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Newman v. Metropolitan Life Insurance Co.

United States Court of Appeals, Seventh Circuit

March 22, 2018

Margery Newman, on behalf of herself and all others similarly situated, Plaintiff-Appellant,
v.
Metropolitan Life Insurance Company, Defendant-Appellee.

          Argued September 19, 2017

          Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 16 C 3530 - Thomas M. Durkin, Judge.

          Before Wood, Chief Judge, and Easterbrook and Rovner, Circuit Judges.

          Wood, Chief Judge.

         At age 56, Margery Newman purchased a long-term-care insurance plan from the Metropolitan Life Insurance Company ("MetLife"). She opted for one of MetLife's non-standard options for paying her insurance premiums; MetLife called the method she selected "Reduced-Pay at 65." When Newman was 67 years old, she was startled to discover that MetLife that year more than doubled her insurance premium. MetLife insists that the increase was consistent with Newman's insurance policy, including its Reduced-Pay-at-65 feature. Newman was unpersuaded and brought this action to vindicate her position. The district court dismissed for failure to state a claim. We conclude, however, that the dismissal was premature, and that Newman's complaint plausibly has alleged facts entitling her to relief. We therefore reverse and remand for further proceedings.

         I

         Two documents lie at the heart of this case. The first is Met-Life's "Long-Term Care Facts" brochure, which Newman reviewed before purchasing her insurance plan. The brochure describes long-term care generally and catalogs MetLife's non-standard payment options. Newman learned of Met-Life's Reduced-Pay option from the brochure. The full description reads as follows:

         Reduced-Pay at 65 Option:

By paying more than the regular premium amount you would pay each year up to the Policy Anniversary on or after your 65th birthday, you pay half the amount of your pre-age 65 premiums thereafter.

         At the foot of the same page, MetLife instructs the reader that the brochure is only a general overview of MetLife's insurance plans, and that the policy governs the terms of the agreement.

         Equipped with this information, Newman purchased a long-term-care insurance plan from MetLife and selected the Reduced-Pay option. Roughly a week later, she received the policy-the second critical document. The policy is 29 pages long. It includes just one reference to the Reduced-Pay option:

In addition, you have selected the following flexible premium payment option: Reduced Pay at 65 Semi-Annual Premium Amount:
Before Policy Anniversary at age 65 $3231.93
On or after Policy Anniversary at age 65 $1615.97

         Elsewhere, the policy reserves MetLife's right to change the premium. On the first page, MetLife announces that "PREMIUM RATES ARE SUBJECT TO CHANGE." The same paragraph continues with the statement that "[a]ny such change in premium rates will apply to all policies in the same class as Yours in the state where this policy was issued." In a section titled "Premiums, " MetLife "reserve[s] the right to change premium rates on a class basis." Similar language is included in the "5% Automatic Compound Inflation Protection Rider." The policy defines more than 30 terms, but the word "class" is not among them. And the appended "Contingent Benefits Upon Lapse Rider, " which provides coverage options in the event of a "Substantial Premium Increase, " includes a table illustrating that that term's meaning varies with the policyholder's age at the time the policy was issued. The table accounts for policyholders who were issued their policy at ages up to "90 and over." Newman had the opportunity to review the policy for 30 days and return it for a full refund if she was dissatisfied.

         From the outset, Newman paid the elevated premium associated with her Reduced-Pay option. When she reached age 65, her premium was cut in half. After Newman turned 67, however, MetLife doubled the premium. MetLife represents that this increase has been imposed on a class-wide basis, which it said at oral argument means all long-term-care policyholders, including Reduced-Pay policyholders over the age of 65. MetLife defends the increase by noting that Newman still pays half the premium of a Reduced-Pay policyholder who has not yet reached age 65, and far less than she would if she had not purchased the ...


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