Life Insurance & Annuities

Featured Publication:

What’s Happening in California After McHugh? [Alert]

Michael Miller and Ilya Schwartzburg discuss the state of lapse cases six months after McHugh.

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Cozen O’Connor’s clients depend on us to litigate issues and provide counsel in federal and state courts across the country and in all forms of arbitration and alternative dispute resolution. 

Stranger-Originated Life Insurance (STOLI) and Other Secondary Market Issues

When it comes to this critical sort of litigation, Cozen O’Connor wrote the book on it — and are still doing so.  The first STOLI case in the country to go to verdict was tried — and won — by a member of our team. The now-established rule that a life insurer who is the victim of application fraud may void the policy and, under certain circumstances retain the premium, was also set in a case handled by one of our lawyers. In recent years, our team has been especially active and has continued to make law in cases establishing the lack of an insurable interest in policies manufactured by prominent STOLI “programs.” We also have been at the forefront in establishing the right of life insurers to challenge the validity of STOLI policies after the expiration of the contestability period. In addition, Cozen O’Connor represents insureds’ estates and families in recovering death benefits paid by insurance companies on STOLI policies, from large investors. For more details regarding our STOLI and secondary market experience, please click here.

Structured Settlements

Cozen O’Connor lawyers have been especially focused on structured settlement issues — having successfully and efficiently litigated factoring cases in state and federal courts across the country on behalf of our annuity owner and issuer clients. For more details regarding our structured settlement experience, please click here.

Class Actions

The Life Insurance & Annuities team frequently works with colleagues in our Class Action practice  who bring a wealth of class action experience and technical expertise to our engagements on a variety of issues.  For more details regarding the experience of our Class Action team, please click here.

Life Insurance and Annuity Litigation and Counseling

For decades, lawyers on our team have counseled clients and litigated issues on a wide variety of insurance matters including, among others:

Bad Faith and Other Extracontractual Claims

Cozen O’Connor regularly litigates cases that include bad faith and other extracontractual claims — having handled these issues since the days when they were unusual to encounter. We know best how to manage preliminary motions, discovery, and trial to eliminate or reduce exposure and also assist insurance companies in identifying best practices to reduce exposure.

Brokers and Agents

Cozen O’Connor is experienced in the range of issues and litigation that can arise from agent/broker compensation disputes, improper policy placements, alleged mishandling of funds, fraud, and other misconduct by producers — be they brokers or agents. Our lawyers understand and know how to manage the tension that can exist between maintaining relationships with producers and not ending up with liability for their conduct.

Foreign Death Claims and Foreign Nationals

Our experience includes assisting life insurers in investigating and litigating claims arising from foreign deaths, which can present significant challenges for our clients. We also advise life insurers on the unique issues that can arise from the sale of policies to foreign nationals.

Identity Fraud

Cozen O’Connor lawyers have broad and deep experience identifying and combating the seemingly constantly evolving misuse of identity data (such as social security numbers, birth dates, addresses, and names) to improperly procure policies on lives different than those disclosed in applications. This experience includes the special issues that can be implicated in situations involving groups of policies, applicants, and putative insureds. In addition, our annuity company clients use this experience to identify and recover the improper receipt of annuity benefits after the deaths of annuitants.

Insurance Department Investigations and Proceedings

Cozen O’Connor advises life insurance and annuity companies and producers on responses to the range of issues that might be raised by or with regulators — everything from fraud reporting, to responses to policyholder complaints, to agent/broker issues and many other similar issues.

Lapses

Our lawyers have litigated and tried lapse issues cases for decades. We are thoroughly familiar with statutory requirements often advising clients on proper lapse procedures, including the impact of coverage protection guarantees, in the settings of individual policy issues. We also provide this assistance on a product-wide basis.

Material Misrepresentations

We counsel life insurers on claims arising from misrepresentations about age, health, financial, other insurance, and other material matters, including the frequently sensitive management of contestable claim investigations. When necessary, we litigate claims concerning such misrepresentations to successful conclusions.

Payment and Interpleader Issues

Our team regularly counsels clients on payment and beneficiary issues and, if necessary, files interpleader actions on behalf of life insurers, and, in those cases, our clients are routinely awarded attorneys’ fees.

Policy Values and Cost of Insurance (COI) Issues

For decades, Cozen O’Connor has been on the front lines in counseling and defending life insurers in cases arising out of changes in premium rates and policy values. We are also familiar with the intersection of COI issues with STOLI issues, and the reality that a void STOLI policy cannot be the subject of a COI claim. 

Prompt Payment Statutes

Cozen O’Connor is experienced in the gamut of prompt payment statutes, ranging from applicability of such statutes, to their impact upon claims procedures and particular claims, to litigation of issues implicating prompt payment requirements.

Stranger-Originated Life Insurance (STOLI) and Other Secondary Market Issues

Cozen O’Connor attorneys are especially focused on the life insurance secondary market, and in particular, on the related problems associated with STOLI. We have been litigating these cases since the inception of STOLI litigation in 2007.  Recently, we obtained eight consecutive summary judgment rulings, which survived appeals, for our insurer clients that policies — in the collective face amount of $56 million — were void STOLI policies lacking an insurable interest, and that no death benefits were payable. These rulings included:

  • Sun Life v. U.S. Bank (Malkin):  The Southern District of Florida ruled that no death claim proceeds were owed on a $5 million policy that was found to be an illegal human life wager under Delaware law. Affirmed by the Eleventh Circuit in June 2017.
  • U.S. Bank v. Sun Life (Van de Wetering):  The Eastern District of New York ruled in 2016 that no death claim proceeds were owed on a $10 million policy that was found to be an illegal human life wager under Delaware law.
  • Sun Life v. Conestoga Trust Services (Collins): The District of Tennessee concluded that this policy was created and financed by investors, that the $2 million policy was invalid, and that no death claim proceeds were owed under Tennessee law. Affirmed by the Sixth Circuit in April 2018.
  • Sun Life v. Wells Fargo Bank (Bergman): The District of New Jersey ruled that this $5 million New Jersey policy on the life of a New York resident was originated and paid for by stranger-investors. Based on these facts, the district court found the policy to be a void human life wager under New Jersey law, and no death benefit was owed. On appeal, the Third Circuit certified issues to the New Jersey Supreme Court, which ruled, in a case of first impression in 2019, that STOLI policies are void ab initio under New Jersey law and that the potential for a limited refund of premiums paid was dependent upon the application of certain equitable factors.
  • Sun Life v. U.S. Bank (Sol): The District of Delaware ruled in 2019 that a $10 million policy that was originated and funded through a non-recourse premium finance loan was a void STOLI policy under Delaware law and that no death benefit was payable.
  • Sun Life v. Wells Fargo (Corwell): The Northern District of Illinois in 2021 held that a $5 million policy that was originated and funded through a non-recourse premium finance loan was a void STOLI policy under Illinois law and that no death benefit was payable.
  • Sun Life v. Wilmington Trust (Frankel and DeBourbon): In two companion cases, the Delaware Superior Court ruled in 2021 that two policies in the total face amount of $19 million were void STOLI policies under Delaware law.

Our team has been successful in obtaining court rulings either entirely precluding or limiting the refund of premiums owed by our insurer clients on STOLI policies  including, among many others, the 2009 Sixth Circuit decision in Wuliger v. Manufacturers Life, which was the first ruling in the United States precluding any premium refund. Our lawyers were successful in the 2021 Delaware Superior Court decision in Brighthouse Life v. Geronta Funding (Seck), which only allowed a nominal portion of premiums paid to be refunded.

In addition, Cozen O’Connor represents insureds’ estates and families in the recovery of death benefit proceeds under the common law and state recovery acts, which generally provide that an insured’s estate is entitled to recover, from an investor, any death benefit payments that the investor received from a life insurer on a void STOLI policy.

Cozen O’Connor tracks existing STOLI litigation, and we also monitor the various publications that report on these issues. Over the years, our lawyers have collected a great deal of knowledge on this market and its participants and tendencies.

Structured Settlements

The lawyers at Cozen O’Connor have been especially focused on structured settlement issues — having successfully and efficiently litigated factoring cases in state and federal courts across the country. After the enactment of Section 5891, we implemented new strategies for handling the increased volume of structured settlement factoring transactions. For several clients, our team also developed programs that offer payees the possibility of commuting their structured settlements.

We have been active in the National Structured Settlements Trade Association (NSSTA) for more than 20 years. A number of our lawyers have served as co-chairs of the NSSTA Legal Committee and are speakers at virtually every NSSTA meeting. We currently serve as outside general counsel to NSSTA.

Although the litigation landscape for factoring transactions has changed over the years, when factoring transactions violate the applicable Structured Settlement Protection Acts (SSPA’s), our team has opposed these transactions on behalf of our annuity owner and issuer clients. We also routinely assist clients with all of the various disputes and issues that arise from the thousands of structured settlement annuities that our clients own and/or issue. These include matters relating to special needs trusts, estates, contingent beneficiaries, underpayments, overpayments, insurer insolvencies, minors, accelerations, commutations, tax planning, bankruptcy, and tax disputes.

Suspicious Deaths

Cozen O’Connor is regularly hired to assist life insurers around the country in reacting to, and litigating when necessary, death claims that raise questions such as the role of an imposter; missing persons; insufficiency of proof of death; suicides; and Slayer’s Acts.

Other Insurance, Life Insurance, and Annuity Experience

The lawyers at Cozen O’Connor produce successful results with respect to products and case types that span the entire spectrum of the industry. The financial exposures presented by the cases, issues, and products we have managed have ranged from nine-figures down to small face amounts.

We have a proven track record of successfully defending insurer and annuity issuer clients in class actions. These cases arise in the context of all of our various areas of experience. We analyze these cases early looking for the most effective and efficient exits — often proving that these cases should be dismissed at their early stages.

Many of our lawyers have experience with complex RICO cases. Indeed, because we know both insurance and RICO issues so well, we are especially well-suited to assist our insurer clients in these matters. For one example, in Luzerne County Retirement Board v. Makowski, et al., we obtained summary judgment for an insurer client on a $45 million RICO claim in the U.S. District Court for the Middle District of Pennsylvania.

Cozen O’Connor also routinely engages with numerous state insurance regulators and state guaranty associations concerning life insurance and annuity issues.

For a number of clients, the lawyers on our team have designed internal policies, protocols, and procedures — including for underwriting, policy administration, and claims handling — that are designed to avoid litigation. 

Finally, for many years we have been recognized by our insurer clients for identifying new developments and exposures in the insurance industry. We devote a significant amount of time and energy to educational presentations, hosting seminars, and publishing articles on issues of interest to the insurance industry. Our lawyers have developed numerous white papers and multi-state surveys on important life insurance and annuity issues.

Experience

Publications

What’s Happening in California After McHugh? [Alert]

April 07, 2022

Michael Miller and Ilya Schwartzburg discuss the state of lapse cases six months after McHugh.

A Compelling Case for Judicial Education [Alert]

June 03, 2021

Ingrid Hopkinson discusses the Jeffrey Barber v. Bruce Stanko, et al., and Zachary Barber v. Bruce Stanko, et al. cases and the importance of ensuring that judges have the information necessary to confirm not only that the procedural requirements of the applicable structured settlement protection acts are met.

Secondary Market Investor Files Interest Rate Class Action [Alert]

January 04, 2021

Michael Miller and Charles Vinicombe discuss a new life insurance secondary market investor strategy — suing life insurers on a class action basis for not paying enough interest.

“Retread” Blowouts Create Hazards for Investors

November 16, 2020

Mike Miller and Stephen Harris discuss the risks involved with structured settlement annuity payments that were sold to a factoring company and that were then resold or assigned, typically by the factoring company, to another investor.

New Jersey Enacts Anti-STOLI Legislation

October 28, 2020

Charles J. Vinicombe and Michael J. Miller discuss New Jersey's anti-STOLI legislation codifying the New Jersey Supreme Court ruling in Sun Life Assurance Company v. Wells Fargo Bank, N.A.

Class Certification Denied in Portion of COI Case Based on Argument that the Policies are STOLI [Alert]

September 10, 2020

The United States District Court for the Southern District of New York recently issued a decision denying class certification to a sub-class in a cost of insurance class action based upon the insurer’s defense that certain of the claims were barred because “a substantial number of the policies at issue were obtained through stranger-originated life insurance schemes.”

New Jersey Assembly Overwhelmingly Approves Anti-STOLI Legislation [Alert]

March 02, 2020

Charles J. Vinicombe and Michael J. Miller discuss New Jersey Assembly Bill A.B. 1263, which supplements New Jersey’s Viatical Settlements Act, N.J.S.A., and codifies the ruling in Bergman that STOLI is illegal and void in New Jersey.

NY DFS’s Regulation 187 – Consumers’ Best Interests [Alert]

January 29, 2020

Mike Miller, Laura Zulick, and Chase Howard discuss how this rule will impact life insurers beginning February 1.

Pension Factoring Continues to Create Problems [Alert]

January 21, 2020

Mike Miller and Stephen Harris discuss the facts in Michele R. Lenderman v. Emil J. Wansa, Allianz Life Insurance Co. of North America and North American Co. for Life and Health Insurance and why pension factoring continues to create problems for institutions that manage and fund these pensions.

NJ Ruling Does Not Bode Well For 'Stranger' Life Policies [Law360]

September 06, 2019

Charles Vinicombe contributed an article to Law360 discussing his thoughts on the Supreme Court decision in Sun Life Insurance Co. of Canada v. Wells Fargo Bank, N.A.

New Jersey Supreme Court Rules Stranger-Originated Life Insurance Is Illegal and Void

August 15, 2019

The New Jersey Supreme Court recently condemned stranger-originated life insurance (“STOLI”) transactions as void ab initio human life wagers in a case that the life insurance and life settlement industries watched closely.

STOLI - What you don't know may cost you [Munich RE]

November 01, 2018

Michael Miller and Gregory Star contributed an article to Munich Re discussing stranger-oriented life insurance, "STOLI," and the effect it has on people today.

Court Dismisses Claims Alleging Undisclosed Deductions from Structured Settlement Funds [Alert]

October 24, 2018

Lisa Stern and Mike Miller discuss a number of attempts to hold casualty carriers and annuity issuers liable for allegedly failing to disclose deductions from the amounts used to purchase structured settlement annuities for plaintiffs’ benefit. Each case has met with varying results but serves as a reminder of the pitfalls and exposure to the insurance industry at the point of settlement.

Federal Court Upholds Policy Approved Under the Interstate Insurance Compact [Alert]

October 24, 2018

Lisa Stern and Michael Miller discuss the first decision to directly address the question whether an interstate compact that is not congressionally approved may delegate authority to an interstate body to promulgate regulations that trump conflicting law in the compact states.

Texas Court Dismisses Factoring Company’s Broad Declaratory Judgment Claims Against Annuity Owner and Issuer [Structured Settlements Alert]

August 29, 2018

Stephen Harris discusses a Texas Court's ruling In the Matter of: A Transfer of Structured Settlement Payment Rights by Shantel D. Freelon, RSL Funding, LLC, Plaintiff v. J.G. Wentworth Originations, LLC, Defendant.

Calif. Life Insurers Get Relief From Unclaimed Property Law [Law360]

July 30, 2018

Andrew Kay and Randy Seybold, members in the firm's Commercial Litigation Department, co-authored, "Calif. Life Insurers Get Relief From Unclaimed Property Law" for Law360.

California Controller Enjoined from Enforcing Invalid Regulations on Life Insurers [Commercial Litigation Alert]

July 24, 2018

Andrew Kay and Randy Seybold discuss the California Superior Court decision that the California controller had improperly promulgated two regulations imposing requirements on life insurers under the UPL.

Events & Seminars

Past Events

Structures 101 &102

February 25, 2020 - Las Vegas, NV

STOLI: It’s Not Over, Not Even Close

April 01, 2019 - Boston, MA

The Association of Life Insurance Counsel 2018 Annual Meeting

May 07, 2018 - Half Moon Bay, California

In The News

More Than 205 Cozen O’Connor Attorneys Named Best Lawyers and Ones to Watch By The Best Lawyers In America

August 19, 2021

Best Lawyers selected 210 Cozen O’Connor lawyers from 23 of the firm’s nationwide offices for inclusion in the 2022 edition of The Best Lawyers in America.

47 Cozen O'Connor Attorneys Named Pennsylvania Super Lawyers and Rising Stars

May 28, 2021

Super Lawyers has selected 47 Cozen O'Connor attorneys to the 2021 Pennsylvania Super Lawyers and Rising Stars lists.

Cozen O'Connor’s Life Insurance & Annuities Group Named One of the Top Lateral Hires of 2018

March 23, 2019

The Cozen O'Connor Life Insurance and Annuities Group was named by The Legal Intelligencer one of the Top Lateral Hires of 2018 after joining the firm in April 2018.

Cozen O’Connor Expands Commercial Litigation Practice in Philadelphia with Group from Drinker Biddle

April 26, 2018

Cozen O’Connor announced today that three nationally recognized commercial litigators — Michael J. Miller, Gregory J. Star, and Stephen R. Harris — along with 11 others have left Drinker Biddle to join Cozen O’Connor’s Commercial Litigation practice

Contacts

Michael J. Miller

Chair, Life Insurance & Annuities
Co-Chair, Software

mjmiller@cozen.com

(215) 665-4114

Gregory J. Star

Vice Chair, Life Insurance & Annuities
Co-Chair, Software

gstar@cozen.com

(215) 665-4110

People

Awards

More Than 205 Cozen O’Connor Attorneys Named Best Lawyers and Ones to Watch By The Best Lawyers In America

August 19, 2021

Best Lawyers selected 210 Cozen O’Connor lawyers from 23 of the firm’s nationwide offices for inclusion in the 2022 edition of The Best Lawyers in America.

47 Cozen O'Connor Attorneys Named Pennsylvania Super Lawyers and Rising Stars

May 28, 2021

Super Lawyers has selected 47 Cozen O'Connor attorneys to the 2021 Pennsylvania Super Lawyers and Rising Stars lists.

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