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Weber v. Government Employers Insurance Co.

August 11, 2009

ELIZABETH WEBER, ET AL., ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
GOVERNMENT EMPLOYERS INSURANCE COMPANY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Simandle, District Judge

MEMORANDUM OPINION

This matter is before the Court upon Plaintiff's unopposed motion for class certification and final approval of the proposed settlement in this class action [Docket Item 112] and Plaintiffs' application for approval of attorneys' fees and reimbursement of costs [Docket Item 113]. THIS COURT FINDS AS FOLLOWS:

1. In this putative class action, Plaintiffs, on behalf of themselves and all others similarly situated, allege that Defendants Government Employees Insurance Company, GEICO Casualty Company, GEICO Indemnity Company, and GEICO General Insurance Company (collectively, "GEICO") failed to comply with N.J.S.A. 39:6A-4.3, which requires that insurance companies selling "standard automobile liability insurance" policies in New Jersey disclose and obtain written consent from consumers for sales of policies providing personal injury protection ("PIP") expense benefits in an amount less than $250,000. Under New Jersey's Automobile Insurance Cost Reduction Act ("AICRA"), N.J.S.A. 39:6A-1.1 to -35, insurance providers are required to give consumers written "notice that election of a lower benefits option, in consideration of a reduced premium, denies eligibility for the $250,000 of benefits formerly mandated," and a consumer's election of such a lower benefits option must be "affirmatively chosen in writing." Britten v. Liberty Mut. Ins. Co., 389 N.J. Super. 556, 559-60 (N.J. App. Div. 2007). Plaintiffs allege that GEICO failed to provide such notice to the members of the proposed class.

2. After considerable discovery and litigation, and following extensive arm's-length negotiations, the parties to this dispute reached a settlement agreement (the "Settlement Agreement"). The Settlement Agreement defines the Settlement Class as the named Plaintiffs (Elizabeth Weber, Patricia Pacheco, Donna Cobbs, and Sandra Rodriguez) plus all natural persons:

(1) who were issued a New Jersey Standard Automobile Liability Insurance Policy by a GEICO entity during the Class Period [between August 16, 2004 and October 1, 2008];

(2) whose policy indicated personal injury protection medical expense ("PIP") coverage limit of less than $250,000, and for whom GEICO did not possess a signed Coverage Selection Form ("CSF");

(3) who submitted PIP claim(s) in excess of $10,000 to GEICO during the Class Period; and

(4) whose PIP coverage limit has not already been reformed in writing by GEICO to reflect the statutory maximum of $250,000.

(Galpern Decl. Ex. 1 at 3.) This class includes 975 persons.

3. Under the terms of the parties' Settlement Agreement, GEICO established a program by which to handle the claims of Settlement Class members, pursuant to which class members would be compensated for medical expenses in excess of the limits provided by their insurance policies, up to $250,000, "consistent with terms of the insurance policies, as reformed, New Jersey PIP law, and GEICO's usual claims handling procedures." (Galpern Decl. Ex. 1-C at 2-3.) In order to participate in this program, Settlement Class members were required to submit a claim form to GEICO within the ninety-day period following the Court's preliminary approval of the Settlement Agreement, that is, by July 10, 2009, (Galpern Decl. Ex. 1-B at 4); class members who did not file their claims within this claim period would be unable to recover under the terms of the settlement and will be deemed to release all claims, known and unknown, against GEICO that have been asserted in this class action. See Settlement Agreement § 11.1.

4. On March 29, 2009, this Court entered an Order Preliminarily Approving Settlement [Docket Item 109], which, inter alia, directed Class Counsel to provide notice of the class action settlement to the class members (thereby initiating the ninety-day claims period, supra) and which scheduled the fairness hearing for final approval of the settlement for August 10, 2009. On July 30, 2009, Defendants filed upon the Docket the Affidavit of Jose Fraga, Senior Director of Operations of the Claims Administrator in this matter, attesting to the Claims Administrator's efforts to provide notice to the 975 class members. (Fraga Aff. at 1.) Of the 975 class members, the Claims Administrator successfully provided notice to approximately 950, but was unable to provide notice to twenty-one. (Id. at 2.) "As of the July 10, 2009 cut-off date established by the March 23 Order, a total of 90 claims out of the 975 Settlement Class Members were received from Settlement Class members other than the 3 named representative[s] -- a participation rate of approximately ten percent of the Settlement Class." (Galpern Decl. ¶ 17.)

5. The Fairness Hearing for final review of the settlement herein was originally scheduled to take place on August 10, 2009. At the August 10, 2009 hearing, the Court expressed to counsel for Plaintiffs and Defendants that it harbored concerns over the low percentage of class members who had filed claims in order to participate in the settlement. The Court was concerned that an absent class member, through inadvertence or confusion, would, along with 90 percent of the other class members who failed to file a claim by the July 10, 2009 deadline, suffer the extinguishment of a viable claim for PIP benefits payable through participating in this settlement. Because the proposed class consists of many individuals who have incurred thousands of dollars in unreimbursed medical expenses, the consequence of an inadvertent failure to file a claim by the due date would be especially severe in this particular class action, since their right to pursue such benefits in the future under the terms of this agreement would be foreclosed. For the reasons that follow, the Court will order that a second and final notice of the settlement, with an additional thirty-day window for class members to file claims with GEICO and thus participate in the proposed settlement, be provided to the class members who did not file claims within the initial claims period.

6. In the context of a motion seeking approval of a class action settlement, the "District Court retains the ultimate responsibility for the protection of class members." In re Cendant Corp. Prides Litigation, 233 F.3d 188, 194 (3d Cir. 2000) (internal quotations and citations omitted). The Court of Appeals has made clear that district courts may exercise their equitable powers, as well as the powers ...


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