Federal Appeals Court Rules Against Insurer in Ark. Financier’s Death

March 1, 2007

A federal appeals court rejected an insurance company’s claim that it shouldn’t have to pay accidental-death benefits for the 2002 death of a Little Rock financier at the center of a Securities Department investigation.

Mace David Howell died in Los Angeles in October 2002 from a drug-and-alcohol overdose. Valley Forge Life Insurance Co. denied coverage, saying Howell committed suicide. It also argued Howell had a sickness, addictions and depression, that contributed to his overdose.

Howell and Richard T. Smith had taken out an insurance policy on Howell, with Smith as the initial beneficiary. Smith assigned the policy to a family trust, represented by David J. Wood.

Wood said Valley Forge paid on a $2 million policy but failed to disclose that Howell was also covered by a $300,000 accidental-death rider, court records showed. He sued in February 2005, seeking the additional funds, 12 percent interest and attorney fees.

At a trial, jurors concluded that Howell died accidentally, contrary to a coroner’s report that Howell had killed himself.

The trial judge did not let jurors see the coroner’s conclusion about Howell’s death, while Valley Forge said they should have had access to his finding. The 8th U.S. Circuit Court of Appeals at St. Louis said jurors should have been able to see it, but said the error was harmless.

While Valley Forge lawyers told jurors that Howell had told counselors that he had contemplated suicide and had plans to kill himself, jurors still called the death an accident, the appeals court said.

Also, the 8th Circuit said, Valley Forge did not prove that Howell was trying to kill himself “then and there” as he used drugs and alcohol. Howell’s “general desire” to kill himself was insufficient, the court said.

Howell died after the state Securities Department issued a cease-and-desist order against him, accusing him of selling at least $15 million worth of unregistered securities to 16 or more people.

Howell’s estate, not including insurance proceeds, was estimated worth about $400,000 after he died. Dozens of investors laid claim to more than $70 million.

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