"Get your facts first, and then you can distort them as much as you please." (Mark Twain)

Monday, January 23, 2006


Behold the dark side of capitalism:
When M. Smith was diagnosed with cancer and AIDS in the early 1990s, she was given two years to live.

That she is still very much alive today is good news - to everyone but the people who bet big on her dying.

Had Smith perished on schedule, Life Partners Inc. would have made $60,000 on a $90,000 wager - a 66 percent return on the investment.

Instead, the company that expected to make a profit on Smith's life insurance policy wound up spending $100,000 more keeping her alive.

Now, Life Partners' attempt to wriggle out of the relationship has led to one of the most morbid contract disputes ever filed in New Jersey Superior Court....

A stranger claiming to represent angry investors has twice called Smith at home to ask her how she was feeling....

Smith felt like a normal, healthy thirtysomething when she got her dual death sentence in 1992.

"I went to the gym the day I saw the doctor," the former New Jersey resident recalled in an interview Thursday. (She requested anonymity because of the stigma of her disease.)

She began treatment, but wasn't optimistic. Back then, it seemed as if everyone who had AIDS died quickly.

Single, self-employed and with little savings, Smith was intrigued by an ad offering to buy her life insurance....

And so, in 1994, Smith sold her $150,000 life insurance policy to Life Partners Inc. of Waco, Texas, for $90,000. As part of the contract, Life Partners set aside $5,510.64 to pay the premiums for Smith's health- and life-insurance policies, which were linked and could not be separated.

By investing in her fate, Life Partners assumed responsibility for the premiums as long as she lived.

"Purchaser," the contract read, "agrees to make any necessary contributions to the escrow fund to pay future premiums in the event that escrowed funds are exhausted and Seller shall have no further liability for payment of premiums on the policy."

Smith defied the odds. She recently turned 50 - and thanks to daily medicine, says she generally feels fine.

Though Life Partners has wowed investors with regular dividends and an average 16 percent return, the Smith case has been all pain, no gain....

Life Partners' president and General Counsel, Scott Peden, declined comment about the lawsuit - which he said he believes is the first of its kind in the company's 15-year history of helping "thousands of terminally ill patients."

Disgusting, but probably inevitable given the way our broken health care system works. But don't worry; the President has a plan to fix it - and it's just about as good as all of the President's other plans.




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