Mass Tort brief
Shields Up for Small Business as Courts Curb Class Action Fees
Knesset committee reforms shield small merchants from nuisance class actions, while judges slash fees on non-cash voucher deals and insurers settle nursing coverage disputes.
Mass Tort
Lawmakers are neutralizing a lucrative legal shakedown model — serial class actions can no longer target small shopkeepers over harmless technical labeling flaws.
BackgroundIsrael's Class Actions Law allows representative litigation on behalf of consumer groups to penalize deceptive trade practices. Small merchants have long complained that aggressive plaintiffs' lawyers exploit litigation costs to extort nuisance settlements over trivial label defects.
- The measure blocks class certification against sole proprietors and enterprises generating under ₪9 million annually, eliminating small business exposure to serial procedural litigation.
- Claimants must provide 60 days written notice before filing, granting merchants an opportunity to correct minor labeling errors without incurring immediate legal liability.
- The bill curtails lucrative fee awards for attorneys who file minor statutory suits merely to extract paid legal withdrawals, reshaping the economics of plaintiff-side consumer bars.
Mass Tort
Judges are dismantling the coupon settlement playbook — lawyers who settle consumer claims for store vouchers will no longer pocket full cash payouts.
BackgroundClass action settlements frequently offer discount coupons or service credits to affected consumers in place of direct cash refunds. Courts scrutinize these coupon remedies because many consumers never redeem them, leaving attorneys with full cash fees while plaintiffs receive minimal value.
- Judge Dori Spivak reduced legal fees to ₪963,951, rejecting counsel arguments that in-store pharmacy credits represent equivalent value to direct cash restitution.
- Clalit resolved allegations of overcharging members on prescription medications by offering internal credits redeemable exclusively at its own health fund pharmacies.
- The ruling establishes a binding disincentive for plaintiff attorneys who negotiate non-cash voucher compromises rather than demanding actual cash disbursements for injured consumers.
Mass Tort
Migdal let billing inertia outlast policy life — charging monthly premiums on expired nursing riders leaves insurers vulnerable to systemic clawback claims.
BackgroundLong-term nursing policies often contain finite benefit caps, such as 36 months of care payments, after which the specific rider expires. Insurers are legally required to remove exhausted benefit riders and adjust monthly direct-debit premium schedules accordingly.
- The petition details instances where insured individuals exhausted their maximum 36-month nursing allowances, yet Migdal continued debiting regular monthly premiums for those riders.
- Claimants allege that systematic failure to update billing rosters breaches insurance contract law and basic fiduciary duties by extracting payments without carrying insurable risk.
- The legal action demands complete reimbursement of all improper premium deductions alongside statutory compensatory interest for affected policyholders and surviving heirs.
Mass Tort
Menora surrendered its post-death clawback practices — ending aggressive recovery demands against grieving families and establishing full-month stipend guarantees across nursing policies.
BackgroundLong-term nursing insurance provides monthly living stipends to chronically impaired policyholders who require constant care. Menora systematically prorated final monthly payments based on the day of death or demanded that grieving families repay partial monthly distributions.
- Menora committed to disburse nursing stipends for the entire calendar month in which an insured passes away, ending disputed proration calculations.
- The settlement delivers roughly ₪400,000 in direct restitution to bereaved families who were previously subjected to repayment demands for partial-month care benefits.
- The court-approved compromise covers all active and legacy private and collective long-term care insurance policies issued by Menora since 2024.
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