Life Partners, the embattled broker of insurance death benefits, won a legal victory this week when attorneys for investors said they will not appeal a Dallas federal judge’s denial of class action status for their lawsuit against the Waco firm.About half a dozen investors in fractions of life insurance policies bought from Life Partners alleged that the firm knowingly gave them inaccurate evaluations of policy sellers’ life expectancies. If certified as a class action, the case could have drawn thousands of aggrieved investors, said plaintiff’s attorney Bruce Packard of Dallas.On Tuesday, Life Partners CEO Brian Pardo welcomed the attorneys’ decision to fold in what was called the “Turnbow action.”“This is yet another example of attorney-driven litigation which damages the entire economy, not to mention the companies that are the targets of such litigation,” Pardo said in a statement. “We are very pleased that the plaintiffs decided to walk away from this case and we hope to see other similar cases end the same way.”A statement from Life Partners said the case centered on whether its medical consultant, Dr. Donald Cassidy of Reno, used an unreasonable method of estimating life expectancy. The plaintiffs said Cassidy predicted that policy sellers would die sooner than independent evaluations had forecast when the firm originally acquired the policies. “However, this allegation was criticized by the court” in its 34-page order, Life Partners said in a statement. Judge Barbara M.G. Lynn also noted that Cassidy’s lack of actuarial training and Life Partners’ lack of a staff actuary were “seemingly undisputed.” The company’s stock (ticker: LPHI) rose 7 cents during the day Tuesday but closed at $1.82, down a fraction of a cent, on the Nasdaq exchange. It trades at less than half its 52-week high of $4.37, reached March 4.Packard said a major blow to the case was the court’s insistence that plaintiffs pay for independent life expectancy studies of each insured person, which would have been too costly. He gave little chance for any of the plaintiffs to sue individually after a class action case was not certified.The firm’s parent company, Life Partners Holding, faces other legal action. Remaining cases include one filed by the Fort Worth office of the Securities and Exchange Commission, which says Pardo and others “systematically and materially” duped investors, and a lawsuit by stock investors based on the SEC’s allegations.
Barry Shlachter, 817-390-7718 Twitter: @bshlachter