AMS Life Insurance Company (Ariz.)
Judgment against Former AMS Actuaries Reversed by Court of Appeals
In a February 15, 2005, decision, the Arizona Court of Appeals overturned a $19+ million trial court ruling in favor of the AMS Life receiver. The litigation at issue was filed by the receiver in 1997 alleging multiple counts of fraud and professional negligence arising in connection with the accounting and actuarial services provided to AMS Life during a period spanning from 1983 to 1991. Before reaching trial in June 2001, the receiver obtained settlements from several of the defendants, resulting in recoveries of approximately $8.255 million for the estate.
The case then proceeded to trial against the remaining defendants, which included the actuarial firm J. Huell Briscoe & Associates as well as certain individual defendants, collectively referred to as the "Briscoe defendants." Following a lengthy bench trial and post-trial briefing, judgment was entered in September 2001 in favor of the receiver in the amount of $17.5 million. In February 2002, the trial court awarded interest, costs, and sanctions in excess of $1.5 million, increasing the judgment to more than $19 million.
As set forth in the trial court's findings, the Briscoe defendants provided virtually all of the actuarial services for AMS Life during the period at issue, including quarterly reserve calculations and year-end certification of reserves, and further provided information for annual statements. The trial court went on to note that the defendants knew or should have known that AMS Life was totally dependent upon the Briscoe defendants to provide timely and accurate actuarial services, and that their repeated failure to do so was a violation of professional obligations to AMS Life, the state regulators, and policyholders. The defendants filed a notice of appeal. Briefing on appeal was completed by mid-2004, and the parties had been awaiting a decision since that time.
In a lengthy, unpublished memorandum decision, the Court of Appeals ruled, reversing the trial court's judgment on the basis that it found insufficient evidence of actual reliance on false and misleading actuarial opinions issued by the Briscoe defendants. A copy of the Court of Appeals's Memorandum Opinion is available to member associations on NOLHGA's Information Resource Center (IRC) database. We anticipate that the receiver may file a Petition for Review with the Arizona Supreme Court challenging the Court of Appeals's reversal of judgment. Such a petition would be due by March 17.
Task Force Chair - Luther Hill; Staff Contact - Joni ForsytheConflicts Surveys and Antitrust Certifications Due March 21
NOLHGA's Conflicts Policy and annual questionnaire were mailed on March 2, 2005, to all NOLHGA personnel and representatives, including NOLHGA's Board members, committee and task force members, and consultants. The questionnaire must be completed on an annual basis by all persons subject to NOLHGA's Conflicts Policy. This year's questionnaire covers activities occurring from January 1, 2004, through the date of response.
In addition, NOLHGA's Antitrust Policy, Implementation Guidelines, and annual certification forms were simultaneously sent to all NOLHGA personnel and representatives referenced above and to all guaranty association administrators. As is the case with NOLHGA's Conflicts Policy, the Antitrust Policy requires an acknowledgement of receipt and an annual certification of compliance from all recipients.
Please review these materials and return the completed forms to Aimee Frye at NOLHGA no later than March 21. These forms should take only a few minutes to complete, and your timely response is very important. Your assistance in this matter is greatly appreciated.
Staff Contact - Joni ForsytheGadd Promoted to Meeting Coordinator
NOLHGA is proud to announce that De Gadd has been promoted to the position of meeting coordinator. In addition to coordinating NOLHGA's MPC meetings, she has taken on added responsibilities in connection with Board of Directors and committee meetings as well as NOLHGA's Annual Meeting. She also continues to serve as administrative assistant to NOLHGA President Peter Gallanis. Please join us in congratulating De on her promotion.
Staff Contact - Sean McKenna