Toulon v. Continental Cas. Co.

877 F.3d 725 (7th Cir. 2017)

Words & Phrases

Consumer Fraud Act

Trial Judge

Manish S. Shah

Appellate Judge

Williams

Holding

Plaintiff failed to state cause of action for fraudulent misrepresentation, fraudulent omissions, unjust enrichment, or violation of the consumer fraud and deceptive trade practices act in connection with sale of long-term care policy.

Fact Summary

In September 2002, Sophie Toulon applied for a Preferred Solution long-term care insurance policy (the Policy) issued by Continental Casualty Company. Continental provided Toulon with a “Long Term Care Insurance Personal Worksheet,” along with the application, to help her determine whether the Policy would work for her given her financial circumstances. The Worksheet discussed Continental’s right to increase premiums and how such increases had been applied in the past. Toulon decided not to fill out the Worksheet but she signed it and submitted it with her application.

Toulon’s Policy became effective on July 15, 2002 and it stated that although Continental could not cancel the Policy as long as each premium was paid on time, Continental could make changes to the premium rates. But there was a “10-Year Rate Guarantee Rider” which stated that premiums would not be increased during the first ten years after the effective coverage date. In September 2013, more than eleven years after the 2002 coverage date, Continental raised Toulon’s premiums by 76.5%.

In January 2015, Toulon sued Continental, on behalf of herself and all others who had purchased the Policy, claiming that Continental had engaged in a scheme to lure elderly people into purchasing the Policy by offering artificially low premiums for the first ten years and by not disclosing that Continental would raise its rates substantially just at the time when elderly insureds would likely need to make claims. Toulon amended her complaint twice, ultimately asserting claims for fraudulent misrepresentation, fraudulent omissions, unjust enrichment, and violation of the consumer fraud and deceptive trade practices acts of all fifty states and the District of Columbia. Continental moved to dismiss the Second Amended Complaint (the Complaint) under Fed. R. Civ. P. 12(b)(6) for failure to state a claim, and the district court granted the motion.

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