Baltimore, MD – June 15, 2009 -- James A. Gordon and Invotex Group, as court appointed administrator of a life insurance policy that was viaticated through Answer Care, Inc., a now-defunct viatical settlement company that was placed into receivership in 2002, delivered good news to a discrete group of Answer Care investors. After nearly seven years of trials and appeals, Invotex was successful in litigation against First Penn-Pacific Life Insurance Company regarding the validity of a $2 million life insurance policy. A recent federal Court of Appeals ruling established the validity of a life insurance policy under which First Penn must pay to Invotex as the policy trustee $2 million plus nearly $1 million in interest that has accrued since 2004. The net proceeds of the First Penn policy will be allocated among the policy investors.

“This outcome is a victory for Answer Care investors who unknowingly invested money into a fraudulently run company. We are pleased to be able to repay all of their investment plus some additional return on their investment as well,” said Mr. Gordon.

According to Paul Caiola, a member of the Litigation Group at Gallagher Evelius & Jones, who argued the case on behalf of Invotex, "This was a pivotal case not only for the investors who owned the beneficial interest in the First Penn policy but also for the secondary insurance market nationwide." Insurance companies around the country have been watching and closely anticipating the Fourth Circuit’s decision. The decision represents the first time a federal appellate court announced that an insurable interest exists where an insured purchases insurance on his own life with an intent to later assign the policy to a third party. "A different decision regarding insurable interest could have had a catastrophic effect on the secondary insurance market," said Mr. Caiola.

Background of the Case
This case centered on a life insurance policy for Stanley Moore, a 54-year old resident of Arizona who sold the benefits of his life insurance policy to a broker, which later sold the policy to Answer Care. The term "viatical settlement" refers to a contract by which a terminally ill person assigns the benefit of his life insurance policy to a third party in exchange for cash. Moore, who was not terminally ill, purchased seven life insurance policies. According to First Penn, one of the policy issuers, Moore fraudulently obtained his policy by failing to disclose the other policies. First Penn sought to rescind the policy and twice sent a letter giving notice of the rescission and attempting to return a check to refund the premiums paid to date. The escrow agent for Answer Care rejected the checks, disputed the rescission, and maintained that the policy remained in force. First Penn then filed a complaint in district court seeking a ruling that the policy was invalid.

Years after the litigation commenced, Moore was shot and killed. The policy took on new significance. A case that once seemed to involve only a fight to pay premiums on a policy on the life of a healthy person became a struggle over the $2 million death benefit of a matured policy.

The case took many procedural twists and turns and found its way three times to the U.S. Court of Appeals for the Fourth Circuit. Mr. Caiola, and his colleague David Sommer, argued the case at every stage. The final appeal challenged the federal district court's 2007 decision to enter summary judgment in favor of Invotex. First Penn made two arguments in that appeal: that the parties mutually agreed to a rescission of the policy, and that an insurable interest did not exist.

Appearing before Chief Judge Karen Williams and Judges Paul Niemeyer and Diana Gribbon Motz, Mr. Caiola argued that the policy owner consistently rejected First Penn's attempts to rescind the policy and, significantly, led the court to conclude that an “intent to transfer a policy does not alone destroy an insurable interest…” The appellate court agreed with Invotex and affirmed the lower court’s award of summary judgment.

About Gallagher
Founded in 1961, Gallagher Evelius & Jones (www.gejlaw.com) is a Baltimore law firm focusing on real estate and business transactions, affordable housing, tax and tax credit investments, litigation, creditors' rights, renewable energy, health care, employment, education, and nonprofit matters. The firm has more than 40 attorneys serving institutional, corporate, and nonprofit organizations throughout Maryland.

About Invotex Group
Invotex Group (www.invotex.com) provides accounting, financial and economic consulting services to clients including Fortune Global 500 corporations, major law firms, leading research universities and local, state, and federal governments and agencies around the country. For more than two decades, the firm has managed multi-state, complex receiverships with recovery efforts spanning theglobe. The firm’s highly credentialed experts and professional staff also conduct economic and financial analyses to provide objective opinions and advice in matters involving complex transactions, disputes, investigations, reorganizations, insurance and valuations. Invotex also offers advisory services for intellectual property owners, including licensing, technology evaluation and license compliance, asset management and enforcement of IP rights. The firm comprises experienced industry leaders, former public company financial executives, former international accounting and consulting firm (Big 4) partners and seasoned consultants.