DALLAS, April 11, 2011 /PRNewswire/ -- Attorneys from Dallas' Heygood, Orr & Pearson have filed a class-action lawsuit in Ellis County on behalf of Texas investors who say Waco-based Life Partners Inc. charged excessive premiums on the company's so-called "life settlement" policies.
This is the second lawsuit Heygood, Orr & Pearson has filed against Life Partners in the past month. The first was a nationwide class action filed in Dallas County, which includes allegations that Life Partners wrongfully withheld thousands of dollars investors paid in escrowed premiums.
Life Partners, a subsidiary of the publicly traded Life Partners Holdings Inc. (NASDAQ: LPHI), purchases life insurance policies from policyholders for the purpose of selling interests in those policies to groups of investors. Policyholders receive an immediate, but reduced, payment, while Life Partners' investors receive the full face value upon the policyholder's death. The purchase of such policies for investment purposes is commonly referred to as a "life settlement."
The most recent lawsuit involves "universal life insurance" policies, in which the original insured policyholder can pay a higher premium and thereby add to the cash value of the policy. But that does not hold true for investors who purchase the rights to the policies in the form of a life settlement. Investors only receive the face-value amount of the policy upon the death of the insured, whether they pay only the minimum required to prevent lapse of the policy or a greater amount.
According to the lawsuit, Life Partners authorized the payment of the higher premiums for its investors even though there was no corresponding benefit, and doing so hastened the depletion of the escrow funds that investors set aside to pay policy premiums. Once the escrow funds ran out, Life Partners demanded additional payments from investors, including lead plaintiff John Willingham.
"We intend to prove that Life Partners failed to act in the best interest of their investors, breaching the contract as well as their fiduciary duty," says James Craig Orr Jr., lead attorney for Mr. Willingham and a name partner in Heygood, Orr & Pearson. "We believe these payments, entirely at the investors' expense, provided absolutely no benefit to the investors and were thus improper, irrational, unjustifiable and unnecessary."
The attorneys are asking the court to certify other Life Partners investors as a class because of the many people who, like Mr. Willingham, suffered through the mismanagement of their escrow accounts. The lawsuit, John Willingham v. Life Partners Inc., Cause No. 82640, was filed on April 8 in Ellis County's 40th District Court.
Heygood, Orr & Pearson is a business litigation and personal injury law firm based in Dallas. The firm prides itself on having the highest of credentials, experience and ability and has tried more than 200 cases to a jury verdict on behalf of both corporations and individuals. More information is available at http://www.hop-law.com.
For information, please contact Rhonda Reddick at [email protected] or 800-559-4534.
SOURCE Heygood, Orr & Pearson