Seven Conseco Life Insurance policyholders prevailed against the odds and were granted national class action status for their lawsuit against the Indiana company.

Law.com reports that at an October hearing in San Francisco, the U.S. District Court granted the class certification, a relatively rare accomplishment in cases involving financial products.

Policyholders plan to frame their argument against Conseco as a breach of contract rather than as fraud.

Judge Susan Illston approved the national class, but denied a request from the plaintiffs for a subclass to consist of California residents.

The policyholders are alleging that the life insurance company breached approximately 10,000 LifeTrend insurance policies. The policies were sold nationally in the 1980s and 1990s. The plaintiffs list several alleged contract violations, including inappropriate deductions from customer accounts and improper policy rate hikes. The result, they say, were losses of thousands of dollars per LifeTrend customer.

According to attorneys for the policyholders, they decided on breach of contract claims rather than fraud because the latter can become entangled in countless case-specific details and sometimes conflicting state laws. Breach of contract claims, on the other hand, are understood in much the same sense across the country, regardless of in which state the breach may occur.

Conseco vigorously contested the request for national class status, saying there were too many variations in state contract laws to treat the policyholders as a class.

Illston disagreed, writing that “contrary to Conseco’s representations, several courts have recognized that the law relating to the element of breach does not vary greatly from state to state.”

She noted that the hearing was a first step; plaintiffs’ claims have yet to be aired at trial, where they can be rejected or accepted.

Source: Law.com: “National Class Action Status Granted in Conseco Life Insurance Case”: October 26, 2010