Force-Placed Insurance Class Action Cases Get the Go-Ahead from Judge

A number of lawsuits against major banks, alleging that they worked together to overcharge for force-placed insurance, got the green light to continue last Thursday when a judge turned down requests to dismiss them.

Force placed insurance lawsuits have seen a dramatic rise recently as homeowners become more and more aware of the practice.

The Miami-based Chief Judge Frederico A. Moreno of the Southern District Court was responding to a request by some of the U.S.’ major banks and insurance companies to dismiss the cases. The companies claimed, among other reasons, that plaintiffs had broken contract first, that they were not appropriate targets for the lawsuit, and that the cases should be severed and transferred out of state.

The lawsuits were brought after homeowners alleged that they were overcharged for unnecessary insurance and that banks’ relationships with insurance companies, often exclusive, led to abusive practices and manipulation of the market. They also allege commissions given for directing insurers to providers were, in reality, kickback payments.

Force placed insurance lawsuits have seen a dramatic rise recently as homeowners become more and more aware of the practice, as well as the possibility of compensation, often through class action filings. Banks affected include Bank of America, JPMorgan Chase, HSBC USA, Citibank, and Wells Fargo, as well as their subsidiaries. Insurance companies are also listed as defendants in the ongoing case– and on Thursday Judge Moreno denied motions from Assurant Inc and QBE Insurance Group, and their subsidiaries, to dismiss the motion. Assurant had asserted that as a holding company it was not a legitimate target for the lawsuit, never having sold or underwritten policies itself – an argument that held no sway in the court, as Judge Moreno stated he intends to both understand better the relationships between the various companies, and ensure the case moves quickly.

The cases mentioned here are Cheryl Hall v. Bank of America, N.A., et al., case number 1:12-cv-22700, Ira Marc Fladell, et al. v. Wells Fargo Bank NA, et al., case number 0:13-cv-60721, Javier Lopez, et al. v. HSBC Bank USA NA, et al., case number 1:13-cv-21104, Alfred Herrick, et al. v. JPMorgan Chase Bank NA, et al., case number 1:13-cv-21107, and Matthew Popkin et al. v. Citibank NA et al., case number 0:13-cv-60722, in the U.S. District Court for the Southern District of Florida.