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Law360 (November 6, 2020, 9:03 PM EST ) Geico Casualty Insurance Co. urged an Illinois federal judge on Friday to toss a proposed class action accusing it of overcharging existing customers despite reduced vehicle use during the coronavirus pandemic, saying it has been fully transparent about a giveback program the insurer voluntarily provided to policyholders.
Geico auto policyholders Roxanne Thomas and James Thomas sued the insurer on July 29, alleging that it's charging "grossly excessive" premiums as fewer people drive during state-mandated closures that began in spring.
The case was removed to federal court on Monday, and Geico said Friday that it should be dismissed, arguing it breached no terms of any of the customers' insurance policies and that it was under "no contractual, statutory, or regulatory duty to make any 'giveback' at all."
"Geico never made a false or deceptive statement about the giveback program. It offered and gave a 15% discount, and provided a "giveback estimator" for policyholders to view their discounts to the dollar," the insurer said in its dismissal motion on Friday. "No reasonable policyholder would have understood the discount to be anything other than 15% for future policy periods."
The Illinois Consumer Fraud and Deceptive Business Practices Act claim fails, because while it's based on Geico's representation that the discount is "fair and reasonable" and on the company's alleged concealment that the giveback program "compares unfavorably to the COVID-19 premium relief offered by all or substantially all other Illinois auto insurers," Geico's statements were true, it said.
The insurer argues it has no duty to advise customers or potential customers that other businesses have different prices under Illinois law.
"Jewel-Osco does not have a duty to disclose whether its price for a gallon of milk differs from other grocery stores. A Citgo station does not have a duty to advertise its competitors' prices for a gallon of gas," Geico said. "Plaintiffs cannot say that Geico owed plaintiffs a fiduciary duty."
With no false statement at issue, the unjust enrichment claim must also be dismissed, the company said.
Geico also urged the court to toss the Thomas' common-law fraud claim and their bad faith breach-of-contract claim.
They can point to no term in the insurance policy that was allegedly breached, or any term in the insurance policy that confers discretion that was allegedly exercised by Geico in bad faith, Geico said. And there's no justifiable reliance to support the fraud claim, Geico said, saying insurance rates are set in a competitive market and consumers can feel free to shop around.
"Nothing kept plaintiffs from looking at other insurance rates on offer. Plaintiffs do not plead that they did (or did not) look at other auto insurers' rates. Pleading that Geico's giveback program 'compares unfavorably' to others' programs simply begs the question as to whether plaintiffs knew this, and, if not, why," the insurance company said.
Geico Casualty Co. was hit with the proposed class action in Illinois state court in late July before it was served on the complaint in early October.
"Vehicle miles" from Illinois residents dropped by 65% from March to April, the customers said, citing data from the Consumer Federation of America. Many insurers have offered more relief to their policyholders, such as State Farm, which gave a 25% premium credit to auto policyholders from late March to late May, according to their complaint.
But Geico only offered the 15% premium credit to policyholders who are willing to renew the policies, with no relief for Illinois auto policies that are currently in place, they added.
According to the suit, Geico said on its website on June 8 that it would offer a 15% premium credit for policies renewed from April 2020 to April 2021.
Representatives for the parties could not be immediately reached for comment.
The policyholders are represented by Antonio M. Romanucci and David A. Neiman of Romanucci & Blandin LLC and John S. Spadaro of John Sheehan Spadaro LLC.
Geico is represented by Lisa T. Scruggs, Ronald M. Lepinskas, and Damon N. Vocke of Duane Morris LLP.
The case is Thomas et al. v. Geico Casualty Insurance Co., case number 1:20-cv-06453, in the U.S. District Court for the Northern District of Illinois.
--Additional reporting by Daphne Zhang. Editing by Nicole Bleier.
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