Big cases. Big clients. Big adversaries.
Patrick J. Stueve
Peter Bezich was surfing the web to find answers to a
question he had about his insurance policy when he came
across Stueve Siegel Hanson in Kansas City, Missouri. “He
saw that we were investigating overcharges for cost of
insurance coverage [in two cases] and called us,” says business litigator Patrick Stueve.
Bezich, Stueve says, purchased a $200,000 permanent
variable life policy—Lincoln Financial’s “Ensemble II.”
“What he didn’t understand at the time he purchased the
policy is that under the cost of insurance coverage [COI]—
which is based on age, sex classification and health to
determine mortality risk—[Lincoln National Life Insurance]
was adding undisclosed hidden loads into the COI charge.
“You put premiums in and they deduct certain monthly
What’s more, Stueve says, the actuary believed this was a
charges,” he adds. “So when someone is overcharged
for COI, that equals less money left over to cash fund the
policy. So 13 years later, in his 60s, Mr. Bezich could no
longer afford the policy.”
Stueve hired an actuary to look into the issue, who
confirmed that there were substantial overcharges. “We
discovered that for the first four or five years of his policy, 70
percent of Mr. Bezich’s COI was loaded with these undis-
closed expenses,” he says.
systematic issue with all of Lincoln’s Ensemble II policies.
Bezich alleged three claims of breach of contract against
Lincoln—(1), that the insurance company had included
non-mortality factors in determining the COI rate, ( 2),
violated the expense cap by loading administrative fees and
expenses into the COI rate and ( 3), failed to reduce the COI
rate in response to improving mortality rates.
In 2014, a trial court denied class certification on claims
one and two, but granted it on the third. That case went up
“The Court of Appeals, in fact, believed that not only
one of the claims should be certified, but all three claims
should be certified,” Stueve says. “The court interpreted the
policy consistent with our claim, which was that the insurance company was not authorized to load those hidden
expenses without the authorization of the policy holder.
It should be no different than if you buy a mutual fund: If
You might say Stueve was bred to take such a case. “My
there’s an expense load, you’re entitled to know about it
before you buy. The bottom line is, a lot of folks don’t realize
they’re getting overcharged.”
Thanks to Stueve and co-counsel John Schirger of Miller
Schirger, those folks got their day in court.
father has been in the life insurance business for 50 years,”
Stueve says. “One of the very reasons my father has sold
An Ensemble Drama
Stueve Siegel Hanson’s Patrick Stueve on his starring role
In February 2016, after six and a half years of litiga-
in Bezich v. The Lincoln National Life Insurance Company BY AMY WHITE
very few of these types of policies is that they get expensive
down the road, and for a lot of folks, even if you don’t add
in the hidden expenses, they become so hard to afford. The
whole idea of people buying these policies is that, theoreti-
cally, they are going to be in place when they die.”
Stueve says Lincoln admitted in discovery that, in addi-
tion to mortality factors, it added administrative and other
expenses into the COI charge. “But they were not able to
identify with any specifics besides ‘other’ expenses,” he says.
tion, an Indiana court granted final approval in Bezich v.
The Lincoln National Life Insurance Company for a $2.25
billion settlement—one of the largest of its kind. As part of
Lincoln’s agreement, the company will issue term life insur-
ance certificates to almost 80,000 policyholders.
“The settlement class included all Ensemble II policyholders in every state except New York and New Jersey,” Stueve
says. “We brought this up to the court. At the time, when
Lincoln issued these policies, they had to be reviewed, and
both New York and New Jersey confronted Lincoln and said,
‘Please confirm COI won’t include expenses.’ … So what Lincoln did was it modified the language in those two states to
explicitly state that, in addition to the mortality factors, that
there could be additional expenses. So they knew darn well
how to draft a policy to authorize these expenses.”
You read complicated legalese
all day. But could an insurance
company pull the wool over your
eyes, too? Stueve says it could
happen to anyone. Before you
sign, do your homework:
“Whenever you are purchasing
a life insurance policy, make
sure, when working with
an agent, you understand
every expense you are being
charged,” Stueve says. Even if it
appears black and white, he suggests having it explained. “Ask, ‘Let’s
go 10 years out—what happens if I’m retired? How am I going to fund
this policy?’ Bottom line: Does the policy fit your long-term plan?”