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December 04, 2007 at 11:23 PM
The U.S. Supreme Court declined Monday to hear a case that could have challenged the extent to which states can regulate life settlements.
The court’s move effectively let an appellate court decision in favor of the states to stand.
The 4th U.S. Circuit Appeal Court in Richmond, Va., had ruled on the case earlier this year, finding that states have the power to regulate life settlements and viaticals under language in the McCarran-Ferguson Act giving the states authority over businesses that “relate to” insurance.
In the case, Life Partners Inc. vs. Morrison, 07-261, a resident of Virginia had filed a complaint with the State Corporation Commission contending that Life Partners Inc., Waco, Texas, had not paid her enough for her policy under state law.
According to a decision written by Judge Paul Niemeyer, the policyholder, referred to as Jane Doe, contracted with Ideal Settlements Inc. of New Jersey to bring a policy into the secondary market, and ultimately to sell it to Life Partners. After rejecting two offers, Doe accepted a bid from Life Partners for $29,900, which represented 26% of the face value of the $115,000 policy.
However, Virginia law requires that viators receive certain percentages of the policy’s face value based on their life expectancy, and under that law Doe should have received as much as 60% to 70% of the face value, Doe contends.
