## Facts

- Margery Newman bought a MetLife long-term-care insurance policy at age 56 and chose a “Reduced–Pay at 65” premium option.
- A pre-sale brochure stated that by paying more than the regular premium before age 65, the insured would “pay half the amount of your pre-age 65 premiums thereafter,” and also stated the policy controls the agreement’s terms.
- The issued policy listed Newman’s selection of the Reduced–Pay at 65 option, set premiums at $3,232 per year before age 65 and $1,616 thereafter, and reserved MetLife’s right to change premiums “on a class basis,” without defining “class.”
- Newman paid $3,232 annually until age 65 and then $1,616; after she turned 67, MetLife increased her premium to $3,852.
- MetLife asserted the increase reflected a class-wide rate increase applicable to long-term-care policyholders, including Reduced–Pay at 65 insureds.
- Newman sued for breach of contract and for deceptive and fraudulent conduct under Illinois consumer-fraud and common-law theories based on MetLife’s marketing of Reduced–Pay at 65 and the later increase.
- The district court dismissed under Rule 12(b)(6), holding the policy unambiguously permitted the increase; Newman appealed.

## Issues

1. Whether Newman plausibly alleged breach of contract where the Reduced–Pay at 65 materials indicated a post-65 “half premium” thereafter, but the policy also allowed premium changes on an undefined “class basis.”
2. Whether Newman plausibly alleged Illinois consumer-fraud and common-law fraud claims based on marketing representations about Reduced–Pay at 65 and the subsequent premium increase.

## Decision

- Reversed the dismissal and remanded for further proceedings.
- Held dismissal was premature because the complaint plausibly alleged entitlement to relief.
- Concluded the complaint’s allegations supported proceeding on the contract claim, including liability, given the interaction between Reduced–Pay at 65 representations and the undefined “class basis” premium-change provision.
- Held the consumer-fraud and common-law fraud claims were sufficiently pleaded to survive Rule 12(b)(6).

## Legal Principles

- At the Rule 12(b)(6) stage, a claim survives if the pleaded facts plausibly support entitlement to relief; courts may not resolve disputed interpretations where the contract terms are reasonably susceptible to more than one meaning.
- An insurer’s reserved right to change premiums “on a class basis” may be ambiguous if “class” is undefined and the provision’s interaction with a specialized premium option is unclear.
- Marketing materials, even with general disclaimers, may inform the plausibility of an insured’s interpretation and reasonable understanding of the bargain when evaluated alongside policy language at the pleading stage.
- Allegations identifying specific representations, reliance, and resulting economic harm can sufficiently plead consumer-fraud and common-law fraud theories to proceed past dismissal.

## Conclusion

The Seventh Circuit held that Newman plausibly alleged that MetLife’s post-65 premium increase could breach a Reduced–Pay at 65 bargain when the policy’s “class basis” rate-change term was undefined, and that her related consumer-fraud and fraud claims were adequately pleaded; the case was remanded for further proceedings.


Newman v. Metropolitan Life Ins. Co., 885 F.3d 992 (7th Cir. 2018)