Attorneys for LPL Financial broker Lance Browning refiled a lawsuit Friday seeking damages from Ohio National's surprise decision to cut trail commissions on certain variable annuities.
The amended lawsuit is part of a strategy to refocus away from the class-action request to individual lawsuits, explained Dennis J. Concilla of Carlile, Patchen & Murphy, a Columbus, Ohio law firm.
Class-action lawsuits can "take years" to resolve, Concilla said, so the firm will be filing several additional lawsuits on behalf of individual brokers who will claim financial loss from Ohio National's decision to end trail commissions on certain VAs. Concilla did not know how many lawsuits will be filed.
"We certainly have a number of them from different firms," he said. "Each case may be a little different depending on the individual agreement the broker signed."
Meanwhile, Ohio National attorneys have asked the Southern District of Ohio court to dismiss Browning's lawsuit. The insurer accused Browning of making "a grab bag of claims" to which he "is neither a party nor a third-party beneficiary."
An LPL broker based in Whitehouse, Texas, Browning sold annuities with Morgan Keegan and UBS/Paine Webber prior to joining LPL in 2012, court documents say. He has sold more than 100 annuities with trailing commissions that yield him $89,000 annually.
Browning's class-action lawsuit claims Ohio National is guilty of "breach of contract" and "unjust enrichment," among other claims.
Ohio National, represented by Zeiger, Tigges & Little, a Columbus, Ohio law firm, said its contracts are with the broker-dealer, not the broker.
Ohio National informed broker-dealers in a Sept. 28 letter that it would terminate "any and all servicing agreements" on Dec. 13. That means all compensation, specifically trail commissions, stopped on that date.
The decision is believed to be the first of its kind in the industry and affects variable annuity contracts purchased with a guaranteed minimum income benefit rider. The GMIB is appealing to clients looking for guaranteed income in retirement.
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. Career agents are apparently unaffected by the decision to stop paying trails on VAs with a GMIB.
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].