SAN DIEGO, Dec. 19 2004 – LAWFUEL – First with law news – The United States Department of Justice on Friday (December 17, 2004) asked the Federal District Court in San Diego to dismiss without prejudice its lawsuit against xelan and Doctors Benefit
Insurance Company, companies that provide financial planning and insurance for
health care professionals.
Last month, in a widely publicized and rare move, the Government sought
and obtained, without a hearing, an order freezing all of the assets of xelan
and Doctors Benefit, and appointing a temporary receiver. After securing the
temporary restraining order, the Government issued a press release accusing
the defendants of operating fraudulent tax reduction schemes, and suggesting
that doctors contact the receiver to learn how to file claims against the
companies.
Nearly a month later (December 3), the Federal District Court in San Diego
conducted a full hearing on the Justice Department’s application for a
preliminary injunction, pending trial of the lawsuit. After hearing all
arguments, the Court ruled that the Government had not demonstrated that it
was likely to prevail in the case, one of the prerequisites for granting such
relief. At that time, the Court also denied the Government’s request for a
preliminary injunction, dissolved the freeze of assets and dismissed the
receiver.
Last Wednesday (December 15), the Court issued its written opinion, in
which it found that the government made no showing that xelan violated the tax
laws, no showing that assets seized were traceable to criminal activity, no
showing of asset dissipation or of an alleged Ponzi scheme, and no showing
that the tax implications of any xelan product were mischaracterized in the
marketing.
DBIC and its predecessor have been writing supplemental disability
insurance since 1995. At the hearing on December 3, DBIC presented opinions
from five actuarial firms and two law firms that had previously reviewed
DBIC’s insurance, each stating unequivocally that the disability insurance was
in fact “true” insurance and satisfied all tests for what constituted
insurance.
