Kudos to Forge Consulting for attempting (albeit 3 weeks after the fact) to be the face of calm to members of a trial lawyer association to whom it is classified a "hero" merely because of size of its wad.
The Forge Consulting decision to highlight"the Executive Life Insurance Company experience" as the shining beacon of all things right historically with structured settlements shows a fundamental lack of understanding worthy of a tragic comedy of errors. Those who were in the industry and actually experienced the Executive Life Insurance Company (CA) debacle know an entirely different story than Forge Consulting paints.
Forge Consulting claims "the power of state insurance regulation isn't hypothetical. It's been tested and proven throughout history, such as the reorganization of Executive Life of California in the mid-1980s. We think this is proof positive that structured settlement recipients have protections".
The important lesson learned by consumers, regulators and industry professionals from the Executive Life debacle however, is that Insurance regulation may be powerful but that DOES NOT guarantee effectiveness.
Executive Life Insurance Company (ELIC) was a large issuer of life insurance, structured settlement annuities, group annuities, and guaranteed investment contracts (GICs) issued to pension plans and municipalities.
Until its seizure, Executive Life was the primary operating subsidiary of the First Executive Corporation, notorious for having assembled the industry's largest portfolio of high-risk junk bonds. Executive Life was seized after junk bond defaults led to large losses and to a run on the company by customers, who were nervous about its ability to pay claims. State regulators in New York seized a separately financed subsidiary, the Executive Life Insurance Company of New York.
A conservation order was issued for ELIC on April 11, 1991, and a liquidation order was entered on December 6, 1991. Most of the company's policies were assumed by Aurora National Life Assurance Company in 1993 .
October 25, 1993 National Underwriter Magazine Life/Health Edition stated "some holders of Executive Life Insurance Co's (ELIC) structured settlement annuities have been hit hard by its restructuring. ELIC's successor, Aurora National Life Assurance Co, has informed some holders of structured settlement annuitants that their policies are worth much less than they expected. The 5,500 annuitants had been receiving 70% of the payments since ELIC went into receivership, while 400 of these annuitants were getting an additional 30% hardship payment. The hardship annuitants and those who took out emergency payments have been informed that they were taking out loans at 7% interest and have had their payments docked accordingly.
In 2003, the French Company Credit Lyonnais and others agreed to pay $771 million in settlements resulting from false statements to bank regulators in connection with the acquisition of junk bonds and the insurance business of the failed Executive Life Insurance Company of California. Click here for the United States Department of Justice press release from December 18, 2003.
On February 1, 2005 Claims Journal reported that The Executive Life Action Network (ELAN), an activist group of former Executive Life Insurance Co. policyholders, on Tuesday filed a second California Public Records Act (CPRA) request with Insurance Commissioner John Garamendi urging him to release documentation of more than $4 billion in policyholder losses that resulted from the largest financial fraud in California history
Here is a 2005 quote from Sue Watson, co-founder of the Executive Life Action Network, and mother of Katie, an annuitant who suffered brain damage as an infant due to reported hospital error (exactly the type of claimant that those of us in the structured settlement, settlement planning and recovery management space serve and are trying to protect). "Our first request for documentation of our losses was met with a disappointing response from the Commissioner and his department. In no way did their response address the billions of losses that policyholders suffered since 1991"
January 31, 2008
California State Auditor Report: Former Executive Life Insurance Company Policyholders Have Incurred Significant Economic Losses, and Distributions of Funds Have Been Inconsistently Monitored and Reported Source: Yubanet.com
It's certainly "refreshing" to see that Forge Consulting still sports the same lazy enthusiasm and inattention to detail that led to it in 2006 print up this typo laced brochure Download FORGEBrochure.pdf , and then distribute it at national meetings of trial lawyers in 2006 and 2007 hoping that nobody would notice.
In it's October 2, 2008 press release Forge Consulting says that it is critical that plaintiffs get advice from experts working only with plaintiffs. It should be noted that it also serves the needs of "plantiffs" Given what we've proven here perhaps plaintiffs AND/OR "plantiffs" would be better off getting advice from someone who, for starters, knows what the heck they are talking about!
Speaking about the same subject, in 2005 the self righteous Forge Consulting President John T. Bair, along with partners Charles Schell and Spooner Phillips (Bair also in 2006) executed declarations under penalty of perjury to get on a list which would enable them to receive case assignments from Assistant United States Attorneys with the United States Department of Justice on behalf of the United States where it was a defendant. The declarations affirmed that Bair, Schell and Phillips provided substantial work for defendant, and their counsel in each of the preceding 3 years to the declaration. These men knew what they were signing and yet still had the nerve to publicly advertise that they were plaintiff exclusive. The scales of false advertising and perjury were "in the balance" at the time.