Heygood, Orr & Pearson are advocates committed to bringing justice to clients against corporations that would attempt to take advantage of them. Recently, HO&P filed two class action lawsuits against Waco-based Life Partners, Inc., a wholly owned subsidiary of Life Partners Holdings, Inc. (LPHI).
Class Action Against Life Partners, Inc.
The first case is on behalf of investor Helen Z. McDermott and others similarly situated who invested with Life Partners in “life settlements.” On behalf of Ms. McDermott, Heygood, Orr & Pearson alleges that Life Partners wrongfully withheld thousands of dollars owed to Ms. McDermott and others after they purchased interests in so-called “life settlement” policies. A “life settlement” policy is a life insurance policy that is purchased from the original insured for an amount less than the face amount of the policy (i.e., less than the death benefit). When the insured subsequently dies, the policy proceeds are paid to the purchaser of the policy as opposed to the family of the insured. Life Partners, Inc. gathers investment funds from would-be investors for the purpose of purchasing life settlement policies. Life Partners, Inc. arranges to purchase the policies from insureds on behalf of investors for a certain price but charges the investors an amount substantially above that price to acquire the policy. The difference between the amount paid to the insured by Life Partners and the amount paid by the investor to Life Partners to acquire an interest in the policy is retained by Life Partners as their “fee.”
Investors are also required to pay to Life Partners an amount to be deposited into escrow to pay premiums on the policy through the life expectancy of the insured. However, if the insured passes away early, then the investor is to receive a refund of the escrowed funds. In the case of Ms. McDermott and other investors, Life Partners refused to refund these escrowed funds when an insured died early. Thus, the class action is on behalf of all investors who have wrongfully had their escrowed funds for premiums withheld when an insured dies earlier than expected.
A Second Class Action Against Life Partners, Inc.
The second class action is on behalf of Mr. John Willingham and others similarly situated. On behalf of Mr. Willingham, Heygood, Orr & Pearson alleges that Life Partners charged investors excessive amounts to cover premium payments on their life settlements. Traditionally, companies that sell or broker life settlements only charge investors and forward to the life insurance company the minimum amount necessary to keep the subject policy from lapsing – called the “cost of insurance.” Rather than charging investors this amount, Life Partners has been charging investors including Mr. Willingham and others the full scheduled premium which includes amounts that go to the cash value of the life insurance policies at issue. Heygood, Orr & Pearson seeks to recover from Life Partners the amount of these excessive charges for premiums on behalf of Mr. Willingham and all other investors who have been required to pay excessive premiums.
Life Partners Under Investigation by SEC
Life Partners Inc. is also under investigation by the U.S. Securities and Exchange Commission (SEC) due to its questionable life expectancy estimations. Groups of investors have claimed that Life Partners intentionally underestimates life expectancies of insureds to entice investors to purchase shares of life settlements. When the insureds outlive the date assigned by Life Partners, investors are required to pay extra money to maintain the life insurance policy premiums.
If you or someone you know has been aggrieved by wrongful conduct on the part of Life Partners or are owed additional sums of money after investing with Life Partners, then you may need a sophisticated and knowledgeable law firm such as Heygood, Orr & Pearson to represent you. For more information and a case evaluation that will help determine your legal rights, please contact us.
