PHL Variable Insurance Co. v. The Sheldon Hathaway Family Trust
Public Citizen represents a life insurance professor and blogger, Joseph Belth, on his motions to intervene and unseal portions of the summary judgment record in a case brought by a life insurance company seeking to rescind a policy it issued on the basis of fraud. PHL Variable Insurance Company alleges that the defendants perpetrated a stranger-originated life insurance (STOLI) scheme, in which a third-party investor typically agrees to pay the premiums on an insurance policy on the life of an elderly individual in exchange for the insured transferring the rights to the death benefits payable on the policy. Among other things, PHL alleged that the individual’s life insurance application falsely represented that he would not use financing to pay the premiums on the policy and that he had no intention of transferring the policy to a third party who had no continued interest in his life. STOLI schemes have attracted regulatory scrutiny in recent years, both because third party investors work with insurance brokers and agents to obtain life insurance policies that far exceed an individual’s net worth and income and because STOLI transactions circumvent the traditional objective of life insurance as a means for an individual to provide financial protection to her family upon her death. In December 2013, the court granted summary judgment in favor of PHL, and the defendants’ motion to alter or amend the judgment is pending. Belth argues that the public has both a common-law and First Amendment right of access to the summary judgment records.