AEGON Unit Wins Round In Battle With LTC Insurance Marketer
An AEGON N.V. unit has won a legal battle against an insurance agent who once tried to help it develop a long-term care insurance marketing organization.
A Washington state appeals court has ruled that Peoples Benefit Life Insurance Company, Cedar Rapids, Iowa, can use a Texas state court order to make Dale M. Larson submit to a deposition and produce documents.
The Bothell, Wash., resident had argued that an arbitration agreement between his defunct company, Larson Long Term Care Group L.L.C., and Peoples should keep the dispute out of court, but a three-judge Washington Court of Appeals argued that the Federal Arbitration Act does not apply because neither Larson nor Peoples has formally asked for arbitration.
The court also cited a U.S. Constitution passage that requires states to give “full faith and credit” to the judicial proceedings of other states.
Even if the arbitration act did apply, “Larson provides no authority for the proposition that a federal statute preempts enforcement of an order that must be recognized under the full faith and credit clause of the United States Constitution,” Judge H. Joseph Coleman writes in an opinion for the appeals court.
AEGON representatives were not available for comment.
Larson said he plans to appeal the ruling because he believes its wrong, and because he believes AEGON is asking for information that he has already given it.
“Theres nothing new,” Larson said. “And I have no staff to sort through records.”
Larson founded the Larson LTC Group with $2.4 million of his own money and a $33 million bank loan from Peoples in 1998, in an effort to replicate the success he had had with Long Term Care Inc., an LTC insurance marketing company he founded in 1985. Larson sold LTC Inc. to General Electric Financial Assurance Holdings Inc., Richmond, Va., in 1997.
Larson LTC ran into problems. It filed for Chapter 11 bankruptcy protection in Washington state in July 2000, according to court documents. Peoples deposed Larson and obtained Larson LTC records in connection with the bankruptcy case, but the bankruptcy court denied Peoples request for additional documents.
Larsons attorney asked Peoples in October 2000 to provide documents so he could determine whether Larson might have “any recourse against Peoplesfor his loss of his $2,407,888 investment in this venture, lost profits, and other consequential damages.”
Peoples, which bases its LTC division in the Fort Worth, Texas, area, then obtained the court order demanding new depositions and more documents from Larson, under a Texas law that allows plaintiffs to take depositions before filing suits.
Larson argued the order should trigger the arbitration clause in his contract with Peoples, but the appeals court agreed with Peoples that the Texas order is a valid judgment that must be enforced.
Reproduced from National Underwriter Life & Health/Financial Services Edition, September 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.