In March, Aviva sued six life insurance agents over Stoli policies sold to 119 members of a church in Los Angeles. Now, those agents have fired back, claiming the carrier consented to the offer of the coverage.
Six life insurance agents claim that Aviva Life and Annuity Co. had consented to the offer of insurance coverage to some 119 churchgoers in Los Angeles.
Agents Kazimir Patelski, Glenda Smith-Lee, Napoleon B. Kinney, Cheralynne Bridgewater, Candice H. Hobdy and Rene Williams responded to a lawsuit filed by the insurer in U.S. District Court in the Central District of California.
Originally, Aviva had sued the agents in March, claiming that the six had sold life insurance to the church parishioners in 2009 and 2010 under false pretenses. Wilshire Coast Consultants Inc., a named defendant, was trustee over 119 irrevocable life insurance trusts, each one holding an Aviva policy on the life of a churchgoer, according to the suit.
The carrier alleged that the parishioners were solicited at church for an “endowment program,” which involved taking out a policy on a church member and dividing the death benefits between that person's beneficiaries, the church and an unknown third party. Aviva claimed that some parishioners who contacted the insurer said they either never paid premiums on the policy or that they paid only the initial premium and another entity made subsequent payments.
Indeed, two churchgoers contacted by InvestmentNews in April had claimed that the program was offered as a way to help their church.
In the latest chapter of the litigation, the agents have turned the table, claiming that Aviva is guilty of “unclean hands” and had consented to the very acts it accuses the insurance agents of participating in.
“Plaintiff directed, ordered, approved, and in all other respects, ratified the acts and performance of these answering defendants,” the agents claim in their response. The insurer had “consented to the acts and omissions alleged in the complaint.”
The defendants specifically denied perpetrating a “Choli” or charity-owned life insurance scheme involving the provision of fraudulent marketing tactics, undisclosed premium finance payments and other financial incentives. Choli is a variation of stranger-owned life insurance (Stoli).
The agents also denied Aviva's allegation that the insurer's producer guidelines don't permit policy sales to be sold in the manner the agents had used.
Mr. Patelski and the other defendants acknowledge that people who apply for coverage from Aviva need to answer questions about whether anyone other than the insured will pay for the premiums or whether the insured intends to transfer the policy to another party. However, the defendants denied the allegations, claiming they lacked the sufficient knowledge to determine the veracity of the accusations.
Calls to the defendants' attorney, Daniel J. Callahan of Callahan & Blaine, were not returned.
“We are fortunate this issue was discovered early before any claims were made on any of the policies,” Aviva spokesman Steve Carlson said. “Multiple misrepresentations were made to Aviva as part of these transactions.”
He declined to comment further on the defendants' claims.
