DALLAS (CN) - Energy tycoon T. Boone Pickens and boosters for Oklahoma State University cannot recoup $33 million in life insurance premiums paid under a failed fundraising scheme, the 5th Circuit ruled.
Launched in 2007, the Gift of a Lifetime program involved several of the school's top boosters between the ages of 65 and 85 who belonged to a group called Cowboy Athletics. It allowed the athletics department to take out $10 million life insurance policies on them, naming itself as the beneficiary.
The school projected revenues of up to $350 million, citing "actuarial analysis including mortality rates and illustrations provided by the brokers," court records state.
Cowboy Athletics paid $16 million in annual premiums on each covered booster for two years, but not of the boosters died.
In January 2009, university president Burns Hargis asked for copies of the policy from Lincoln National Life Insurance Co. Within 10 days of physically receiving the policies, the school tried to cancel the policies under free-look provisions in state law. It asked for a refund of premiums paid, arguing that Lincoln failed to provide copies of the policies until 2009.
In an ensuing federal complaint, U.S. District Judge Jorge Solis dismissed all of Cowboy's counter-claims.
The ruling noted that Athletic Director Mike Holder had signed policy delivery receipts in 2007 that said the insurance would take effect only if the policy had been delivered and accepted, and the initial premium had been paid.
An insured cannot deny knowledge of a policy's terms if it fails to examine and read a policy before accepting and paying premiums, the court found, citing case law.
"Holder signed the policy delivery receipts acknowledging his free look right and delivery of the policies," Solis wrote. "It was Holder's own decision not to read the legal documents he signed and to not read the policies. Based on these documents, both Lincoln and Cowboy subsequently treated the issued policies as valid and they both performed under the contracts. For Cowboy to now claim breach of contract based on an alleged failure of delivery of the policies would itself be inequitable."=
The New Orleans-based federal appeals court unanimously affirmed Monday.
Though Oklahoma law allows for a free-look for 10 days after receipt of the policy, the boosters had waived their rights, according to the ruling.
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