Sunday, May 6, 2012


 The Bankers Life Fraud Suit: The Final Decision
In case you're new to the scene, here's a recap of how this scandal came to be, as we originally broke the story on this blog March 15, 2012:

Five managers and twelve insurance agents previously associated with the Traverse City branch of Bankers Life and Casualty have tentatively settled a civil suit filed in Chicago on April 26, 2011. A status hearing is scheduled for 9:45 a.m. on March 20, 2012 before Honorable Geraldine Soat Brown.

But as the legal clock ticks down to the March 20 status hearing in Chicago, the five biggest fish (all former Bankers Life Traverse City office senior managers)—Shannon Nelson, Kelly Dachtler, Ryan Kashmerick, Timothy Horvath and David Teesdale—aren’t waiting for the ink from the judge's signature to dry. They’ve already formed a new company, American Senior Benefits, and have gone right back into the insurance business.

The seventeen had been sued by the company for fraud. The suit alleged “breach of contract, misappropriation of confidential client information and trade secrets.” The seventeen signed Bankers Life agent contracts containing confidentiality, anti-raiding and customer non-solicitation provisions.

Bankers Life, a health and life insurance company with more than 200 branch sales offices across the country, sought compensatory damages, double damages for willful misappropriation of trade secrets, punitive damages, costs, and attorneys’ fees.

Named in the civil complaint filed on April 26, 2011 by Bankers Life in Chicago’s U. S. District Court is former Branch Sales Manager Shannon Nelson. Nelson’s LinkedIn profile states he began his career with Bankers Life as an Agent Development Associate in March 1993, at the Evansville, Indiana branch office. He was named Branch Sales Manager of the Traverse City office in 1994.

Also named: former unit sales managers Kelly Dachtler and Ryan Kashmerick, former unit field trainers Timothy Horvath and David Teesdale, and former agents Troy Baxter, Lisa Benson, John Blanck, Bert Brotherton, John Kime, Seth Kishefsky, Joseph Michalec, Michael Robertson, Kurtis Tulppo, and Johnathan Young. Except for Kime, who lives in suburban Detroit, the defendants are Traverse City area residents.

The Bankers Life Traverse City branch office unraveled in early February 2011, when members of Bankers Life’s human resources department and special investigations unit arrived at its 800 Hastings Street location to conduct on-site investigations prompted by complaints regarding the activities of both former and current agents and managers.

According to court papers, the investigations revealed numerous instances of “fraud and other improper conduct” by all seventeen defendants.

Nelson, Dachtler and Kashmerick disclosed during their interviews with the Bankers Life special investigations unit in February that they had improperly instructed agents to stop placing sales leads on the “do not call” list unless the individuals had requested that “they not be called at least seven times.” According to the court filing, agents that did not follow this instruction were reportedly “subject to retaliation by Nelson, Dachtler and Kashmerick”.

Timothy Horvath acknowledged to Bankers Life investigators during an interview that he had forged “the signature of a policyholder on her policy delivery receipt.”

Jonathan Young revealed to investigators that he had forged “the signatures of several of his family members on policy applications.” Bankers Life alleges in its suit that Young took out the policies to “qualify for a sales bonus,” and then cancelled the policies shortly thereafter.

The Bankers Life suit claimed that Nelson, Dachtler, Kashermick, Horvath and Young, in anticipation of negative consequences of the investigations conducted in Traverse City, obtained licenses to sell insurance products for North American Company for Life & Health Insurance (North American), a competitor of Bankers Life. The suit maintained that these five defendants then “resigned from and/or voluntarily terminated their contracts with Bankers Life and solicited the other defendants to terminate their contracts from Bankers Life and join North American”.

A review of the State of Michigan’s Office of Financial and Insurance Regulation licensing records confirms that Nelson, Dachtler, Kashermick, Horvath and Young first obtained licenses to sell insurance products for North American between March 9 and March 20, 2011.

Bankers Life claimed that they then instructed the other twelve defendants to “obtain a license with North American and prepare to sever their relationships with Bankers Life”.

Shortly before resigning, all seventeen defendants “accessed Bankers Life’s Sales Productivity Network and/or Bankers Life’s Centralized marketing database and downloaded thousands of proprietary policyholder records and prospecting resources”—information that could be used to target specific policyholders and tailor proposals directly to them. The downloaded information included protected health information regulated by the Health Insurance Portability and Accountability Act (HIPAA).

Among the highlights asserted by Bankers Life in the court filings are:

-Shannon Nelson was the first to access the Centralized Marketing Database. Beginning in late February 2011, after he was aware of the investigation, he “downloaded multiple prospect and customer lists”. (Michigan licensing records verify that Nelson was appointed to North American on March 20, 2011 and resigned from Bankers Life on March 31, 2011.)

-Kelly Dachtler received her appointment with North American on March 13, 2011 and submitted her resignation from Bankers Life on March 26, 2011. According to the Bankers Life suit, Dachtler “downloaded policyholder records on March 14, 15, 16, 19, 22, 23, 24 and 26”. Dachtler capped her downloading with a “policyholder list containing hundreds of records on March 27, the day after she submitted her resignation”.

- Ryan Kashmerick received his appointment with North American on March 9, 2011 and submitted his resignation from Bankers Life on March 20, 2011. During the interim, Kashmerick “downloaded a significant number of policyholder records on March 9, 10, 14 and 15”.

- Timothy Horvath received his appointment with North American on March 10, 2011 and submitted his resignation from Bankers Life on March 18, 2011. Horvath “downloaded over one thousand policyholder records on March 17, the day before he submitted his resignation”.

-David Teesdale received his appointment with North American on March 15, 2011 and submitted his resignation from Bankers Life on March 23, 2011. Teesdale “downloaded hundreds of policyholder records the very day of his resignation, and downloaded several policyholder records the day after he resigned”.

Bankers Life maintained “the defendants removed the records from the database and branch office with the intent to use the information in their new positions with North America”.

In addition to the allegations of “misappropriation of trade secrets and confidential client files”, the suit claimed that four defendants admitted during their interviews to “contacting Bankers Life policyholders for the purpose of having them cancel or replace policies issued to them by Bankers Life”.

Kurtis Tulppo and Joseph Michalec were among those Bankers Life claimed contacted numerous policyholders, some by phone and some in writing.

The suit alleged Tulppo contacted a policyholder by phone, telling her that he left Bankers Life because of “bad business” but that he could help her with any questions that she may have, and they he could get her a “better deal” with another company.

And after terminating his agreement with Bankers Life, Michalec allegedly contacted a prospective Bankers Life policyholder and “solicited her to cancel her insurance applications with Bankers Life and take out policies with a competitor”. As a result, Bankers Life claimed the policyholder cancelled her applications with the company.

Michigan corporation records confirm that Central Licensing Bureau, Inc., an Arkansas-based insurance industry compliance service, filed paperwork to incorporate “American Senior Benefits, LLC” on April 25, 2011—one day before Bankers Life filed its civil suit.

Michigan classifies American Senior Benefits, LLC a “foreign limited liability company” as it was originally formed in Ohio. Launched under the name, HealthMark Sales of Ohio, LLC on May 25, 2001, the company changed its name three times over the next nine years before finally settling on its present identity in 2010.

Shannon Nelson, the former Bankers Life Traverse City branch sales manager, heads the new company as its Regional Sales Manager. Nelson’s senior management team includes former Bankers Life colleagues Kelly Dachtler, Jonathan Young, and John Blanck, who joined American Senior Benefits as Senior Partners. Nelson named former Bankers Life Unit Sales Manager Ryan Kashmerick the new Branch Sales Manager, and fellow alum David Teesdale was added to the staff as the company’s new Executive Administrator.

American Senior Benefits is located in Traverse City’s Harbour View Center at 333 W. Grandview Parkway.

Caveat emptor, baby!

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