Prospective Equitable Relief Settlement Subclass shall consist of
a mandatory, non-opt out class pursuant to Fed. R. Civ. P. 23(b)(2). The
prospective equitable relief is specified in Section 3.5 of this Settlement
Agreement.
3.4 The Parties hereby agree that each Class Member under Section
3.1(A) of this Settlement Agreement who submits a Valid Claim in conformity
with the claims procedure set forth in Section 5.7 shall be entitled to receive a
3546882v.1
12
refund of 100% of the premium owed to the Class Member if the Class Member
paid for Family Coverage, but never had an eligible dependent or no longer has
any eligible dependents but continues to pay for Family Coverage. The refund will
be based on the difference in applicable premium between the Family Coverage
and Individual or Named Insured/Spouse Only coverage, as applicable, for the
period in which there were no dependents eligible for coverage. For purposes of
determining dependent coverage under a policy with a “two tier” age structure, if a
dependent was over the applicable age at the time of application, but under the
applicable limiting age set forth in the policy, the dependent will be deemed to be
ineligible for coverage; if the Class Member had no other eligible dependents or no
longer has any eligible dependents, such Class Member will be entitled to a refund
of 100% of the premium from the date the Class Member applied for the policy to
the date of the Settlement Payment. Aflac, with the assistance of the Claims
Administrator, will evaluate all Claim Forms in accordance with its policyholder
records in order to determine which claims constitute Valid Claims subject to
payment under this subsection.
Within 45 days after Final Approval, payments shall be made in accordance
with this Agreement and in response to properly completed Claim Forms submitted
by Class Members to the Claims Administrator, as set forth in Sections 5.7 and 7.4.
No interest shall accrue or be due to Class Members.
13
3.5 The Parties hereby agree that for the purposes of prospective equitable
relief, upon denial of a claim for “Claimant Excluded from Coverage” or
“Dependent Not Covered” (Denial Codes 3 and 12) or similar reason for denial,
each Class Member under Section 3.1(B) will receive a modified dependent claim
denial letter from Aflac stating that if he or she has no eligible dependents, then the
Class Member may be eligible to convert his or her Family Coverage policy to an
Individual or Named Insured/Spouse Only policy, as applicable. Each Class
Member whose dependent claim is denied in the future and who elects to make
such a policy conversion shall be entitled to receive a refund equal to 100% of the
refund owed pursuant to the calculation method set forth in Section 3.4, if any.
The revised dependent claim denial letter shall be in the form attached hereto as
Exhibit D.
3.6 Any Class Member individually may elect to opt out of the Monetary
Relief Settlement Class, within the time and pursuant to the procedures specified in
the Class Notice and Section 6.5 and thereby exclude himself or herself from this
Settlement. Such opt out rights may be exercised only individually by a Class
Member, and not by any other person acting on behalf of a Class Member in a
representative capacity, except as an executor, administrator or personal
representative of the estate of a deceased Class Member.
SECTION 4 LIST OF CLASS MEMBERS
14
4.1 Aflac agrees to create, at its expense, a list of potential Class Members
based on the stipulated class definitions within 15 days after Preliminary Approval,
or such reasonable time as the Parties may agree, consistent with the obligations
and time frame established in Section 5, and to provide such list to Class Counsel
and the Claims Administrator. The list shall include those individuals identified on
the Code 3 and 12 claim denial spreadsheet produced by Aflac in the Litigation. It
is expressly contemplated that the list of potential Class Members shall include all
individuals whose dependent claim has been denied by Aflac for “Claimant
Excluded from Coverage” or “Dependent Not Covered” (Denial Codes 3 and 12)
from December 16, 2002, to the date of Preliminary Approval under the following
types of Aflac insurance policies: accident, cancer, critical care and recovery,
hospital confinement indemnity, hospital confinement sickness indemnity, hospital
intensive care, lump sum cancer, lump sum critical illness, and vision.
4.2 The list of Class Members will remain the confidential property of
Aflac. Prior to receiving the list of Class Members or Claims, any person or entity
receiving such list shall sign a written Confidentiality Agreement in a form agreed
upon by Class Counsel and Defendant’s Counsel. Recipients of the list must
agree: (1) to be bound by the terms of the Confidentiality Agreement; (2) to
maintain the list in confidence; and (3) not to disclose the list to anyone other than
in accordance with the terms of the Confidentiality Agreement and this Settlement
15
Agreement. The Claims Administrator may execute one Confidentiality
Agreement on behalf of its entire company and all its employees, provided it
agrees to be liable for any breach thereof.
4.3 Aflac shall make available to Class Counsel the unredacted Code 3
and 12 claim denial spreadsheet produced by Aflac in the Litigation, which Class
Counsel shall treat as confidential and shall not use for any purpose outside of the
instant litigation. The categories of information contained on such spreadsheet
shall be provided for any additional Class Member on the list of Class Members
who does not appear on the foregoing Code 3 and 12 claim denial spreadsheet.
SECTION 5 CLASS NOTICE AND CLAIM FORM
5.1 No later than fourteen (14) days after Preliminary Approval, with the
assistance of the Claims Administrator, Aflac shall, at its sole expense, cause the
Notice and Claim Form to be sent by postage pre-paid, first-class mail, along with
a self-addressed, postage prepaid return envelope, to each Class Member.
Notwithstanding the foregoing, the Parties may jointly agree and consent, without
Court approval, to extend the date on which Aflac shall be required to send the
Notice and Claim Form to Class Members, provided such extension shall not
exceed ten (10) days.
16
5.2 Aflac, with the assistance of the Claims Administrator, will make a
good faith effort to identify the most current address of each Class Member (using
the National Change of Address database and other internal research tools
available to Aflac to update the last known address reflected on Aflac’s policy
records of each Class Member), and shall cause the Notice and Claim Form to be
sent to that address. Notice and Claim Forms returned with a forwarding address
shall be re-mailed by the Claims Administrator to the forwarding address at
Aflac’s expense. If, following the use of the above-described procedures, the
Claims Administrator receives returned mail without forwarding addresses in an
amount equal to or greater than 25% of the initial mailing, then Aflac, at its
expense, will retain Choicepoint, Experian or another similar company to make
further attempts to identify correct forwarding addresses, and the Claims
Administrator shall cause these corrected Notice and Claim Forms to be re-mailed
at Aflac’s expense. The Notice and Claim Form shall have substantially the same
content as Exhibits A and B hereto. Class Counsel and Defendant’s Counsel will
jointly agree on the form and format of Exhibits A and B and for all forms of Class
Notice; and further, may make by mutual written agreement any non-substantive
changes and changes necessary to correct any inconsistency between approved
forms and this Settlement Agreement.
17
5.3 An electronic claim submission site will be established and
maintained by the Claims Administrator, at Aflac’s expense, the substance and
content of which shall be mutually approved by the Parties, but will be limited to
an electronic Claim Form for submission of Claims.
5.4 Notice shall also be given by publication. At Aflac’s expense, a
Summary Notice shall be published in the following newspapers: USA Today, Los
Angeles Times, Washington Post, Atlanta Journal Constitution, Chicago Sun
Times, Dallas Morning News, Philadelphia Enquirer, San Francisco Chronicle,
Seattle Times, Minneapolis Star Tribune, and Denver Post no later than twenty-two
(22) days after the date on which the Notice and Claim Form is mailed. Such
advertisement shall be 1/8 page in size, and shall appear in one of the main “Run of
Paper” sections of the newspapers, i.e., in the News, Metro, Sports, Business, or
Life. The Summary Notice shall not be published in the Classified or Legal
sections.
5.5 At least ten (10) days before the Final Approval Hearing, Aflac shall
file with the Court a proof of mailing of the Class Notice from the Claims
Administrator and proof of publication of the Summary Notice.
5.6 All costs incurred with the duplicating, mailing, distribution and
publication of the Class Notice and Claim Form and any other notices required by
the Court, including costs associated with electronic claim submission site and
18
prepaid return postage for Claim Forms, shall be borne solely by Aflac. Aflac
shall be solely responsible for all fees, costs and expenses of the Claim
Administrator. In the event the settlement is not approved by the Court, or
otherwise fails to become effective, neither the Representative Plaintiff nor Class
Counsel shall have any obligation to pay Aflac any such costs incurred but unpaid,
or to repay any amounts actually and properly disbursed.
5.7 Any Class Member seeking to participate in the Monetary Relief
Settlement Class must complete and timely return to the Claims Administrator a
Claim Form complying with the procedures specified in the Class Notice and
Claim Form to Aflac Dependent Coverage Settlement, P.O. Box _________,
_________, ______ _______, or electronically through the electronic claim
submission site established by the Claims Administrator. No Claim Form will be
accepted if is submitted by someone purporting to act on behalf of or in a
representative capacity for a Class Member including without limitation, a claim
filing service, with the exception of the executor, administrator or personal
representative of the estate of a deceased Class Member. All Claim Forms must be
returned no later than 65 days after the mailing to Class Members described in
Section 5.1. A Claim Form rejected for failure to provide the information
requested in the Claim Form shall be returned to the Class Member by postage pre-
paid first class mail in a separate envelope notifying the Class Member of the
19
missing information and providing the Class Member with 10 business days to
complete the form and provide the missing information.
5.8 The Claims Administrator shall notify Class Counsel and Defendant’s
Counsel of its determination that a Claim Form is incomplete, and will follow the
procedures outlined in Section 5.7 regarding missing information. If, following the
opportunity to provide the requested information and complete the Claim Form,
the Claims Administrator concludes that a claim form is invalid because of missing
information, the Claims Administrator shall provide Class Counsel and
Defendant’s Counsel with copies of the incomplete Claim Forms. Counsel will
work cooperatively and in good faith to reach an agreement regarding the
incomplete Claim Form and communicate any agreement reached to the Claims
Administrator. If Defendant’s Counsel and Class Counsel cannot reach an
agreement, then such disputes concerning the validity of timely-submitted Claim
Forms shall be submitted to the Court prior to the Final Approval Hearing for
resolution.
5. 9 Aflac shall have the right to verify through its records the validity and
accuracy of any Claim Form, and to deny invalid Claims. Aflac also has a right to
reject as invalid a Claim Form that does not provide sufficient information (not
reasonably available to Aflac) for Aflac to pay the Claim. Any Class Member
whose Claim is rejected by Aflac as being invalid, and is thus denied the
20
Settlement Payment provided herein, may challenge such rejection. Such
challenge shall be heard by a Neutral Arbitrator. The arbitrator shall consider only
written evidence and declarations submitted by Aflac and the rejected Class
Member and Class Counsel and shall promptly consider all of the evidence
submitted and make a final, non-appealable finding based on this evidence. The
burden shall be on Aflac to prove to the Neutral Arbitrator by a preponderance of
the evidence that there is factual support for its rejection of the Claim. Class
Counsel and Defendant’s Counsel shall agree on and nominate three potential
arbitrators to the Court from whom the Court shall appoint only one at the Final
Approval Hearing. Aflac shall make reasonable information and documentation
available to Class Counsel to audit Aflac’s Claim denial, including without
limitation all information and documentation relied upon by Aflac in denying the
Claim. Aflac shall be responsible to pay all reasonable fees and costs for the
services of the Neutral Arbitrator designated by the Court.
5.10 Any Class Member who wishes to challenge Aflac’s rejection of his
or her claim as invalid pursuant to Section 5.9 must send written notice of appeal
(“Appeal Notice”) to the Claims Administrator, Defendant’s Counsel and Class
Counsel by first-class mail within 30 days of the date of the postmark on the
envelope containing notice of an adverse decision regarding a submitted Claim.
The Appeal Notice shall state, in detail, the reason(s) why the Class Member does
21
not agree with Aflac’s rejection and submit documentation, if any, in support of the
Class Member’s disagreement. Class Counsel may also submit an Appeal Notice
on behalf of any Class Member. If the Class Member, Class Counsel, Aflac and
the Claims Administrator are unable to resolve the appeal with 10 days after
receipt of the Appeal Notice, the dispute will be submitted for resolution by the
Neutral Arbitrator. The Neutral Arbitrator must decide the Appeal Notice within
30 days after receipt thereof.
5.11 The Parties shall urge the Court to establish a date in the Settlement
Order and Final Judgment by which Claims shall be fully completed and closed
(the “Closing Date”). The Claims Administrator shall report the results of
processing all claims to the Court, Class Counsel and Defendant’s Counsel in a
final report, as of the Closing Date, due 40 days after the Closing Date. The
Claims Administrator shall make any adjustments to the results as ordered by the
Court, and Aflac will true-up any needed Settlement Funding at that time.
SECTION 6 CLASS SETTLEMENT PROCEDURES
6.1 The Parties agree to recommend approval of this Settlement
Agreement by the Court, and the Parties agree to undertake in good faith their best
efforts, including all steps and efforts contemplated by this Settlement Agreement,
and any other necessary or appropriate efforts, by order of the Court or otherwise,
22
to carry out the terms of this Settlement Agreement, and to take no action contrary
to or inconsistent with their commitment to seek prompt approval and
implementation of the Settlement.
6.2 Neither Aflac, nor any of its parent, subsidiaries, affiliates, officers,
directors, employees, agents, sales associates, or attorneys, shall take any action,
directly or indirectly, to interfere with or discourage any Class Member from filing
a claim or from exercising their right to opt out from this Settlement Agreement as
provided herein. Nor shall the Parties or their counsel seek to solicit or otherwise
encourage Class Members to submit written objections or requests for exclusion
from the Settlement Class or encourage Class Members to appeal from the Court’s
final Judgment.
6.3 The Parties shall move for a Preliminary Approval order, in the form
of Exhibit C, preliminarily approving this Settlement Agreement as fair, just,
reasonable and adequate, approving notice to the Settlement Class as described in
Section 5, and setting a hearing to consider final approval of the Settlement
Agreement and any objections to its fairness.
6.4 Pursuant to Section 3 of the Class Action Fairness Act, 28 U.S.C.
§ 1715, not later than ten (10) days after this Stipulated Settlement Agreement and
Release is filed with the Court in conjunction with the Motion for Preliminary
Approval, Aflac will send to the Attorney General of the United States and the
23
appropriate insurance official in each state, territory and the District of Columbia
where class members reside, all documents required by 28 U.S.C. § 1715(b).
6.5 Any Class Member seeking to be excluded from the Monetary Relief
Settlement Class must send a timely written and signed request for exclusion
complying with the procedures specified in the Class Notice and Claim Form to
Aflac Dependent Coverage Settlement, P.O. Box ______, ____________, ___,
__________. Class Members may not opt out electronically. Class Members who
opt out from the Monetary Relief Settlement Class in accordance with the
requirements specified in the Class Notice and Claim Form will not receive any
benefits available under the Monetary Relief portion of the Settlement and will not
be bound by any orders or judgments entered in this case relating to such Monetary
Relief. Class Members who opt out from the Monetary Relief Settlement Class in
accordance with the requirements specified in the Class Notice and Claim Form
shall also not have the right to object to the Monetary Relief Settlement Class or
any terms of this Settlement Agreement. It is the intent of the Parties that the opt
out and objection deadline be 45 days from the mailing of Class Notice and Claim
Form to the Class.
6.6 Subject to the Court’s approval as set forth in Section 6.3, the Parties
agree that, after Preliminary Approval, the Class Notice and Claim Form, in
24
substantially the same form as Exhibits A and B hereto, will be sent to each Class
Member as set forth in Section 5.1.
6.7 Any Class Member may appear at the Final Approval Hearing, at the
Class Member’s own expense, individually or through counsel of the Class
Member’s choice. Notice of any such appearance shall be served, on or prior to
the date of its filing, on both Class Counsel and Defendant’s Counsel.
6.8 The Final Approval Hearing will be held on a date and time to be set
by the Court not less than 95 days after preliminary approval of the settlement, to
determine whether to finally approve the Settlement Class and Settlement
Agreement. Subject to Section 6.7, any Class Member may then and there appear
and show cause why the settlement should or should not be approved as fair and
reasonable and adequate; or why the proposed Settlement Order and Final
Judgment should or should not be entered thereon; or why attorneys’ fees and
expenses should or should not be awarded to Class Counsel; or why the
Representative Plaintiff should or should not receive the incentive award;
provided, however, that no Class Member shall be heard or entitled to contest or
object to the Court’s decision on any of the foregoing matters unless that person
has (a) no later than the objection date filed written objections and supporting
documentation with the Court; and (b) served such objections and documentation
no later than the objection date upon Class Counsel and Defendant’s Counsel. In
25
order to be considered for hearing, all objections must be filed with the Court and
served upon counsel no later than ten (10) business days prior to the Final
Approval Hearing. Any Class Member objecting to the proposed Settlement Order
and Final Judgment also may seek to present oral argument to the Court at the
Final Approval Hearing. Class Members are not required to present oral argument
even if an objection is filed. Any Class Member seeking to present oral argument
must file a Notice of Appearance and Intent to Present Argument along with his or
her objection, which also must be filed with the Court and served upon Class
Counsel and Defendant’s Counsel no later than 10 business days before the Final
Approval Hearing. Unless otherwise ordered by the Court, any Class Member who
does not make his or her objection in the manner provided herein shall be deemed
to have waived such objection and shall forever be foreclosed from making any
objection to the fairness, reasonableness or adequacy of the proposed settlement,
and to the award of attorneys’ fees and expenses to Class Counsel.
6.9 At or before the Final Approval Hearing, the Parties shall move for a
Settlement Order and Final Judgment, granting final approval of this Settlement
Agreement as fair, reasonable, adequate and binding on all Class Members who
have not timely and properly excluded themselves, awarding attorneys’ fees and
expenses and effecting the releases set forth in Section 9.
26
6.10 At the Final Approval Hearing, the Court shall determine the amount
of attorneys’ fees and expenses to be awarded pursuant to Section 8.
6.11 Upon request, Aflac and the Claims Administrator shall timely and
periodically report to the Court concerning the actions taken to comply with this
Settlement Agreement. Class Counsel may take reasonable steps to monitor the
claims administration, and Aflac and the Claims Administrator will make a good
faith effort to accommodate Class Counsel’s monitoring efforts.
SECTION 7 SETTLEMENT PAYMENTS
7.1 The Representative Plaintiff will receive as an incentive award the
sum of $5,000 for her diligent pursuit of this case, which shall be separate and
apart from any relief that she is entitled to in accordance with Section 3.4. This
incentive award will be paid to her within 45 days after Final Approval.
7.2 The Claims Administrator shall record the Settlement Payment to be
made to the Class Member based on timely receipt of a Valid Claim as set forth in
Section 3.1 and the amount shall be calculated according to the Claim formula as
defined in Section 3.4 No Settlement Payment shall be disbursed to any person or
entity, including without limitation a claim filing service, purporting to act on
behalf of or in a representative capacity for a Class Member pursuant to a power of
attorney, assignment, or otherwise, with the exception of the executor,
administrator or personal representative of the estate of a deceased Class Member.
27
7.3 Thirty (30) days after mailing of the last batch of Claim Forms, the
Claims Administrator will tally all Valid Claims received and provide an
accounting to Aflac of the Settlement Funding required to pay all Valid Claims.
Aflac will transmit the Settlement Funding to the Claims Administrator within
fourteen (14) days of its certification of the amount thereof.
7.4 Within twenty-one (21) days after the Funding Date, the Claims
Administrator shall distribute Settlement Payments on behalf of Aflac to qualifying
Class Members in accordance with Section 3.4. Settlement Payments shall be
made to the Class Members by check, and such checks shall remain valid and
negotiable for 90 days from the date of their issuance, and may thereafter be
automatically cancelled if not cashed within that time. Any such funds represented
by checks that are not negotiated and are cancelled shall be donated by the Claims
Administrator to Friends of a Feather, Aflac’s pediatric cancer philanthropic
initiative. Acceptance of any Settlement Payments will constitute a Class
Member’s acknowledgement that the payment and denial provisions contained
herein fully comply with the relevant state insurance claims practices acts, and will
constitute a full release and discharge in favor of Aflac for any claims thereunder.
SECTION 8 ATTORNEYS’ FEES AND EXPENSES
8.1 Within the time set forth in the Preliminary Approval Order, or as
otherwise directed by the Court, Class Counsel may apply to the Court for an
28
award of attorneys’ fees and reimbursement of expenses, which amount shall be
determined solely and exclusively by the Court at or after the final fairness
hearing. Aflac does not oppose Class Counsel’s entitlement to an award of
attorneys’ fees and expenses, but it reserves its right to object to the amount of
attorneys’ fees and expenses sought by Class Counsel. Class Counsel’s attorneys’
fees and expenses, if any, as approved and ordered by the Court, shall be paid
within fourteen (14) days after Final Approval and shall be paid without reducing
or depleting the Settlement Payments to be made to the Class Members and
without diminishing any other amount owed by Aflac, if any, under the terms of
this Settlement Agreement.
8.2 Class Counsel may conduct all necessary discovery to support its
application for attorneys’ fees and expenses, and Aflac may interpose objections
thereto as allowed by law. Any discovery disputes that arise that cannot be
resolved by Class Counsel and Defendant’s Counsel may be submitted to the Court
for resolution.
8.3 All of Aflac’s attorneys’ fees, costs and expenses incurred in the
Litigation shall be borne solely by Aflac.
SECTION 9 RELEASE AND INJUNCTION AGAINST SUIT
9.1 In exchange for the Settlement Funding and all other amounts
referenced as payable by Aflac herein, the Released Parties shall, upon entry by the
29
Court of the Settlement Order and Final Judgment, receive a full release and
discharge from the Representative Plaintiff and each Class Member (including
their past, present or future agents, legal representatives, trustees, estates, heirs,
executors and administrators), regardless of whether such Class Member has
claimed or obtained Monetary Relief benefits hereunder, for any and all claims of
any nature whatsoever (including claims for any and all losses, damages, attorney
fees, litigation costs, injunction, declaratory relief, contribution, indemnification,
disgorgement, unjust enrichment, or any other type or nature of legal or equitable
relief) that are or could have been asserted on the basis of the facts alleged in the
Complaint and Amended Complaint. This Release includes but is not limited to
damages and/or liabilities, whether class, individual or otherwise, known or
unknown, accrued or not, asserted or unasserted, suspected or unsuspected,
concealed or unconcealed, tangible or intangible, in law or in equity, based on or
otherwise arising out of any or all of the acts, omissions, facts, matters,
transactions, occurrences, actions, or inactions of any or all of the Released Parties
through and including the date of the execution of this Agreement that are, were or
could have been alleged, asserted, or set forth in the Complaint or Amended
Complaint or would be barred by principles of res judicata if the claims were
asserted and if the Action had been fully litigated and resulted in a final judgment.
By way of illustration, this Release includes any claims that the Released Parties
30
violated any consumer fraud or protection statute, any insurance statute or
regulation, any statutory or common law requirement, claims of bad faith, breach
of contract, breach of insurance policy, or any claim of fraud in the inducement of
this settlement. This release further includes the following: (a) Release of Rights
under South Dakota Codified Law § 20-7-11. Class Member acknowledges and
agrees that he/she expressly, knowingly and voluntarily waives and relinquishes
any and all rights and benefits that he/she may otherwise have under or by reason
of South Dakota Codified Law § 20-7-11, which provides as follows:
“20-7-11. Unknown claims not released by general release. 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.”; and (b) Release of Rights
under Civil Code Section 1542. Class Member acknowledges and agrees that
he/she expressly, knowingly and voluntarily waives and relinquishes any and all
rights and benefits that he/she may otherwise have under or by reason of Section
1542 of the Civil Code of the State of California, which provides as follows:
“A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which if
known by him or her must have materially affected his or her settlement with the
debtor.”
31
9.2 This Release shall not apply to Class Members who have timely and
properly excluded themselves by complying with the opt out procedure detailed in
the Class Notice and Claim Form and pursuant to Section 3.6, whether or not they
object to the Settlement; provided, however, that Class Members do not release
any claims that have been reduced to judgment in a trial court, whether or not that
judgment has been resolved on appeal, prior to the Settlement Order and Final
Judgment.
9.3 Effective upon entry by the Court of the Settlement Order and Final
Judgment in this Action, if they have not opted out pursuant to Section 3.6, all
Class Members will also release and forever discharge any and all existing and
future claims, including but not limited to any claims under relevant state insurance
claims practices statutes, arising from this Settlement Agreement, including but not
limited to the certification of the Settlement Class, the resolution of claims, and the
class settlement procedures.
9.4 Effective upon entry by the Court of the Settlement Order and Final
Judgment in this Action, the Class Members who have not timely and properly
excluded themselves hereby covenant not to sue and will be permanently enjoined
from suing the Released Parties in respect to any or all of the Released Claims
identified in this Section.
32
9.5 Effective upon entry by the Court of the Settlement Order and Final
Judgment in this Action, all Class Members submitting Valid Claims and receiving
a Settlement Payment expressly agree that Aflac may convert their Family
Coverage insurance policy to an Individual or Named Insured/Spouse Only policy,
as the case may be. All such Class Members expressly waive further notice of
such conversion.
9.6 This Settlement Agreement reflects, among other things, the
compromise and settlement of disputed claims, and neither this Settlement
Agreement nor the releases given herein, nor any consideration therefore, nor any
actions taken to carry out this Settlement Agreement are intended to be, nor may
they be deemed or construed to be, an admission or concession of liability, or of
the validity of any claim, or of any point of fact or law on the part of any Party.
Aflac continues to deny the allegations of the Complaint and the Amended
Complaint.
SECTION 10 MISCELLANEOUS PROVISIONS
10.1 The Parties, Class Counsel and Defendant’s Counsel shall use their
best efforts to secure Preliminary Approval of this Settlement as promptly as
possible, to take all steps necessary to effectuate this Settlement Agreement and to
obtain Final Approval. All counsel and any other person executing this Agreement
warrant and represent that they have the full authority to do so.
33
10.2 Neither the Parties nor their counsel shall disclose any information
regarding the negotiation of this settlement and the parties’ discussions in the
compromise of this disputed claim and preparation of settlement documentation,
except as otherwise set forth herein.
10.3 Unless and until this Settlement Agreement is terminated pursuant to
its provisions, all discovery, motions, pleadings and other activities in the Class
Action shall be stayed except to the extent necessary to conduct confirmatory
discovery, discovery for Class Counsel’s application for attorneys’ fees and
expenses, and any other action necessary to effectuate this Settlement.
10.4 In the event that the Court refuses to approve the Settlement
Agreement, or issues an order preliminarily or finally approving this Settlement in
a form that is materially different from this Settlement Agreement submitted to the
Court, including all attached exhibits, either Party will have the option to withdraw
from this Settlement Agreement, which option may be exercised within five
calendar days of the respective Order upon written notice to the other party and
filing with the Court. In no event shall the Court’s award of attorneys’ fees and
expenses under Section 8.1 be a basis for either Party to withdraw from this
Settlement Agreement. If either Party chooses to exercise the right to withdraw as
set forth in this Section, this Settlement Agreement shall be null and void for all
purposes.
34
10.5 This Settlement Agreement was entered into only for purposes of
compromise and settlement and is not an admission of liability of Aflac or any
admission that a class should be certified, other than for settlement purposes. In
the event that Final Approval does not occur for any reason, then no term or
condition of this Settlement Agreement shall have any effect, nor shall any such
matter be admissible in evidence for any purpose in this action or in any other
proceeding.
10.6 This Settlement Agreement is intended to and shall be governed solely
and exclusively by the laws of the State of Montana, without regard to its choice of
law rules.
10.7 The terms and conditions set forth in this Settlement Agreement
constitute the complete and exclusive agreement between the Parties relating to the
subject matter of this Settlement Agreement, superseding all previous negotiations,
representations, and understandings, and may not be contradicted or supplemented
by evidence of any prior contemporaneous agreement. The Parties intend that this
Settlement Agreement constitutes the complete and exclusive statement of agreed
terms as between the Parties and that no extrinsic evidence whatsoever may be
introduced in any judicial proceeding involving this Settlement Agreement. Prior
or contemporaneous representations not contained in this Settlement Agreement
35
shall be of no force or effect. Any modification of the Settlement Agreement must
be in writing signed by Class Counsel and Defendant’s Counsel.
10.8 The determination of the terms of, and the drafting of, this Settlement
Agreement has been by mutual agreement after negotiation, with consideration by
and participation of all Parties and their counsel. None of the Parties shall be
considered to be the drafter of this Settlement Agreement or any provision hereof
for the purpose of any statute, case law or rule of interpretation or construction that
would or might cause any provision to be construed against the drafter.
10.9 This Settlement Agreement shall be binding upon and inure to the
benefit of the representative heirs, successor and assigns of the Parties.
10.10 After Preliminary Approval, the waiver by one Party of any provision
or breach of this Settlement Agreement shall not be deemed a waiver of any other
provision or breach of this Settlement Agreement. Time is of the essence in the
performance of this Settlement Agreement, except as set forth otherwise herein.
10.11 The Parties agree to be bound by this Settlement Agreement, which
shall become fully effective upon Final Approval. The Parties may execute this
Settlement Agreement in counterparts and by facsimile, which shall have the same
force and effect as if all Parties had signed the same instrument.
10.12 Subject to Section 10.4, if any word, phrase, term or other part of this
Agreement is found to be unenforceable, that unenforceable part will be severed
36
from the Agreement, and the remainder of the Agreement will remain in full force
and effect.
10.13 The Parties each represent and warrant that they have not made and
will not make any assignment, conveyance, or transfer of any claims, rights, or
causes of action that may serve as a basis for a claim or demand against any other
party based upon, arising out of, or in any way connected or related to the
Litigation.
10.14 Any dispute regarding the interpretation or validity of or otherwise
arising out of this Settlement Agreement, or referring to the Litigation or the
Released Claims, shall be subject to the exclusive jurisdiction of this Court, and
Plaintiffs and Aflac agree to submit to the personal and exclusive jurisdiction and
venue of the Court, with regard to such dispute. The Court shall retain jurisdiction
solely with respect to the interpretation, implementation and enforcement of the
terms of this Settlement Agreement and all orders and judgments entered in
connection therewith, and the Parties and their counsel submit to the jurisdiction of
the Court for the purposes of interpreting, implementing and enforcing the
settlement embodied in this Settlement Agreement and all orders and judgments
entered in connection therewith.
37
IN WITNESS HEREOF, the undersigned, being duly authorized, have
caused this Settlement Agreement to be executed as of the date first referenced
above.
[SIGNATURE PAGES FOLLOW]