{"id":18712,"date":"2020-06-17T15:02:05","date_gmt":"2020-06-17T19:02:05","guid":{"rendered":"https:\/\/insurancenewsnet.com\/?post_type=innarticle&p=5564508"},"modified":"2020-06-17T15:02:05","modified_gmt":"2020-06-17T19:02:05","slug":"georgia-judge-calls-viatical-a-case-of-illegal-wagering","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2020\/06\/17\/georgia-judge-calls-viatical-a-case-of-illegal-wagering\/","title":{"rendered":"Georgia Judge Calls Viatical A Case Of Illegal \u2018Wagering\u2019"},"content":{"rendered":"
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A Georgia federal court decision involving a viatical settlement of a term life policy is being appealed after a judge ruled the transfer an \u201cunlawful wagering contract.\u201d<\/p>\n

The lawsuit focuses on a 10-year, $500,000 term life policy issued in 1999 to Kelly Douglas Couch, who hid his HIV-positive status and died in June 2005. Later in 1999, Couch transferred ownership of his policy to Sterling Crum, an investor in such policies.<\/p>\n

The policy was issued by a predecessor to the Jackson National Life Insurance Company. Crum did not learn that Couch had died until December 2016, court documents say. Jackson sued Crum in October 2017.<\/p>\n

Crum countersued and Judge William M. Ray II sided with Jackson in March. But Crum appealed and the case continues.<\/p>\n

Viatical settlements can be traced to the 1980s and the AIDS outbreak. The deal starts with a chronically ill policy holder selling his or her life insurance policy, which was acquired when the policy holder was healthy, to a third party for a lump sum. The third party then becomes the new owner of the policy and is responsible for paying the policy\u2019s premiums.<\/p>\n

The practice became popular and fraudulent practices developed.<\/p>\n

In his ruling, Ray cited Georgia law prohibiting wagering contracts, although he conceded that its applicability to life insurance is murky.<\/p>\n

\u201cThe law is less clear as to what constitutes a wagering contract when a life insurance policy is lawfully taken out on an insured\u2019s own life, but later assigned to a third party without an insurable interest,\u201d Ray wrote, adding that \u201ca preponderance of evidence\u201d shows that Couch always intended to immediately sell the policy.<\/p>\n

Questionable Circumstances<\/h2>\n

Couch, 32 at the time, revealed his intention to convert his policy to a wagering contract in three ways, Judge Ray said:<\/p>\n

No family.<\/strong> Couch was a residential house cleaner with no spouse or dependents. Crouch also took out a second $500,000 term life policy at the same time, Ray noted.<\/p>\n

\u201cCouch\u2019s acquisition of these life insurance policies is suspect, particularly in light of his lack of any apparent family members who were dependent on him for support,\u201d Ray wrote.<\/p>\n

Application lies.<\/strong> On his application, Couch claimed he was HIV-free and had never filed for bankruptcy. Both of those were lies, Ray said. In fact, Couch had two bankruptcies. His Social Security number was also incorrect on the application.<\/p>\n

These misstatements indicate \u201can intent to obtain the Policy fraudulently and sell it for quick cash,\u201d Ray wrote.<\/p>\n

The timing.<\/strong> Thirdly, Ray questioned the timing of Crum acquiring both insurance policies from Couch, just eight months after they were issued.<\/p>\n

\u201cIn sum, the Court finds that Jackson demonstrated, by a preponderance of the evidence, that Mr. Couch intended to enter into a wagering contract at the time he procured the Policy,\u201d Ray concluded.<\/p>\n

Policy Lapsed<\/h2>\n

Court documents paint Crum as an investor in viatical settlements who worked through various third-party companies. One of those companies brought the Couch policies to Crum, stating that Couch had been HIV-positive since 1996 and had 24-30 months to live, court documents say.<\/p>\n

Via intermediaries, Crum made the annual $250 premium payments on the Jackson policy through 2008. He let the policy lapse when the premiums increased in 2010, court documents say.<\/p>\n

Crum \u201cadmitted he did not monitor Mr. Couch\u2019s mortality,\u201d court documents say, but relied on his attorney to do so via \u201cGoogle searches.\u201d The attorney never learned that Couch died until he acquired a Lexus search tool in 2016. Crum filed a life claimant statement on March 17, 2017.<\/p>\n

Jackson has not paid the claim.<\/p>\n

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]<\/span><\/a>. Follow him on Twitter @INNJohnH.<\/em><\/span><\/p>\n

\u00a9 Entire contents copyright 2020 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.<\/strong><\/p>\n<\/div>\n<\/div>\n<\/div>\n

Read the original article at insurancenewsnet.com <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

A Georgia federal court decision involving a viatical settlement of a term life policy is being appealed after a judge ruled the transfer an \u201cunlawful wagering contract.\u201d The lawsuit focuses on a 10-year, $500,000...<\/p>\n","protected":false},"author":578,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/18712"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/578"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=18712"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/18712\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=18712"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=18712"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=18712"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}