(CN) - A program that T. Boone Pickens designed to support athletics at his alma mater by selling life insurance policies to Oklahoma State alumni has been sued by its insurer for breach of contract. Pickens is not a party to the complaint. Lincoln National Insurance claims that Cowboy Athletics, the beneficiary of the policies of The Gift of A Lifetime program, grossly misrepresented its cancellation provisions when it demanded the return of $33.3 million in premiums made between 2007 and 2009.
Lincoln National also claims Cowboy Athletics made false claims of fraud against Pickens' BP Company and other Texas firms involved in the program's management, in a wanton, anticipatory effort to void legitimate contracts.
The insurer seeks declaratory judgment that the policies it issued are valid and enforceable, and that Cowboy Athletics Inc. has no right to refunds of premiums.
According to the federal complaint, the nonprofit Cowboy Athletics was organized to raise money for athletics programs at Oklahoma State University. It was in that role, between 2005 and 2007, that it worked with Pickens to develop The Gift of a Lifetime program.
In form and breadth, the plan was simple. OSU would solicit alumni to allow Cowboy Athletics to buy $10 million life insurance policies in their name, with the nonprofit named as beneficiary and the return on its investment benefitting the university's athletic programs.
Pickens' firm was retained to invest in and manage the program in collaboration with a select group of other Texas firms, according to the complaint.
The insurer says the strategy was outlined in several memoranda, including "Pickens Financial Strategy for Oklahoma State University," "Pickens Athletic Development Strategy for Oklahoma State University," "Cowboy Gift of a Lifetime Program: An Endowment Building Strategy," and "Oklahoma State University Foundation Pickens Insurance Strategy Questions and Answers."
An arbitrary date of Feb. 7, 2007 was established for enrolling in the program, to allow Pickens to announce its founding at the Reagan Presidential Library. In all, 27 alumni agreed to participate, the complaint states.
According to Lincoln National, Cowboy Athletics acknowledged receipt of the individual policies in March and April 2007. Each had a provision allowing for cancellation 10 days after its receipt, 20 days in the case of policies issued in replacement of other insurance.
But in April 2009, Cowboy Athletics improperly asserted its right to cancel the policies, claiming it had not received them until March 26, 2009, the complaint states.
Lincoln National says that Cowboy Athletics also falsely claimed, among other things, that Pickens' and the other firms involved were improperly acting as the insurer's agents; negligently misrepresented that Cowboy Athletics could obtain permanent premium financing; and that they failed to provide Cowboy Athletics with accurate and reliable actuarial data related on the anticipated mortality of the insured alumni.
Lincoln National, which paid $10.9 million in commissions to brokers based on the validity of the policies, holds that each of the assertions is false and that it has fully performed its obligations under the polices.
Lincoln National is represented by Andrew Jubinsky and Raymond Walker with Figari & Davenport in Dallas.