Heygood, Orr & Pearson is currently pursuing a putative class action lawsuits against Life Partners, Inc., a company that specializes in “life settlement” investments. A “life settlement” is the sale of an existing life insurance policy by the policyholder to another party. By selling a life insurance policy, the policyholder receives an immediate cash payment while the purchaser takes an ownership interest in the policy at a discount to its face value and later receives the full amount of the death benefit paid out under the policy when the insured dies. The less that a life settlement purchaser pays to the insurer prior to the policy maturing, the greater the yield on the investment.
On behalf of our clients, we have filed putative class actions in Texas and California seeking to represent persons who purchased a “life settlement” through Life Partners, Inc. The lawsuits allege that Life Partners, Inc. has wrongfully overpaid insurance companies at the expense of Life Partners, Inc.’s clients.
In order to receive the proceeds of life insurance policy when it matures, the purchaser of a “life settlement” pays premiums to the insurance company as necessary to keep the policy in force. With “universal life insurance policies,” one can choose to pay the minimum necessary to maintain the policy, so-called “optimized premiums.” The lawsuits allege that Life Partners, Inc. failed to pay the minimum and instead paid so-called “level premiums” which include additional amounts beyond the cost-of-insurance. The lawsuits allege that no reasonably prudent purchaser of such a life settlement would pay more to the insurer than the minimum (cost of insurance) required to maintain the policy. One lawsuit seeks to represent Texans who paid too much and the other suit seeks to represent Californians who paid too much.
The California suit was filed in a California state court because we believe that is the most appropriate place to hear a lawsuit on behalf of California residents alleging violations of California state law. Life Partners, Inc. removed the case to federal court and we moved the federal court to send the case back to state court. The motion was granted. However, Life Partners, Inc. then requested that the federal Ninth Circuit Court of Appeals hear their appeal of the district court’s decision. We are happy to report the Ninth Circuit has recently entered an order denying the request by Life Partners, Inc. There is no guarantee that Life Partners, Inc. will not file some other such motion or further attempt to appeal. However, we are hopeful that the lawsuit can finally get down to the real business of a trial on the merits.
Life Partners, Inc. is just one of many companies in the business of buying and selling “life settlements.” If you feel that a “life settlement” investment company may have taken advantage of you or a loved one, we’d love to hear your story and see if we can help. You can reach us by calling toll-free at 1-877-446-9001, or by filling out a free online contact form.