PIERRE, S.D. The South Dakota Supreme Court remanded a suit against CUNA Mutual Group and Black Hills FCU regarding credit life disability back to a lower court and said the case can be handled as a class action.
The lawsuit alleges the credit union and CUNA Mutual improperly raised credit disability rates without sufficient notice to borrowers/members of the credit union.
A trial judge ruled the lawsuit could not be handled as a class action. But the South Dakota Supreme Court said there is no evidence that handling the case as a class action would harm the interests of any of the more than 4,400 borrowers involved.
The high court also said issues related to whether borrowers waited too long to sue can be handled in a class action.
CUNA Mutual downplayed the state high court’s ruling. “The court’s decision today deals only with the manner in which this lawsuit will proceed,” said Phil Tschudy, spokesman for the credit union insurer. “The lawsuit involves a rate and plan change to Black Hills FCU’s group credit insurance policy that occurred in 1999. The plaintiff contends we did not give proper notice of the change to insured members. We strongly disagree with that contention.”
“The group policy provides that the rate and plan may change from time to time and that we will give written notice to insured members,” said Tschudy. “Insured members were notified of the premium change more than a month prior to the increase and, as always, the charge for the insurance was reflected in insured members’ monthly account statements. CUNA Mutual Group maintains the allegations in the lawsuit are without merit.”
The credit union members who are suing say people who borrowed money and bought the disability insurance before July 1, 1999 had been told they would be notified before any premium rate was increased. The lawsuit alleges that a quarterly advertising newsletter sent to credit union members contained a notice that said the insurance terms would change and premium rates would increase on July 1, 1999, but few people would be able to understand the change would double the amount they would pay for the insurance.
The state Division of Insurance told CUNA Mutual it had acted illegally because the newsletter notice did not comply with requirements.
Court documents indicate credit union officials were surprised when they discovered the insurance change had substantially increased the amount borrowers had to pay over the life of their loans.
The credit union and insurance company argue that the borrowers waited too long to sue because state law requires such claims to be made within six years of an alleged wrong. The borrowers contend they can still sue because they have six years to file after they discovered the wrong.
