In the late 1990’s and early 2000’s there was a cottage industry of life insurance sales practice litigation in Mississippi. The cases were commonly referred to as “vanishing premium” cases because most plaintiffs alleged that the selling agent promised that premiums would vanish in a set number of years, but didn’t.
To a large extent the Court’s opinion in Stephens v. Equitable, 850 So. 2d 78 (Miss. 2003) killed vanishing premium litigation in Mississippi. Stephens held that the policy contract was inconsistent with the vanishing premium sales pitch so that the statute of limitations began running when the plaintiff bought the policy–usually years before suit was filed. After Stephens, many cases were either dismissed under the statute of limitations or settled cheaply.
On December 11, 2008 the Court reversed the Court of Appeals and retracted from Stephens in Wilbourn v. Equitable. The Court agreed with Judge Chandler’s dissent in the Court of Appeals that argued that Stephens was distinguishable. Judge Chandler observed that the statute of limitations analysis was complex and not susceptible to being decided based on a selective quotation of the policy. The Court agreed and replaced a bright line analysis under Stephens with a murky, fact intensive analysis under Wilbourn.
It remains to be seen whether Wilbourn will revive sales practice litigation in Mississippi. But one thing is certain. Between 2003 and 2008 many cases were dismissed under Stephens that would not have been dismissed under Wilbourn.