Superior Court upholds finding that insurance companies violated consumer protection law

By Chandra Lye | Oct 9, 2018

PITTSBURGH - The Superior Court of Pennsylvania has rejected an appeal from insurance companies in a case that found they “deceitfully profited” in a business dealing.

Ameriprise Financial, Riversource Life Insurance Co. and Robert Kovalchick were sued by Gary and Mary Gregg after the couple purchased life insurance from the defendants. 

Despite the Court of Common Pleas of Allegheny County issuing an order for the companies to reimburse the Greggs for what they invested and cover their legal fees, the defendants appealed. 

“The trial judge held the insurance companies in violation of the ‘catchall’ provision of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL),” the court decision stated.

The case dates back to 1999 when Kovalchick solicited the Greggs to become his clients. He had known the couple through his dealings with Gary Gregg’s mother. 

As he assessed their financial situation, the couple told him they had seven Prudential life insurance policies that had a combined value of $121,000. 

“Mr. Kovalchik advised the Greggs to liquidate their $121,000 Prudential polices, so he could place the assets into IDS Life Insurance, a corporation that the appellant insurance companies eventually acquired,” the court decision noted. “Mr. Kovalchik also recommended that they surrender their existing IRAs and use those funds to purchase IRAs through IDS.”

They followed his recommendations and bought into the IDA life insurance and IRAs.

However, in January 2001 they received a class action notice and, assuming the companies did something illegal, they sued. 

“The trial judge then awarded $52,431.29 in UTPCPL damages to the Greggs. The judge arrived at that figure by refunding the premium that the Greggs had paid to the insurance companies, plus 6 percent interest, minus the $12,151.13 that the insurance companies had already paid the Greggs in September 2012,” the court decision stated.

“He also ordered the insurance companies to pay the Greggs’ legal bills and costs of $69,421.26 and $12,065.88, respectively,” according to the court decision. 

“We conclude that the insurance companies’ assertions of res judicata and collateral estoppel fail the first step of their respective tests. Common law misrepresentations and UTPCPL catchall violations present distinct legal issues. Thus, the trial judge properly made a separate finding of fact under TAP, and the insurance companies’ first appellate issue lacks merit."

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