Elderly Insurance Scam Results in a $4.3 Million Jury Award

When an elderly man was scammed out of $100,000 by an insurance scheme, the courts were called upon to intervene.
By: | December 12, 2019

After his wife passed, 79-year-old Thomas Williams was left with a task he had always relied on her to complete: their finances.

A former bookkeeper, Barbara Williams had the family financials in strict order. Upon her passing, the couple agreed to give a bulk of their assets to a local nonprofit that served the homeless near their California home. After that was said and done, Williams decided he needed a few additional tips on how to handle what money he had left. He called what he believed to be his financial adviser.

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Unfortunately, it was the wrong company.

An agent from this wrong company convinced Williams to purchase a $100,000 National Western Life Insurance Company (NWL) annuity. Through this action, the agent would gain a $9,500 commission, according to the Los Angeles Times.

“The agent had Williams sign a blank check and blank documents, ostensibly needed to modify the trust, Williams said. Instead, [the agent] used them to move $100,000 of Williams’ money into a National Western Life Insurance Co. annuity, according to court filings,” read the LA Times.

When all was said and done, Williams was left with $14,000 in his account — not nearly enough to cover any health care and other emergency expenses he might have. Williams took to the courts.

He soon learned that this was not the first instance of NWL facing legal action for scams against the elderly.

The California Insurance Commissioner sued NWL in 2006 over allegations that it was allowing its agents to use “trust mill” scams — the pretense of providing legal advice and estate planning services as a ruse to sell annuities that generate large commissions. NWL’s settlement in 2010 required it to take steps to avoid trust mill sales of its annuities and to thoroughly investigate complaints with any similar abuses.

At first, Williams wanted to solve the issue outside of trial, even offering to settle for $16,000 plus attorney’s fees and costs. NWL rejected the offer. So, a Butte County Superior Court jury reviewed Williams’ case.

They found that NWL’s agent “deceived 79-year-old Thomas Williams into purchasing an annuity after Mr. Williams sought advice on revising his estate plan in order to give the bulk of it to a local homeless shelter.”

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The jury also said that the agent who had operated under the guise of a “legal services company” and, the jury found, he “deceived Mr. Williams into purchasing an annuity from NWL.”

The jury awarded over $3 million to Williams after finding that he was misled into buying the $100,000 NWL annuity. The judge in the case later added fees and costs to the judgment, bringing the total liability to over $4.3 million.

NWL has already filed for appeal.

Scorecard: Thomas Williams will receive back his $15,000 surrender charge plus $600,000 for emotional distress. An additional $2,501,000 was awarded in punitive damages, along with $145,100 for legal costs and $1,263,570 for attorney’s fees.

Takeaway: Nuclear jury awards may be increasing in both value and quantity, but for companies that are conducting illegal practices, verdicts should be the least of their concerns. &

Autumn Heisler is the digital producer at Risk & Insurance®. She can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]