After Ms. Newman turned 67, however, MetLife doubled her premium. MetLife represented that this increase was imposed on a class-wide basis, which it asserted meant all long-term care policyholders, including Reduced-Pay policyholders over the age of 65. MetLife defended the increase by noting that

Ms. Newman still paid half the premium of a Reduced-Pay policyholder who had not yet reached age 65, and far less than she would have if she had not purchased the Reduced-Pay option. Nevertheless, at age 67, Ms. Newman's semi-annual premium jumped to $3,851.80, greater than it has been at any other point during the life of the plan.

Ms. Newman filed a four-count complaint on behalf of herself and a proposed class. She alleged that raising her post-anniversary premium was a breach of the policy, violated the Illinois Consumer Fraud and Deceptive Business Practices Act, and rendered MetLife's representations and practices fraudulent.

The U.S. District Court for the Northern District of Illinois granted MetLife's motion to dismiss for failure to state a claim. In its view, the contract unambiguously permitted MetLife to raise Ms. Newman's premium, even after she reached age 65. This meant also that she had no claim for deceptive or unfair business practices or common law fraud, because MetLife had done nothing wrong.

Ms. Newman appealed to the Seventh Circuit.

The MetLife Documents

MetLife's "Long-Term Care Facts" brochure stated:

Reduced-Pay at 65 Option:

By paying more than the regular premium amount you would pay each year up to the Policy Anniversary on or after your 65th birthday, you pay half the amount of your pre-age 65 premiums thereafter.

At the foot of the same page, the brochure stated that it was only a general overview of MetLife's insurance plans, and that the policy governed the terms of the agreement.

MetLife's 29 page long policy included the following reference to the Reduced-Pay option:

In addition, you have selected the following flexible premium payment option: Reduced Pay at 65 Semi-Annual Premium Amount:

Before Policy Anniversary at age 65 $3231.93

On or after Policy Anniversary at age 65 $1615.97

The first page of the policy stated:

PREMIUM RATES ARE SUBJECT TO CHANGE. 

It also said that:

[a]ny such change in premium rates will apply to all policies in the same class as Yours in the state where this policy was issued. 

In a section titled:

Premiums

, MetLife:

reserve[d] the right to change premium rates on a class basis. 

The circuit court, applying Illinois law, reversed the district court's grant of MetLife's motion to dismiss and remanded for further proceedings.

In its decision, the circuit court found that "[l]ittle" in Ms. Newman's policy elucidated the terms of the Reduced-Pay option. The circuit court observed that the policy offered one illustration with two numbers: Ms. Newman's "before policy anniversary" premium, and her "on and after policy anniversary" premium, and that the first amount was twice the second.

The Seventh Circuit explained that Ms. Newman deduced from this example that upon reaching her 65th birthday, her premium would drop to half of what it was the day before, and that MetLife agreed that this was what the policy said.

The circuit court then rejected MetLife's contention that the only guarantee was that from the policy anniversary following Ms. Newman's 65th birthday onward, her premium would be half that of a Reduced-Pay policyholder who had not yet reached age 65. Instead, the Seventh Circuit decided that Ms. Newman's interpretation – that the policy fixed her post-65 premium at half the amount of her pre-65 premium – was "one reasonable interpretation of its language."

According to the circuit court, the one illustration reproducing the cost of her personal premiums gave no indication whether these were the same premiums that all Reduced-Pay policyholders were paying, and would pay, or if they were particular to Ms. Newman. The circuit court added that "a reasonable reader easily could think" that "on and after" the policy anniversary following age 65, the policyholder (Ms. Newman) would pay half of what she personally was paying prior to that anniversary date.

Finally, the Seventh Circuit rejected MetLife's argument that Ms. Newman's claim had to be dismissed because the policy reserved the right to change premiums.

The circuit court found that "none of the four references in the policy" to MetLife's right to change premiums sufficed to disabuse a reasonable person of the understanding that purchasing the Reduced-Pay option took that person out of the class of policyholders who were at risk of having their premium increased after their post-age-65 anniversary.

The policy, the circuit court concluded, was "at least ambiguous" because it could be read reasonably to fix such a person's premium, if the person had opted for the Reduced-Pay option. That meant that Ms. Newman prevailed on the liability phase of her contract claim.

The circuit court concluded that Ms. Newman also should be permitted to go forward on her other theories.

The case is Newman v. Metropolitan Life Ins. Co., No. 17-1844 (7th Cir. Feb. 6, 2018). Attorneys involved include: For MARGERY NEWMAN, and all others similarly situated, Plaintiff, Appellant: Thomas C. Cronin, CRONIN & COMPANY, LTD, Chicago, IL; Robert R. Duncan, DUNCAN LAW GROUP, LLC, Chicago, IL. For METROPOLITAN LIFE INSURANCE COMPANY, Defendant, Appellee: Steven H. Brogan, Stephen Alan Serfass, DRINKER BIDDLE & REATH, LLP, Philadelphia, PA; Daniel J. Delaney, DRINKER BIDDLE & REATH, LLP, Chicago, IL; Sheldon Eliot Eisenberg, DRINKER BIDDLE & REATH LLP, Los Angeles, CA.