Sifting through the opposing rulings on the legality of the subsidies on the federal health insurance exchange.
By Steven A. Morelli
A California appellate court threw out the conviction of an insurance agent who had been found guilty of theft for selling an annuity.
Glenn Neasham, 53, Hidden Valley, had been convicted in October 2011 of felony theft from an elder in a California court for selling an Allianz MasterDex 10 in 2008 to an 83-year-old woman who was later said to have suffered from dementia. Neasham was facing up to four years in prison but the sentence had been reduced to 60 days.
The First Appellate District Court on Tuesday reversed the conviction in a decision that seemed to ridicule the prosecution.
“Under the prosecution’s theory of this case, merely cashing a check for a person known to suffer from dementia would support a larceny conviction,” Associate Justice Stuart Pollak wrote in the ruling.
The prosecutor had argued in the original case that Neasham should have known the client, Fran Schuber, had dementia, even though Neasham and his assistants said that they did not notice any cognitive impairment and that Schuber had said in a questionnaire that her health was “good.” At that time, California allowed the sale of that annuity to clients up to age 85.
In their decision, the three appellate justices agreed that the prosecutor did not prove theft because the annuity sale amounted to an exchange of equal value and the state did not prove that there was intent to steal.
The ruling said:
Prosecutors did not prove Neasham knew of the dementia: “All of the witnesses to the discussions between Schuber and defendant confirm Schuber’s apparent comprehension at the time of their conversations, and prosecution witnesses acknowledged that persons with dementia can have periods of apparent lucidity.” [In an interview with InsuranceNewsNet after the verdict, the prosecutor admitted that she did not prove that Neasham knew Schuber had dementia.]
If Neasham knew of the dementia, the prosecution still did not prove larceny: “Defendant received Schuber’s cashier check payable to Allianz and transmitted it to the insurance company, which issued her the annuity policy. He did not take her funds or convert her property for his own use or the use of any other person.”
Schuber was not deprived of her money: “The annuity was issued in Schuber’s name and she at all times was the owner of that policy. For 30 days after its issuance, she had the unqualified right to cancel the policy and receive back the full price paid for the policy. While the prosecution placed great emphasis on the penalty she might have incurred had she withdrawn more than 10 percent of the policy value within five years of its issuance, there was no evidence that Schuber had any intention or need to make such a withdrawal, the penalty did not apply if she became hospitalized or moved to a long-term care facility and, most importantly, there was no evidence that this standard term reduced the value of the policy to less than she paid for it.”
After Neasham’s conviction, Allianz refunded Schuber the value of the annuity plus interest promptly after Schuber’s son asked for the money. The Schuber family had not asked for a refund before the conviction. Fran Schuber has since died.
The prosecution can now appeal the verdict or retry the case. An appeal would have to overcome a jury instruction error noted in the ruling. A retrial would also have to grapple with the appellate ruling’s rejection of the basic premise of theft in the prosecution’s initial case.
Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers, magazines and insurance periodicals. He was also vice president of communications for an insurance agents’ association. Steve can be reached at email@example.com.
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