$300M Chase Force-Placed Insurance Class Action Settlement Gets Final OK

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A federal judge on Friday granted final approval to a $300 million class action settlement with JPMorgan Chase NA and Assurant Inc. over claims that the lender and insurance company overcharged customers for force-placed hazard insurance, which they used to fund kickbacks.

U.S. District Judge Federico Moreno said that the class action settlement agreement is a good deal for the plaintiffs because it is likely that they would not have prevailed had they pursued a trial, according to how other similar class action lawsuits over force-placed insurance have turned out.

“Many of the claims presented by plaintiff were highly complex, and there is strong authority to suggest that plaintiff may not have prevailed,” Moreno said in his Feb. 28 decision. “There exists a potential that the class could endure a long and expensive trial only to come away with nothing that is impossible to ignore.”

“In the face of these headwinds then, the settlement is favorable one,” Moreno added.

The JPMorgan Chase force-placed insurance settlement is for all nationwide borrowers who had an insurance policy force-placed on their residential property from Jan. 1, 2008 and Oct. 4, 2013, and were charged a premium for the insurance costs by Chase.

Moreno says that the estimated Class is comprised of 762,390 individuals. Class Members will have to submit a valid Claim Form and will receive 12.5 percent of the net premium charged to them, less any refund they have already received.

The Settlement Administrator for the JPMorgan Chase class action settlement is Garden City Group, which has set up both a website and a 24/7 toll-free phone number that Class Members can use for submitting a claim. [See detailed claim filing instructions here.] Class Members were also sent notification about the class action settlement in the mail, and a notice was published in the print edition of the USA Today on Nov. 14, 2013.

The class action lawsuit settlement also provides for $650 million in injunctive relief. Both Chase and Assurant will not be allowed to inflate premiums imposed on borrowers for six years. During that period, Chase will not accept financial interest in the placement of force-placed hazard insurance policies “outside of the premium itself and the protection of the policy.”

Chase is also prohibited from taking commissions on force-placed hazard insurance. And Assurant is prohibited from paying commissions to Chase for force-placed hazard insurance.

The defendants will also have to pay $20 million in attorneys’ fees as part of the settlement, which is seven percent of the total settlement amount, which is low compared to the 20 to 30 percent that attorneys typically claim.

Moreno gave the Chase force-placed insurance class action settlement preliminary approval in October 2013.  A Final Fairness hearing took place on Feb. 14.

The class action lawsuit was brought because Chase required, as part of their mortgage loans, that their customers purchase hazard and wind insurance on their property, and if there was a lapse in coverage, the agreement said that Chase could “force insurance coverage on the property at the homeowner’s expense.”

The plaintiffs do not take issue with Chase asking customers to cover forced placed insurance, but claim that Chase and Assurant colluded together to charge inflated premiums and paying themselves kickbacks through commissions, inexpensive administrative services and questionable reinsurance agreements with bank affiliates.

A group of Class Members objected to the JPMorgan Chase force-placed insurance class action settlement in January 2014, saying it unfairly requires Class Members to submit Claim Forms in order to get relief, a requirement that is an “unnecessary impediment to recovery.”

Class Members will have until 60 days after the Final Settlement Date to submit their claims in order to seek money from the class action settlement. Since the settlement was approved on Feb. 28, the estimated Claim Form deadline is April 29, 2014. The exact deadline will be posted at www.SaccoccioSettlementInfo.com when the Settlement Administrator updates the website.

The objecting plaintiffs are represented by Edward W. Ciolko, Peter A. Muhic, Donna Siegel Moffa and Amanda R. Trask of Kessler Topaz Meltzer & Check LLP, by Brad Seidel and Christopher Johnson of Nix Patterson & Roach LLP, by Tod Aronovitz of Aronovitz Law, by John A. Yanchunis of Morgan & Morgan Complex Litigation Group, and by Brian D. Penny of Goldman Scarlato Karon & Penny PC.

The Florida plaintiffs are represented by Adam M. Moskowitz, Harley S. Tropin, Tucker Ronzetti, Rachel Sullivan and Robert J. Neary of Kozyak Tropin & Throckmorton PA; Aaron S. Podhurst and Peter Prieto of Pdhurst Orseck PA and by Lance A. Harke, Sarah Clasby Engel and Howard M. Bushman of Harke Clasby & Bushman LLP.

The JPMorgan Chase Force-Placed Insurance Class Action Lawsuit is Salvatore Saccoccio, et al. v. JPMorgan Chase Bank NA, et al., Case No. 1:13-cv-21107, in the U.S. District Court for the Southern District of Florida.