The fun begins - SCA now asking for money back...

[Weapons of @ss Destruction]

...though if the underwriters had done their job, the losses would be more than offset by premiums on policies where there were no losses.

No, underwriters and actuaries cannot be reasonably expected to assess risk and apply the necessary financial measures in the setting of policy premiums across the entire portfolio of policies they insure, if any significant portion of those policies (by value) ends up having fraudulent claims made against the covered contingencies. Armstrong and Co. gamed the system.

On the other hand, if all the insureds disclosed during the application process that they were gaming the system, then appropriate premiums could be set. If not, then the insurance company is essentially a victim of fraud.

Duh...

 

[ChewbaccaD]

He should just put it in his sig. line.

Isn't a large part of the case simply that Armstrong ultimately didn't win those races that he was paid the bonus for, so therefore Tailwind should have never collected any money? If so, then seems like Tailwind owes SCA and Lance owes Tailwind. No?

Yes, the point of the entire contract was to pay Armstrong if he was the "Official Winner" of the Tour for the years in the contract. He isn't the "Official Winner" and never was because his status was procured through fraud. His continuing fraud kept the truth from being known, and that truth was that he was not the winner of the Tour because he did not, in reality, fulfill all of the requirements of a Tour winner. "Official" Tour winners cannot have doped. Armstrong has admitted he did.

It is a bit nuanced, but people keep talking about how SCA is claiming that Armstrong fraudulently got SCA to sign the settlement agreement, and (some like Mark and BTK) that the settlement agreement makes clear that it was entered into based on no representations by anyone (meaning Armstrong never claimed anything in relation to doping or anything else to get SCA to sign). The problem is that none of that has anything to do with SCA's actual complaint. People are either reading the complaint wrong, or reading it and deciding to make an argument about it that is not related to the actual content of the complaint. It's frustrating.

I probably need to just stop trying to explain it, and wait until Armstrong's attorneys either settle, or file for a motion to dismiss, and that motion is denied (because it will be denied). Once that happens, Armstrong will be forced to settle unless some here are right and SCA wants to humiliate Armstrong to the biggest extent possible. I wouldn't advise them to do that because it will eat into their award.

 

[MarkvW]

All one has to do is observe the direction of defense LA's lawyers are pursuing to render the above take completely FOS.

If LA is successful arguing he didn't fraudulently win those TdF titles, successfully argues that he's still the TdF winner for those years and that his depo testimony was not also fraudulent, then he has a shot at keeping all his SCA payout.

Wait until you see the answer filed by Armstrong's lawyers. Herman has already touted the settlement agreement when he made his no "do-overs" statement.

Why in the world would Armstrong argue that he "didn't fraudulently win" the TDF? If he didn't win, then he'd be arguing that he shouldn't have gotten paid! That's not an argument he is going to make.

Armstrong's not going to argue that he won the TdF. He couldn't get a credible witness to say that for him! I'm betting his arguments are all going to be based around Statutes of Limitation and settlement agreements.

 

[ChewbaccaD]

Wait until you see the answer filed by Armstrong's lawyers. Herman has already touted the settlement agreement when he made his no "do-overs" statement.

Why in the world would Armstrong argue that he "didn't fraudulently win" the TDF? If he didn't win, then he'd be arguing that he shouldn't have gotten paid! That's not an argument he is going to make.

Armstrong's not going to argue that he won the TdF. He couldn't get a credible witness to say that for him! I'm betting his arguments are all going to be based around Statutes of Limitation and settlement agreements.

And when that argument fails, will you come and write the words "I was wrong?" I doubt it, but it won't change reality.

 

[Wallace and Gromit]

No, underwriters and actuaries cannot be reasonably expected to assess risk and apply the necessary financial measures in the setting of policy premiums across the entire portfolio of policies they insure, if any significant portion of those policies (by value) ends up having fraudulent claims made against the covered contingencies.

Insurance companies are subject to fraudulent claims all the time. Fraudulent claims, just like doping, didn't begin and end with Lance! Some such claims the insurers don't pay out on, others they will pay out on. Of these where they pay, some will be where they think there is fraud but can't prove it and some will be cases where they are oblivious to the fraud.

It I would be very surprised if the premium for Tailwind's policy didn't include a loading for fraudulent claims. This would be a loading based on general expectations across the whole portfolio rather than specific to Tailwind. Loadings for fraudulent claims are very common, even if included implicitly in the assumed claim rates, as the claims experience will reflect fraudulent claims.

Equally, I would be surprised if the SCA underwriters were naive enough to assume that everyone plays fair, and their premiums for sport related policies would reflect this realistic view of the world.

Underwriters that don't include cautiously realistic loadings for both known and unknown unkowns wouldn't last very long in the industry.

 

[Fortyninefourteen]

Insurance companies are subject to fraudulent claims all the time. Fraudulent claims, just like doping, didn't begin and end with Lance! Some such claims the insurers don't pay out on, others they will pay out on. Of these where they pay, some will be where they think there is fraud but can't prove it and some will be cases where they are oblivious to the fraud.

It I would be very surprised if the premium for Tailwind's policy didn't include a loading for fraudulent claims. This would be a loading based on general expectations across the whole portfolio rather than specific to Tailwind. Loadings for fraudulent claims are very common, even if included implicitly in the assumed claim rates, as the claims experience will reflect fraudulent claims.

Equally, I would be surprised if the SCA underwriters were naive enough to assume that everyone plays fair, and their premiums for sport related policies would reflect this realistic view of the world.

Underwriters that don't include cautiously realistic loadings for both known and unknown unkowns wouldn't last very long in the industry.

The fact that almost all companies provide for and insure against theft, fraud, financial misstatement and a variety of other 'risks' does not render the occurrence of any one of these crimes as 'not necessary to pursue' based on coverage.

Any thinking to the contrary would come from lack of exposure and understanding of such matters, or excessive exposure to the latest set of talking points.

 

[Weapons of @ss Destruction]

Insurance companies are subject to fraudulent claims all the time. Fraudulent claims, just like doping, didn't begin and end with Lance! Some such claims the insurers don't pay out on, others they will pay out on. Of these where they pay, some will be where they think there is fraud but can't prove it and some will be cases where they are oblivious to the fraud.

It I would be very surprised if the premium for Tailwind's policy didn't include a loading for fraudulent claims. This would be a loading based on general expectations across the whole portfolio rather than specific to Tailwind. Loadings for fraudulent claims are very common, even if included implicitly in the assumed claim rates, as the claims experience will reflect fraudulent claims.

Equally, I would be surprised if the SCA underwriters were naive enough to assume that everyone plays fair, and their premiums for sport related policies would reflect this realistic view of the world.

Underwriters that don't include cautiously realistic loadings for both known and unknown unkowns wouldn't last very long in the industry.

Duh part deux...

Of course claims experience includes some fraudulent claims. The point you seem to be ignoring is that when a "jumbo" policy that has values much higher than the typical policies skews experience via fraudulent claim, it's unlikely to be fully covered within the overall book of policy premiums. The assumption is that higher value claims draw increased scrutiny and are unlikely to be subject to fraud as frequently. Smaller claims don't warrant the same level of scrutiny since that entails investigation expenses. Without knowing SCA's mix of policy types and values, it's impossible to say for certain, but I maintain that your attempts to cast blame on underwriters and actuaries setting policy premiums is misguided and facile.

 

[Scott SoCal]

Wait until you see the answer filed by Armstrong's lawyers. Herman has already touted the settlement agreement when he made his no "do-overs" statement.

Why in the world would Armstrong argue that he "didn't fraudulently win" the TDF? If he didn't win, then he'd be arguing that he shouldn't have gotten paid! That's not an argument he is going to make.

Armstrong's not going to argue that he won the TdF. He couldn't get a credible witness to say that for him! I'm betting his arguments are all going to be based around Statutes of Limitation and settlement agreements.

Herman has already touted the settlement agreement when he made his no "do-overs" statement.

You have faith in Herman? What's his batting average nowadays?

Why in the world would Armstrong argue that he "didn't fraudulently win" the TDF? If he didn't win, then he'd be arguing that he shouldn't have gotten paid! That's not an argument he is going to make.

The operative word here is "didn't." It's short for "did not."

Armstrong's not going to argue that he won the TdF

Then he loses the case:

Extrinsic fraud has been defined to be 'actual fraud, such that there is on the part of the person chargeable with it malus animus, the mala mens, putting itself in motion and acting in order to take an undue advantage of some other person for the purpose of actually and knowingly defrauding him. [Continental Nat'l Bank v. Holland Banking Co., 66 F.2d 823, 830 (8th Cir. 1933)].

Read it and weep.

 

[Wallace and Gromit]

I maintain that your attempts to cast blame on underwriters and actuaries setting policy premiums is misguided and facile.

Personally, I don't think they should have written the policy at all if it was so large that it could significantly skew the overall portfolio experience. (Or at least they should have arranged to reinsure most of the risk.) It's only down to blind luck (Landis and the Feds), unrelated to their efforts, that they are in with a chance of getting their money back.

The risks of fraud via doping in pro cycling is surely too big a risk to not factor in either via premium loadings (if Tailwind's policy was small in the overall scheme of things) or via not taking on the policy if it would represent too large an exposure. Maybe the underwriters were insufficiently experienced about pro cycling, having read too many of Lance's books...

As an aside, an insurance company's pricing/underwriting has no bearing on whether a claim is fraudulent.

 

[D-Queued]

Personally, I don't think they should have written the policy at all if it was so large that it could significantly skew the overall portfolio experience. (Or at least they should have arranged to reinsure most of the risk.) It's only down to blind luck (Landis and the Feds), unrelated to their efforts, that they are in with a chance of getting their money back.

The risks of fraud via doping in pro cycling is surely too big a risk to not factor in either via premium loadings (if Tailwind's policy was small in the overall scheme of things) or via not taking on the policy if it would represent too large an exposure. Maybe the underwriters were insufficiently experienced about pro cycling, having read too many of Lance's books...

As an aside, an insurance company's pricing/underwriting has no bearing on whether a claim is fraudulent.

The salient point in response to the fanboys.

As for the risks of fraud via doping, please think back 15 years. Lance was supposed to be the great white hope - coming from outside of the European peloton, miraculously (emphasize) cured from Cancer, blah, blah, blah - in the aftermath of Festina when the UCI had removed doping from cycling.

SCA may have been dumb enough to believe all of that, but they were not alone.

What they should have done if they were concerned about doping was not readjust premiums. What they should have done was to not bother writing the contract.

They did. Lance violated it. He needs to pay back.

Dave.

 

[Weapons of @ss Destruction]

Personally, I don't think they should have written the policy at all if it was so large that it could significantly skew the overall portfolio experience. (Or at least they should have arranged to reinsure most of the risk.) It's only down to blind luck (Landis and the Feds), unrelated to their efforts, that they are in with a chance of getting their money back.

I have no idea what their block of business looks like. Seems like a high risk business model, since there's no way to apply any law of large numbers in modeling the expected claims with the high level of variability from contract to contract (assuming they weren't chock full of policies listing TdF wins as the contingency ).

The risks of fraud via doping in pro cycling is surely too big a risk to not factor in either via premium loadings (if Tailwind's policy was small in the overall scheme of things) or via not taking on the policy if it would represent too large an exposure. Maybe the underwriters were insufficiently experienced about pro cycling, having read too many of Lance's books...

Maybe they were well aware of the risk, but underestimated their ability to successfully control risk of fraud - even after the fact - because they didn't expect high profile key witnesses to lie under oath, or go to extreme lengths to circle the wagons with the assistance of high value sponsors?

As an aside, an insurance company's pricing/underwriting has no bearing on whether a claim is fraudulent.

Not sure what you are getting at here.

The bottom line is that SCA didn't do anything wrong, and casting aspersions in their direction is nothing more than misdirection. It was their business risk to take if they wanted it including assuming the entire risk instead of reinsuring a portion, and harmed no one in the process. The deception, fraud, and negative impact on the lives of others directly involved was all on Armstrong and Co.

 

[BillytheKid]

It's "you're."

Secondly, stop posting on LSD. I suggest putting on Alpine Valley '89 and remembering that you will come down. Just keep saying "I will come down, I will come down, I will come down."

I always mistrust someone who does not have a sense of humor despite the circumstances. Are you an all seeing sage. All knowing?

More like a supreme hubirs zealot.

Self-serve ice cream, take good look at yourself.

 

[ChewbaccaD]

I always mistrust someone who does not have a sense of humor despite the circumstances. Are you an all seeing sage. All knowing?

More like a supreme hubirs zealot.

Self-serve ice cream, take good look at yourself.

I prefer a sense of irony.

And I'm just a smarta$$ who understands a little bit about the law.

Nobody forced you to ditto the remarks of someone who has proven his incompetence in legal understanding. Quit blaming me for your choice.

 

[BillytheKid]

I prefer a sense of irony.

And I'm just a smarta$$ who understands a little bit about the law.

Nobody forced you to ditto the remarks of someone who has proven his incompetence in legal understanding. Quit blaming me for your choice.

So your saying the law is not open to interpretation? Your alpha-male ego is reminds me of...

 

[ChewbaccaD]

So your saying the law is not open to interpretation? Your alpha-male ego is reminds me of...

Anything is open to interpretation, but that doesn't make it competent interpretation. The earth is round...well sort of.

And I am glad to know that I can sue anyone I want and say my sponsors made me do it.

 

[BillytheKid]

Anything is open to interpretation, but that doesn't make it competent interpretation. The earth is round.

And I am glad to know that I can sue anyone I want and say my sponsors made me do it.

Now your quoting a highly paraphrased statement. On its face value you be right, but he may have more coming. Like who was in the know. I hope to hear all one day. Right now, it is rather fragmented. Anyone can blow a whistle or sing a tune, but are they sharp of flat? A coin has two sides.

I'm out. Another p!$$!^& match and a waste of time.

 

[ChewbaccaD]

Now your quoting a highly paraphrased statement. On its face value you be right, but he may have more coming. Like who was in the know. I hope to hear all one day. Right now, it is rather fragmented. Anyone can blow a whistle or sing a tune, but are they sharp of flat? A coin has two sides.

I'm out. Another p!$$!^& match and a waste of time.

We're all just dust in the wind. Life is a highway, I want to ride it all night long. Every day is a winding road. Squeeze my lemon till the juice runs down my leg. Now you can go where people are one. Heeee heee.

 

[Merckx index]

As a public service, I will bring some order to this confusion:

1) LA agrees to settle with SCA, and pays all or close to the $12.5 million at stake – Chewy (and several others here) win, Mark (and his sympathizers) lose.
2) The case gets dragged out in court, and LA in the end has to pay everything – same winners and losers as in 1)
3) SCA agrees to settle with LA for no more than, say, $3-4 million – Mark et al. win, Chewy, et al. lose
4) The case goes to court, and LA wins and doesn’t have to pay anything – Mark wins big, Chewy loses big
5) The two sides agree to settle for some figure that is substantially less than $12 million, but substantially more than pocket change, say, $8 million – Everyone at the Clinic claims he won.

So place your bets, ladies and gentlemen, and if anyone wants to be insured against the possibility of losing the bet, see me. For example, if Chewy bets Mark $1 million that LA will pay everything, he can pay me a $50,000 premium, and I will pay off the bet if Chewy loses it AND if I conclude to my satisfaction that Mark did not win the bet fraudulently. Likewise, if Chewy wins the bet and Mark owes him $1 million, I will pay off the bet if Mark pays me a $50,000 premium AND if I conclude to my satisfaction that Chewy did not win the bet fraudulently. Evidence for fraud would include (but not be limited to) the following: 1) any posts that include performance-enhancing assertions that can’t be verified; 2) any posts that resulted in Clinic sanctions; and 3) proof that the poster is not actually a licensed attorney.

In other news, LA is losing medals I didn’t even know he had:

PARIS (AP) — Lance Armstrong faces the prospect of losing his Legion of Honor medal after French officials said they will open an inquiry following his admission that he doped during his Tour de France wins.

Armstrong was awarded the Chevalier de la Legion d'Honneur in 2005 in recognition of his seven consecutive Tour victories. The American admitted to doping during all of those wins and has been stripped of the titles.

Armstrong always denied using drugs throughout his career but owned up to doping in a television interview with Oprah Winfrey in January.

Francois Sourd, top aide to the head of the Legion of Honor, told The Associated Press by telephone on Monday that "an inquiry will be opened." The investigation is expected to last several weeks.

 

[Fausto's Schnauzer]

We're all just dust in the wind. Life is a highway, I want to ride it all night long. Every day is a winding road. Squeeze my lemon till the juice runs down my leg. Now you can go where people are one. Heeee heee.

And as we wind on down the road
Our shadows taller than our soul.
There walks a lady we all know
Who shines white light and wants to show

 

[ChewbaccaD]

As a public service, I will bring some order to this confusion:

1) LA agrees to settle with SCA, and pays all or close to the $12.5 million at stake – Chewy (and several others here) win, Mark (and his sympathizers) lose.
2) The case gets dragged out in court, and LA in the end has to pay everything – same winners and losers as in 1)
3) SCA agrees to settle with LA for no more than, say, $3-4 million – Mark et al. win, Chewy, et al. lose
4) The case goes to court, and LA wins and doesn’t have to pay anything – Mark wins big, Chewy loses big
5) The two sides agree to settle for some figure that is substantially less than $12 million, but substantially more than pocket change, say, $8 million – Everyone at the Clinic claims he won.

So place your bets, ladies and gentlemen, and if anyone wants to be insured against the possibility of losing the bet, see me. For example, if Chewy bets Mark $1 million that LA will pay everything, he can pay me a $50,000 premium, and I will pay off the bet if Chewy loses it AND if I conclude to my satisfaction that Mark did not win the bet fraudulently. Likewise, if Chewy wins the bet and Mark owes him $1 million, I will pay off the bet if Mark pays me a $50,000 premium AND if I conclude to my satisfaction that Chewy did not win the bet fraudulently. Evidence for fraud would include (but not be limited to) the following: 1) any posts that include performance-enhancing assertions that can’t be verified; 2) any posts that resulted in Clinic sanctions; and 3) proof that the poster is not actually a licensed attorney.

In other news, LA is losing medals I didn’t even know he had:

If the case gets past a motion to dismiss, Mark loses. Period. Based on his theory (and one you seem to favor also), the case cannot survive such a motion.

I don't gamble though.

We're all just dust in the wind dude, dust in the wind.

 

[MarkvW]

If the case gets past summary judgment, then it will probably be looking very good for SCA. If there are no factual disputes over the circumstances surrounding the execution of the settlement agreement (there's no sign of any yet), then a summary judgment motion ought to resolve the settlement agreement issue one way or the other.

My bet is that the summary judgment motion will happen fairly early on.

 

[slowspoke]

As a public service, I will bring some order to this confusion:

1) LA agrees to settle with SCA, and pays all or close to the $12.5 million at stake – Chewy (and several others here) win, Mark (and his sympathizers) lose.
2) The case gets dragged out in court, and LA in the end has to pay everything – same winners and losers as in 1)
3) SCA agrees to settle with LA for no more than, say, $3-4 million – Mark et al. win, Chewy, et al. lose
4) The case goes to court, and LA wins and doesn’t have to pay anything – Mark wins big, Chewy loses big
5) The two sides agree to settle for some figure that is substantially less than $12 million, but substantially more than pocket change, say, $8 million – Everyone at the Clinic claims he won.

So place your bets, ladies and gentlemen, and if anyone wants to be insured against the possibility of losing the bet, see me. For example, if Chewy bets Mark $1 million that LA will pay everything, he can pay me a $50,000 premium, and I will pay off the bet if Chewy loses it AND if I conclude to my satisfaction that Mark did not win the bet fraudulently. Likewise, if Chewy wins the bet and Mark owes him $1 million, I will pay off the bet if Mark pays me a $50,000 premium AND if I conclude to my satisfaction that Chewy did not win the bet fraudulently. Evidence for fraud would include (but not be limited to) the following: 1) any posts that include performance-enhancing assertions that can’t be verified; 2) any posts that resulted in Clinic sanctions; and 3) proof that the poster is not actually a licensed attorney.

In other news, LA is losing medals I didn’t even know he had:

 

[Wallace and Gromit]

Maybe they were well aware of the risk, but underestimated their ability to successfully control risk of fraud.

I actually think the fraud risk is a red-herring in terms of assessing SCA's risk analysis and risk management. (It's obviously highly relevant to whether they're going to get their money back.)

Their policy covered the 2002, 2003 and 2004 Tours. I'm not sure when it was written - presumably some time in the early 2000s - but most likely when it was, Lance had already won 2 or 3 Tours and not been busted for doping. So SCA were effectively betting against Lance winning more Tours in the dope testing environment as prevailed at the time. Not many other people were doing that in the early 2000s. SCA didn't really face additional fraud risk in the years their policy covered vs that which had been prevalent for the 2 or 3 years prior to this.

The bottom line is that SCA didn't do anything wrong.

Not morally or legally. But I think they did in a risk management sense. They don't appear to have had a pool of other unusual risks across which to diversify the risk of paying out on Lance's wins. (They were either going to make a huge loss or sizeable profit on the Tailwind policy, which appears to be the only policy of its type that they wrote.)

Further, based on their website, their typical payouts are the range of tens of thousands to a million dollars, so the Tailwind policy was a huge single risk to take on and in the absence of any media reference to other (re)insurers being involved, it seems reasonable to assume that SCA didn't reinsure their risk.

They should definitely send Floyd a Christmas card by way of thanks!

 

[ChewbaccaD]

If the case gets past summary judgment, then it will probably be looking very good for SCA. If there are no factual disputes over the circumstances surrounding the execution of the settlement agreement (there's no sign of any yet), then a summary judgment motion ought to resolve the settlement agreement issue one way or the other.

My bet is that the summary judgment motion will happen fairly early on.

Okay, summary judgment it is. I'm fine with waiting until then. Why no faith in a 12(b)(6)? That settlement agreement is iron clad, right? So after 12(b)(6) your mantra is #itsnotover...noted.

 

[Kennf1]

Okay, summary judgment it is. I'm fine with waiting until then. Why no faith in a 12(b)(6)? That settlement agreement is iron clad, right? So after 12(b)(6) your mantra is #itsnotover...noted.

The case is in state court, so no 12(b)(6). Armstrong will file an MSJ and seek to quash any discovery unitil MSJ is ruled on (to prevent deposition).