A New York state court has dismissed most of a lawsuit filed against a life settlement firm by former New York Attorney General Eliot Spitzer, and Florida regulators have announced a settlement in connection with an investigation concerning similar issues
Spitzer accused Coventry First L.L.C., Fort Washington, Pa., of rigging the bidding process used to sell 9 in-force life insurance policies.
New York state Judge Helen Freedman has knocked down challenges of 7 of the transactions, noting that none of the sellers or brokers were based in New York and that none of the alleged misconduct was said to have taken place in New York.
Freedman dismissed 3 of the remaining charges against Coventry and plans to hold a preliminary hearing Oct. 16 to consider the remaining charges.
“Coventry believes the few remaining claims are not based in fact and have no merit,” Coventry says in a statement. “Coventry is gratified by this ruling and remains confident that it will ultimately prevail going forward.”
Meanwhile, in other Coventry news, the Florida Office of Insurance Regulation says it has agreed to settle with Coventry because the company has cooperated with an investigation into charges that Coventry had engaged in fraudulent practices.
The Florida OIR looked into allegations that Coventry had paid brokers not to place competitive bids on life insurance policies that Coventry was hoping to buy from policyholders.
The Florida OIR initiated the investigation soon after Spitzer filed charges against Coventry.
Florida regulators now say they have settled all issues with Coventry, including a cease-and-desist order and a market-conduct examination that had remained open for 2 years.
Although the OIR imposed no fines or penalties on Coventry, Coventry agreed to pay $1.5 million to cover costs of the investigation and examination.
Coventry also agreed to adopt a plan to improve its business practices. One provision will require it to disclose compensation paid to any intermediaries involved in a settlement, according to the Florida OIR consent order.
Coventry has agreed to submit quarterly reports listing the number of transactions it handles for Florida consumers, and it has agreed to support a pending OIR viatical settlement disclosure rule. The company agreed to undergo an independent annual audit for the next 2 years to verify its compliance with the terms of the order, according to the consent order.