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Days before a hearing on a controversial consumer class action settlement, the New Mexico lawyer representing the class backed out of the deal. In court papers filed on Feb. 19, Santa Fe, N.M., sole practitioner George Gary Duncan withdrew his support. He disclosed that more than 500 class members, current and former customers of Massachusetts Mutual Life Insurance Co., objected to the proposed settlement, which would have provided no money for class members but millions in fees for Duncan. Wilson v. Massachusetts Mutual Insurance Co., No. 9802814 (N.M. Dist. Ct., Santa Fe Co.) [NLJ, Feb. 19]. By repudiating the deal, Duncan avoided what would likely have been a highly contentious Feb. 26 hearing on the settlement’s fairness. His action set up a possible trial later this year. The suit is based on MassMutual’s practice of charging a finance fee to customers who pay their life-insurance premiums in installments rather than at the first of the year. The settlement would have required MassMutual to disclose the annual percentage rate of the charges, which Duncan claims range from 4.3 percent to 21.5 percent, depending on such things as the payment frequency. SEVERAL CLASS ACTIONS The Wilson lawsuit is one of at least a dozen nationwide class actions in New Mexico, each targeting a single insurer also offering installments. Other insurers charge rates ranging from 15 percent to 40 percent, according to Duncan, who is counsel only in the MassMutual case. The failed settlement called for MassMutual to disclose the annual percentage rate to current and future policyholders. But it provided no money for class members and no benefit at all for an estimated 5 million former MassMutual customers. And the settlement set Duncan’s fees at $5 million, plus a $3 million life insurance policy and a $250,000 lifetime annuity. Duncan has defended the failed deal, claiming the proposed change in MassMutual’s policy is more valuable than any cash benefit he could have negotiated. He said he had hoped the settlement would force the rest of the life insurance industry to disclose its rates to consumers. If Duncan is unable to reach a revised deal, he plans to try the case. Trial is tentatively set for December. A MassMutual spokesman declined to comment.

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