HSBC Urges Approval of Insurance Kickback Class Action Settlement

On Aug. 28, HSBC PLC asked the Colorado federal judge presiding over the insurance kickbacks class action lawsuit to approve the proposed $1.8 million settlement recently agreed upon by the banking company and the Class Members, arguing that if the HSBC class action settlement is not approved, the consumers face the real risk of not receiving any relief.

The plaintiffs, HSBC, Assurant Inc., and Assurant’s subsidiaries jointly filed an unopposed motion for final approval of the insurance kickback class action settlement, which would provide settlement awards to about 11,000 Class Members.

According to the motion, the parties claim that the proposed HSBC class action settlement is fair, as it provides monetary relief that would amount to 90 percent of HSBC’s “kickback” commissions, as well as satisfies all federal rules of procedure for Class notification. Furthermore, because the HSBC insurance kickbacks class action settlement requires a modification of business practices, providing substantial injunctive relief to the Class, the defending parties claim that the deal is adequate.

However, it is important to note that the motion states that the defendants do not have an opinion regarding, and by extension do not approve of, the plaintiffs’ argument that they and the Class counsel are entitled to an award of attorney’s fees and court costs.

The terms of the HSBC class action settlement were agreed upon by the parties back in April of this year, which is approved would settle a two-year-long insurance kickback class action lawsuit claiming HSBC purposefully chose excessive insurance coverage in situations when the bank needed to force-place insurance coverage on certain homeowners whose policies had lapsed. By doing so, HSBC was given and accepted monetary bonuses or “kickbacks” from Assurant, a unit of American Security Insurance Co., according to the HSBC class action lawsuit.

This Colorado based HSBC insurance kickbacks class action lawsuit is not the only complaint the banking company and Assurant are facing. In fact, a similar class action lawsuit has been filed in New York federal court by plaintiffs James and Kimberly Hoover, who claim HSBC imposed force-placed insurance policies featuring loss limits that were allegedly more than the outstanding balance of their home mortgage.

HSBC and Assurant attempted to dismiss this New York HSBC class action lawsuit, but their motion was denied by New York federal judge Mae A. D’Agostino in March of last year, allowing the plaintiffs’ claims of breach of contract, unjust enrichment and violation of New York state consumer protection laws to stand.

In January of this year, the parties involved a joint status report was filed, stating that HSBC and Assurant were close to reaching a class action settlement in the Colorado-based insurance kickbacks class action and may also settle claims in the New York based HSBC class action lawsuit. In April, another status report was filed in New York federal court indicating parties were close to a settlement agreement.

The plaintiffs are represented by Peter A. Muhic, Edward W. Ciolko and Tyler S. Graden ofKessler Topaz Meltzer & Check LLP, and Shanon J. Carson of Berger & Montague, PC.

The HSBC Insurance Kickbacks Class Action Lawsuit is Weller, et al., v. HSBC Mortgage Services Inc., Case No. 1:13-cv-00185, in the U.S. District Court for the District of Colorado. The New York HSBC Class Action Lawsuit is Hoover, et al., v. HSBC Mortgage Corp. (USA), et al., Case No. 3:13-cv-00149, in the U.S. District Court for the Northern District of New York.