After months of tepid activity, a trio of lawsuits to recover trail commissions on specific variable annuities offered by Ohio National are moving ahead briskly.
The lawsuits are filed in the Southern District of Ohio. They are three of many challenges to a September 2018 decision by Ohio National to stop paying trail commissions on variable annuity contracts purchased with a guaranteed minimum income benefit rider.
On June 28, a magistrate judge denied a motion by Ohio National to dismiss a class-action lawsuit filed in March by Stephen Cook, a Dallas-based advisor affiliated with Triad Advisors. Judge Stephanie Bowman also recommended that the case be consolidated with a similar one against Ohio National brought by LPL Financial broker Lance Browning in November.
This morning, Judge Susan J. Dlott set July 23 as the hearing date for a similar motion for summary judgment filed by Ohio National in the third lawsuit brought by Veritas Independent Partners. The judge will hear arguments at 10 a.m.
'Superfluous And Improper'
If Dlott issues a similar ruling -- to allow the Veritas lawsuit to proceed -- then the cases could begin moving through the courts.
Meanwhile, there are signs that the lengthy delays are wearing on some of the parties. Browning's attorney expressed frustration this week in responding to a request for a status conference by Ohio National.
In a response filed Tuesday, attorney Matthew R. Wilson dismissed the idea that a status conference is needed. No discovery requests are pending, nor are any planned, Wilson wrote. The "true purpose" of Ohio National's conference request was to brief the court on its objections to Bowman's ruling, he insisted.
"Whether the court elects to hold a status conference at this time or not, it should ignore the defendants' superfluous and improper briefing," Wilson wrote.
Ohio National has told InsuranceNewsNet that it never comments on pending litigation. However, a company spokesperson issued this statement following Bowman's decision: “we disagree with this ruling and are taking action to seek further review.”
Here are summaries of the three lawsuits filed in Ohio:
- Cook's lawsuit is the only class-action filing. The class is being represented by Cincinnati-based law firm Helmer, Martins, Rice & Popham, Co., and New York-based Sarraf Gentile. The lawsuit is filed on behalf of "thousands of members" that his complaint concedes must be found and identified.
- Browning originally brought his class action on behalf of all securities reps in November. Later, he amended his complaint and is limiting his class to LPL Financial reps. Browning's attorney told InsuranceNewsNet that class-action lawsuits "can take years" to resolve. Ohio National is arguing that Browning is a "third-party" participant who lacks standing to sue.
- Veritas Independent Partners, an independent broker-dealer based in Conway, Ark., filed its lawsuit on behalf of broker-dealers in November. Veritas asked the court to issue an injunction maintaining the current contract provisions, as well as to certify rights to all trail commissioners in the contracts.
Ohio National terminated "any and all servicing agreements" on the VAs in question on Dec. 12, 2018. The decision is believed to be the first of its kind in the industry. The VAs with a GMIB are appealing to clients looking for guaranteed income in retirement.
"Ohio National tortiously devised a scheme to save money by refusing to pay owed trail commissions to Veritas," the Veritas lawsuit reads.
In addition to its decision to stop paying trail commissioners, Ohio National followed up with an Oct. 29 email to clients offering a buyout of the VA contracts with the GMIB rider.
Ohio National distributes life and annuities through an independent producing general agent channel with about 11,000 agents, and through a career agency channel with about 4,000 agents, the company said.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected].
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