Nebraska Insurance Agency Loses Round But Fight Continues

A judge has ordered a defunct Nebraska insurance firm to pay Florida regulators at least $2.2 million, but this week’s ruling isn’t likely to settle the case that began in 1998.

The Nebraska Supreme Court has already ruled on aspects of the case four times, and may get another chance after the ruling from a Douglas County District Court judge.

The case centers on the relationship between David Fulkerson’s former company, Countrywide Insurance Agency, and an insolvent insurance company, United Southern Assurance, that Florida regulators took control of in 1997.

Bob Craig, who represents Florida, said he’s pleased with the ruling, but doesn’t expect it to end the dispute.

Attorney William Gast, who represents the Fulkerson family and Countrywide, said he’ll appeal because procedural problems should have killed the case several years ago and because he doesn’t think the evidence supports the judge’s ruling.

He added that the lawsuit has become “a story of total judicial chaos” with elements in three different courts. Fulkerson died in 2009 triggering a probate case in another county. His wife is now a defendant and her remaining assets are being held in bankruptcy court until this case is resolved.

Fulkerson’s company had been selling insurance policies as an agent for United Southern and was supposed to send the premiums to United Southern. When Florida officials ordered United Southern to stop writing insurance policies in 1997, Countrywide did not hand over four months of premiums.

In a 2006 judgment that was later overturned, Fulkerson was ordered to repay $2.23 million in premiums and pay $2.44 million in interest, which continues to accrue.

The Fulkerson family denies any money was taken fraudulently. Gast has argued the missing premium money was either returned to customers or applied to new insurance policies with a different company.

But Florida regulators haven’t accepted Fulkerson’s explanations and maintain the money owed to United Southern should be repaid. They say much of the money was transferred to other entities the Fulkersons controlled.

A trial was held in April 2014, but Judge Peter Bataillon didn’t announce his ruling until this week because he had to review numerous legal briefs, 2,000 pages of testimony and 3,000 pages of exhibits. Now, it may make a fifth trip to the state Supreme Court.

In 1999, the Nebraska Supreme Court decided the trial judge was wrong to issue a judgment against Fulkerson and Countrywide. Then in 2005, the court ruled it didn’t have jurisdiction to evaluate whether the trial judge should have recused himself from the case.

The court also ruled a jury, not the judge, should have decided the case in 2006. And then it issued another ruling in 2009 clarifying how the case should proceed.