The Bankers Life Fraud Suit: The Final Decision
READ THE FINAL DECISION AT THE ABOVE LINK!
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!