Wednesday, February 3, 2016
I've certainly seen "unsuitability" claims arising from annuities sold by insurance agents to older persons. In Connecticut, an interesting variation on that theme is the subject of an Unfair Trade Practices suit, brought on behalf of an individual against the Continuing Care Retirement Community (CCRC) where the man was a resident. The individual, Mr. Roscoe, a resident of the CCRC since 2002, married in 2012, reportedly became worried about money, which led to the transaction in question.
Roscoe was concerned about outliving his assets and also about his wife's long-term financial welfare. In the suit, it is alleged that the facility’s director of "planned giving" offered to allow Roscoe to transfer $41,181 from his "entrance fee refund account" and to receive a lifetime charitable gift annuity of $219 per month. According to Roscoe's complaint, the director allegedly represented that the annuity was a more valuable product that it actually was and that the contract was a "good deal." However, at some point Roscoe apparently came to believe that the annuity generated more taxable income than had been indicated, that the charitable deduction was of little value to him given his tax status, and the annuity, as a "gift transfer," could cause either Roscoe his wife to be ineligible for Medicaid if needed to pay for nursing home care.
On December 22, 2015, the Superior Court of Connecticut (the trial level of that state) dismissed counts in Roscoe's lawsuit alleging the CCRC's negligence, recklessness or breach of fiduciary duty in selling the annuity in question to Roscoe. However, the court permitted claims for breach of Connecticut's Unfair Trade Practices Act (CUTPA) to go forward, along with related common law theories. The court concluded:
The plaintiffs' allegations support more than a simple breach of contract claim. As discussed above, the plaintiffs allege facts that, if proven, would support claims of fraudulent misrepresentation and civil theft. Therefore, the plaintiffs have sufficiently alleged substantial aggravating circumstances in support of the CUTPA claim.
For more, read the ruling on the defendants' motion to strike in Roscoe v. Elim Park Baptist Home, Inc., decided December 22, 2015.