Gough v. Transamerica Life Insurance
2011 U.S. Dist. LEXIS 28407
W.D. Ky.2011Background
- Plaintiffs Michael and Carol Gough hold Equity National Life Insurance cancer policy 01E128866 issued in 1994, predecessor entities now include Life Investors and Transamerica.
- Transamerica allegedly changed its interpretation of “actual charges” in 2006 to pay based on amounts accepted by providers rather than full billed amounts.
- Carol Gough was diagnosed with breast cancer in Nov. 2008, incurring multiple cancer-related charges.
- Transamerica paid $15,168.28 on claims totaling $65,013.38 under the new interpretation.
- Plaintiffs sued Transamerica for breach of contract in Union Circuit Court in Nov. 2009.
- Runyan v. Transamerica Life Ins. Co. culminated in a nationwide class settlement approved Dec. 21, 2009, with notice to over 250,000 class members and an opt-out deadline of June 28, 2009.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Runyan precludes Goughs’ claims | Runyan judgment lacks full faith and credit due to due process concerns | Runyan final judgment should preclude as res judicata | Runyan precludes the Goughs’ claims under res judicata. |
| Scope of collateral review of Runyan’s due process | Due process protections in Runyan were insufficient for binding absent class members | Limited collateral review confirms due process safeguards were met | Court applies limited collateral review and finds due process satisfied. |
| Preclusion under Arkansas law | Arkansas law does not give Runyan preclusive effect | Arkansas final judgment should bind under res judicata | Arkansas law gives Runyan preclusive effect; final judgment binds class members who did not opt out. |
| Gooch v. Life Investors impact on finality | Gooch interlocutory order suspends full faith and credit | Gooch is interlocutory and not final; does not suspend application of 28 U.S.C. § 1738 | Gooch does not preclude application of Full Faith and Credit Act to this case. |
Key Cases Cited
- Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) (due process in class actions; absent class members must be given notice and opt-out)
- Matsushita Elec. Indus. Co. v. Epstein, 516 U.S. 367 (1996) (standard for summary judgment and absence of genuine issues of material fact)
- Hall v. Equity Nat. Life Ins. Co., 730 F. Supp. 2d 936 (2010) (preclusive effect and jurisdiction in Runyan context)
- Hunter v. Transamerica Life Ins. Co., 2011 Ark. 43 (2011) (Arkansas Sup. Ct. on class-action subject-matter jurisdiction under Rule 23(e))