Confusion and Controversy Surrounds Confederation Life Insurance Co.

Strategic Insights -

A New Jersey doctor, Allen Glushakow, and his wife, Shelley, have filed a class action suit against Confederation Life Insurance Co., alleging that the company misrepresented its financial health. The suit was originally filed in state court in New Jersey in June, but after regulators seized the company in August, the plaintiffs added a RICO claim under the Racketeer Influenced and Corrupt Organizations Act. Confederation Life and its defendants have applied to have the case transferred to U.S. Federal Court for the New Jersey District, where oral arguments are expected to be heard in mid-November.

Key Takeaways:

  • The Glushakows' class action suit alleges that Confederation Life misrepresented its financial health, citing a history of misrepresentation dating back several years.
  • The RICO claim, added in August, allows for triple damages to be awarded.
  • The defendants have applied to have the case transferred to U.S. Federal Court for the New Jersey District.
  • The court is expected to hear oral arguments in mid-November.
  • The Glushakows have difficulty determining which of their whole life policies are still in force, but the total face amount is between $10-million and $20-million, with a cash value in excess of $1-million.
  • Confederation Life's insolvency proceedings prevent policy holders, including the Glushakows, from obtaining the cash value of their policies.

Statistics:

  • The Glushakows' whole life policies have a total face amount between $10-million and $20-million.
  • The cash value of their policies is in excess of $1-million.
  • The RICO claim allows for triple damages to be awarded.
  • The court is expected to hear oral arguments in mid-November.

Sources:

  • Gary Meyers, lawyer for the Glushakows, quoted in the Gazette.
  • John Levy, lawyer representing Toronto-based Confederation Life and one of its U.S. subsidiaries, quoted in the Gazette.
  • Gazette article, "Confederation Life insurance company sued by New Jersey doctor."