$5.6M Midland National Class Action Settlement Proposed in Annuity Fraud Case

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Retirement investors who accuse Midland National Life Insurance Co. of deceiving them about the terms of annuity products asked a federal judge Thursday to preliminarily approve a $5.6 million class action settlement over annuity fraud allegations.

The proposed Midland National Life Insurance class action settlement will resolve allegations regarding various Midland fixed deferred annuity products sold in California. Plaintiffs allege, among other things, that Midland made misrepresentations of “bonuses” and “growth” with respect to its annuity products but failed to disclose that it shifted the cost of bonuses and high sales commissions back to purchasers through lower interest and index credits over time.

Plaintiffs further allege that Midland National misled them about the surrender value, or how much of the money the company would hold onto, if they sought to redeem the annuities before their maturity.

The judge handling the Midland National class action lawsuit certified most of their counts on Feb. 12, 2014, according to the May 15 motion requesting preliminary approval of the class action settlement.

If the judge signs off, Midland would set aside $5.5 million dollars in funds for two types of subclasses and, as a result, will admit no wrongdoing regarding the allegations of annuity fraud. According to the terms of the Midland National class action settlement deal, $3.5 million will go to repaying annuity holders aged 60-64 who were subject to a surrender charge, and a further $2 million to those who were 59 or younger at the time that they were looking to stop their variable annuities.

The Midland variable annuities include those sold to Californians under the age of 65 named Bonus 5, Bonus 10, Bonus 11, Legacy Bonus 5, Legacy Select, Legacy Bonus 11, and Veridian Plus deferred annuity products.

Class Members will automatically receive payments under the Midland National Life Insurance class action settlement “without the burden” of having to file a claim, the motion states.

Plaintiffs’ counsel also notes in the motion that the awards from the class action settlement would be similar to those achieved in similar actions regarding these financial instruments.

Plaintiffs are requesting preliminary approval of the Midland National Life Insurance class action settlement at a June 2 hearing. They’re proposing that Class Notices be mailed 21 days after the preliminary approval order, and that Final Fairness Hearing be held Sept. 22 or as soon thereafter as the Court is available.

The putative class is represented by class action attorneys Ronald A. Morris and Beatrice Skye Resendes of The Law Offices of Ronald A. Marron, and Jully C. Pae, Robert S. Gianelli and Joshua S. David of Gianelli & Morris ALC.

The Midland National Annuity Fraud Class Action Lawsuit is Rosalie Vaccarino, et al. v. Midland National Life Insurance Co., et al., Case No. 11-cv-25858, in the U.S. District Court for the Central District of California.