Teachers’ class action complaint goes federal

Published 10:22 pm Monday, April 23, 2018

A class action complaint against American Fidelity Assurance filed on behalf of several teachers in Dallas County has made its way to federal court.

The complaint, which was filed in February, by Birmingham attorney Stephen Wadsworth, lists five teachers in Dallas County and one in Montgomery County.

“It was removed from Dallas County to federal court, and it’s now in the Southern District of Alabama,” Wadsworth said.

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Four of the six teachers listed in the complaint can be found on the Selma City Schools employee directory. The complaint alleges American Fidelity, which specializes in auto, education, municipality and healthcare insurance, sold teachers “new policies through a series of fraudulent statements and omissions.”

“The new policies were inferior to the old ones in that they provided no long-term care coverage,” the complaint reads. “American Fidelity did not provide information to plaintiffs which would have allowed them to make an informed decision under Alabama law.”

The complaint alleges nearly 500 teachers were “deceived” by American Fidelity. According to the complaint, when the teachers purchased new policies that did not have long-term care, it cancelled “$20 million worth of Fidelity Life Policies worth up to $60 million in long-term care.”

“Essentially, these policies pay off a couple of different ways. It could pay off in terms of life insurance, or it could pay off in terms of covering nursing home, assisted living and other expenses like that,” Wadsworth said. “It’s a life insurance policy that could be converted to long-term care if you require long-term care.”

According to Wadsworth, the alleged fraud took place over the last year.

“We’re hoping to make the teachers whole,” Wadsworth said. “We’re hoping to put them in the position they were in before the sale, before the fraud.”

The complaint states American Fidelity did not tell the teachers purchasing new policies that it would cancel their original policies, which included the long-term care.

“American Fidelity did not reveal to the plaintiffs that purchasing their policy would cause the plaintiff’s Fidelity Life policies to be cancelled,” the complaint reads. “In most cases they told them they were replacing the policies but did not indicate on the application that it was a replacement or complete the required replacement paperwork.”

Wadsworth said it is still early in the process, and he is hoping the complaint makes it past a motion to dismiss, so it can move forward.

“After the motion to dismiss is decided, normally at that point, you go into discovery. You start taking depositions. You receive documents. That’s the next step in litigation after a motion to dismiss,” he said.

The motion to dismiss, according to Wadsworth, was filed by attorneys representing American Fidelity. Phone calls to American Fidelity seeking comment on the complaint have not been returned.

“We’re still just trying to feel out where we are and figure out where the defendants and the judge want to go with this and how we want to treat it,” he said.

“We’re committed to this case and look forward to bringing it, we hope, to a speedy and successful resolution.”