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Barely five months after it agreed to pay $51 million to settle complaints that it had overcharged black policyholders, Life Insurance Company of Georgia is facing a class action in state court. The plaintiffs claim that Life of Georgia reaped millions in profit for decades by charging black customers higher premiums than it charged white people. Premium payments sometimes exceeded the face value of the policies on the holder’s death and the company frequently refused to pay death benefits on the policies, according to the complaint. Charles A. Mathis Jr. of Savannah, Ga.-based Mathis & Adams, and David F. Walbert and Kimberly Althuis of Atlanta-based Parks, Chesin, Walbert & Miller are seeking class status in the case, which has 15 named plaintiffs. The complaint charges Life of Georgia with theft by taking, theft by deception, violating the state Racketeer Influenced and Corrupt Organizations Act, bad faith and breach of contract. The plaintiffs are seeking compensatory damages, triple damages, punitive damages and other remedies. Cummins v. Life Insurance Company of Georgia, No. 02VS036258G (Fult. St. Aug. 2, 2002). ‘HIGHWAY ROBBERY’ Walbert called Life of Georgia’s practice “highway robbery” and said he was “amazed — astonished that this went on until very recently.” The complaint alleges that “from at least the early 1900s to the present, Georgia Life engaged in and profited from a systematic pattern and practice of racial discrimination in the sale, servicing and administration of its Policies.” “[A]t all times Georgia Life and its agents targeted a disadvantaged segment of the population that was uninformed with respect to insurance and related financial dealings or affairs, and was ill-equipped to understand the unfamiliar and technical language of the Policies,” the complaint alleges. The company also failed to pay death benefits, knowing that collection would not be cost-effective, the suit alleges. The plaintiffs also claim that the class can extend back for decades because, due to Georgia Life’s concealment of the system, the statute of limitations has been suspended. Representatives for Life of Georgia, which is now part of Dutch financial conglomerate The ING Group, did not return phone calls for this story. According to its Web site, Life of Georgia has more than $619 million in annual revenue and representatives in 10 Southeastern states. The company has more than $15 billion of life insurance in force. The late Rankin Smith Sr., whose family owned a majority interest in the Atlanta Falcons until recently, was president of the company from 1970 to 1978. In 1979, the company was acquired by Nationale-Nederlanden N.V., which later became ING Group. POLICIES MARKETED TO POOR Historically, insurance companies marketed their “industrial life” or “burial” policies mostly to poor people. Agents sold them door to door and collected premiums weekly, biweekly or monthly. Some companies had different mortality tables for black and white customers. If the tables showed higher mortality rates for blacks, the companies used the figures to justify charging them higher premiums. Life of Georgia was founded in 1891 to fulfill the needs of “the working-class black people of the South,” according to the company’s Web site. NAACP Legal Defense and Education Fund Assistant Counsel Robert H. Stroup said that although it’s rare now for insurance companies to discriminate, suits continue to be filed because companies continue to benefit from past discriminatory practices. “A significant number of companies have continued to collect on the higher race-based premiums,” he said. The plaintiffs in this suit make the same charge. “Where level premiums were originally based on racially discriminatory pricing, such disparate pricing remains within the Policies today,” Mathis wrote in the complaint. “Georgia Life continues to reap the profits of its prior discriminatory practices. Thus, Life of Georgia’s discrimination persists today even if it establishes that it has ceased issuing new Policies based on overt discriminatory-based pricing.” These cases rarely are resolved in the courts, Stroup said. Most companies faced with similar suits reach settlements with the plaintiffs. EARLIER COMPENSATION In the case of Life of Georgia, the company already has paid one settlement related to allegations of past discrimination. In 2000, after participating in a $206 million settlement of similar charges against American General Life and Accident Insurance Co., Georgia Insurance Commissioner John W. Oxendine announced an investigation of Life of Georgia. That “market conduct investigation” ended in February, when Oxendine announced the $51 million settlement to policy holders nationwide. Life of Georgia also agreed to a $4 million fine. According to the commissioner’s office, the settlement affects 2.5 million policies, 677,000 of which are in Georgia. Those who qualify for benefits include black people who bought “upside down” policies from Life of Georgia or Southland Life Insurance Co., and those who bought substandard policies from either company. An upside-down policy is one in which the premium payments exceed the policy’s face value. Oxendine said the settlement makes sense because Life of Georgia had several possible defenses. Among them was its practice of determining risk based on socioeconomic status rather than race. The commissioner said it’s not the government’s job to assess punitive damages. “We’re looking to make the consumer whole more than anything else,” he said. A ‘SWEETHEART DEAL’ Walbert called the Oxendine settlement, which was reached in the context of a complaint in federal court in Tennessee, “the most extraordinary sweetheart deal” for the insurance company. He added that it has nothing to do with this class action, which the plaintiffs are bringing exclusively under Georgia law. “It shouldn’t have any effect on our ability to assert our claims in Georgia,” he said. Walbert said his clients are not bound by any settlement the insurance commissioner has struck with Life of Georgia. The insurance commissioner’s deal with Life of Georgia doesn’t go nearly far enough, Walbert claimed. The company doesn’t come close to disgorging the value of what it took from minority policyholders under false pretences, “which is nuts,” he said. “The defendant is being allowed to keep its ill-gotten gains,” Walbert said. “That’s just not right.”

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