THE EXECUTIVE LIFE INSURANCE COMPANY OF NEW YORK DEBACLE
While this may seem like history, the day is still fresh in the minds of those who lost their supposedly guaranteed annuity benefits. In December of 2011, just before the Christmas holidays, over 1500 Executive Life Insurance Company of New York (ELNY) annuitants received notices from the New York Liquidation Bureau (NYLB) that their benefits would be severely cut, with some seeing a reduction of more than 60%. The recipients of these letters had one thing in common – all had received an Executive Life Insurance Company of New York (ELNY) annuity as a result of the settlement of a personal injury or wrongful death lawsuit.
In spite of the many objections raised by the ELNY shortfall payees at a lengthy hearing held in March, 2012 in Nassau County Supreme Court (NY), on April 16, 2012 Judge John Michael Galasso issued an Order approving the plan of liquidation and in an accompanying decision declared ELNY to be insolvent.
The approved plan of liquidation for ELNY cut over $920 million of payments owed to approximately 1500 Executive Life shortfall payees. A hardship fund administered by JAMS was established with voluntary contributions from undisclosed insurance companies. The lengthy and complicated hardship application took hours to complete and applicants were told that funds will be distributed according to financial or medical need as determined by JAMS. Collectively the shortfall payees faced a loss of over $920 million and the $100 million hardship fund did not come close to covering the $920 million dollars the shortfall payees lost.
Edward Stone, along with the Utah based law firm of Christensen & Jensen filed an appeal of the liquidation order on the basis that (i) inadequate notice and denial of information to the shortfall payees did not meet due process requirements, and (ii) the immunity and injunctive relief afforded the Superintendent and his agents was overly broad and not supported by statute or common law. Despite the thousand page record and detailed briefs citing controlling New York case law, on February 6, 2013 the New York Appellate Division, Second Department summarily denied the appeal and determined that due process had been satisfied and the injunctions and grants of immunity in Judge Galasso’s order were appropriate.
On March 8, 2013 Edward S. Stone, Christensen & Jensen, and New York appellate expert, Michael J. Hutter, Esq. of Powers & Santola filed a Motion for Leave to Appeal the Second Department’s decision to the New York State Court of Appeals.
Despite our best efforts, the New York Court of Appeals denied our motion for leave to appeal the Appellate Division decision and the case was not heard on the merits. The Restructuring Agreement was signed on August 8, 2013 and benefit reductions began immediately, with most annuitants seeing additional cuts. For more on the ELNY debacle, see our recap of the ELNY Class Action Lawsuit.