The head of a California benefits firm has agreed to pay $2 million in restitution to resolve an investigation started by New York regulators.
Douglas Cox, president of Universal Life Resources, San Diego, has agreed that he and affiliated companies will pay the restitution to policyholders throughout the United States who allegedly were harmed by the companies’ actions, according to New York Attorney General Eliot Spitzer and New York Insurance Superintendent Howard Mills.
The companies also have agreed to adopt new business practices and fees to avoid conflicts of interest, New York officials say.
Brian Maddox, a spokesman for Cox, says his client has no immediate comment on the settlement agreement.
The terms of the settlement agreement appear to prohibit Cox from using proceeds from an insurance policy to make the restitution payments.
Under the terms of the agreement, Cox has promised to pay the $2 million into a settlement fund, to help regulators calculate the amount of contingent commissions that clients paid, and to refrain from filing for bankruptcy for at least 220 days from the date of the settlement agreement, according to a copy of the agreement posted on the Web site of the New York attorney general’s office, at Document Link
To get restitution from the fund, clients must sign a release form and make a request by May 1. Cox will pay the clients as much as possible from the restitution fund June 1, according to the settlement agreement.
Cox has agreed to notify the New York attorney general and insurance superintendent of any bankruptcy case filed between the date of the settlement agreement and Dec. 31, 2007, at the earliest possible date. If a bankruptcy court voids the restitution payments, that will void the settlement agreement, according to the settlement agreement.
Cox also has agreed to accept only specified fees and commission percentages from clients and to describe those compensation arrangements for clients in writing. Cox and related companies may not accept trips, expense payments, contingent commissions, communication fees, or “pay to play” compensation from insurance companies, according to the settlement agreement.