Thursday, August 19, 2004
C.A. Reinstates Libel Suit Against Web Activist in Dispute Over Viatical Settlements
By a MetNews Staff Writer
A defamation suit by a broker of viatical settlement agreements against a former insurance agent who now operates a Web site dealing with viaticals and has written several books on the subject has been reinstated by the First District Court of Appeal.
The panel Tuesday reversed San Francisco Superior Court Judge James J. McBride’s dismissal of Scott Wilbanks’ action against Gloria Wolk. Justice William Stein agreed with the trial judge that the suit concerned statements made by the defendant on a public issue in a public forum, but concluded that Wilbanks will probably prevail at trial.
Wolk is a self-described consumer advocate who has used her site www.viatical-expert.net to promote her books and criticize brokers of viatcals, including Wilbanks, for allegedly unethical business practices.
In a viatical settlement, an insured—generally someone with a terminal illness—agrees to sell his or her life insurance policy to investors for a percentage of the death benefits. The practical effect of the arrangement is that the insured, called a viator, receives funds for medical care or living expenses, while the investors’ return is dependent on how quickly the viator dies.
The investors usually receive 20 to 30 percent of the death benefits, while brokers such as Wilbanks sell the policies in exchange for sales commissions of nine percent or more.
Wilbanks filed suit in July 2001, saying Wolk defamed him and his firm by stating on her site that Wilbanks and Associates was “under investigation” by the state Department of Insurance, that “a California viator who won a judgment against Wilbanks” had complained, and that the firm “provided incompetent advice” and “is unethical.”
In response to Wolk’s special motion to strike under Code of Civil Procedure Sec. 425.16, Wilbanks argued that the site is not a public forum because Wolk controls the content and allows no public input, that the business practices of his small brokerage are not a matter of public interest, and that he will be able to prove at trial that he was libeled and suffered damages as a result, which he pegged at more than $1 million based on the difference between his income before and after Wolk’s comments appeared online.
Stein disagreed at to the first two points.
While Wolk’s site may not be a public forum, the justice reasoned, the Internet as a whole is. And while the public may not know who Wilbanks is or care about his business practices specifically, the subject of viatical settlements “touches a large number of persons” who may be interested in the kind of information Wolk provides.
But Stein agreed with Wilbanks that the evidence presented by the parties in connection with the motion “stated and substantiated a legally sufficient claim.”
Wolk, the justice explained, “omitted significant facts” from her report on Wilbanks. Stein noted that she failed to mention that the judgment against Wilbanks was obtained in small claims court, rather than in a fully contested legal proceeding and did not explain what the dispute was about.
By reporting that state regulators were investigating, Stein said, Wolk implied that they thought there was merit to the complaint. In fact, the justice wrote, Wolk knew that the department assigns an investigator to every complaint and that it had not pursued disciplinary action against Wilbanks.
“Wolk’s own position as a crusader and watchdog to the industry also works against any argument that she was merely stating the facts and drawing her own opinion from them,” Stein reasoned. “An accusation that, if made by a layperson, might constitute opinion, may be understood as being based on fact if made by someone with specialized knowledge of the industry....Wolk here held herself out to have special knowledge resulting from extensive research into the viatical industry; i.e., she claimed to be a person who could recognize and identify unethical practices that the average person might not recognize. Wolk clearly expected readers to rely on her opinions as reflecting the truth.”
Wilbanks, the justice went on to say, is not a public figure and need only prove negligence in order to recover. The evidence, Stein concluded, supports at least a claim of negligence and potentially of recklessness, since Wolk refused to discuss the matter with Wilbanks or to consider his side of the story.
The case is Wilbanks v. Wolk, 04 S.O.S. 4505.
Copyright 2004, Metropolitan News Company