Midland National Life / Midland National Life Tried To Cheat Me Out Of More Than $350,000 In Commissions
I was a very successful general agent for Midland National Life; was asked to write and submit an article for Midland’s company publication; and was awarded Midland National’s M Agency of the Year for three years in a row. I declined the last award because I became concerned about the unethical sales practices that Midland National was fostering with some of their agents.
I discovered that Midland National was allowing agents to misrepresent products and allow agents to submit applications that were known to be fraudulent. This was easy to do at the time as most applicants 35 and under did not require a medical exam. This meant that an agent could lie about smoking status, high blood pressure, and almost any condition that would not appear on a Medical Information Bureau (MIB) report.
Since these applications were almost always on younger people Midland National knew that they could make a profit from those policies regardless as to what premium was being paid. If the insured dies within the contestability period then Midland National would deny the entire claim and dispute the accuracy of the medical information in the application even if the death was an accident. If the insured died after the contestability period ended Midland National would attempt to adjust the death benefit based upon what the premium should have been.
If the beneficiary decided to sue when their claim was denied Midland National blamed the agent and cut them loose.
I wanted to believe that Midland National cared about their policy holders and wanted to be informed about the problem so they could correct it. I placed my business and my relationship with Midland National at risk by sending letter after letter describing the problem. Midland ignored me; however their Regional Vice President (RVP) actually threatened me if I “didn’t go along to get along”.
Finally, I decided to reduce my business with Midland National to the minimum level necessary to maintain my contract and submitted our business with other life insurance companies. In retaliation Midland National cancelled my contract several days before over $350, 000 in bonuses would have accumulated and vested. Midland National also stopped paying the as-earned commissions and renewals on business I had already written, which destroyed the business I had spent almost ten years building.
Midland National then allowed their RVP to threaten to cutoff my agents’ commissions if they didn’t defect to him, and bribed them by allowing them to walk away from their advance commission debts which were then charged to my account.
When that didn’t intimidate me Midland National then intentionally delayed the issuance of our client’s policies that my agents and I had developed. This was a completely reckless practice that placed our applicants at risk. Midland then filed a complaint with the Maryland Insurance Administration against me for mishandling client’s premium refund checks that Midland National was actually holding in their home office.
I then sued Midland National for breach of contract and several other issues that, in their totality, constituted violations of the RICO (Racketeer Influenced Corrupt Organization) Act. Midland took the “David and Goliath” legal approach and refused to provide us discovery while they withheld my commissions. Eventually I could not afford my attorney and was unable to continue the case.
While we were suing each other Midland National allowed an employee of another Midland National General Agent to impersonate one of my employees and call my clients making threats or other inappropriate comments. Midland National also instructed their home office employees to describe me as a “crook” if any of our clients called, and claim that I had been “fired”.
All Midland National cares about is making a profit so, despite all of Midland’s claims of my improper behavior they offered to reinstate my contract and return all of my commissions if I would drop my lawsuit against them and support their story as they were telling it. Midland National Life forced me to make one of the most difficult decisions of my life and I will admit that I had many sleepless nights considering that offer. In the end I decided my integrity and character were not for sale. No person, much less a life insurance agent, should ever be placed in that position.
Midland National never sent me another payment until I was informed by the IRS several years later that Midland National had been attempting to clean the money off of their books by reporting to the IRS that they were paying me commissions. Since Midland National wasn’t sending me a 1099 showing the income every year like as the law required I wasn’t reporting it on my tax returns. Midland National then defrauded the IRS by refusing to disclose that they were holding almost $75, 000 in my name.
My attorney contacted Midland National for an explanation and Midland, an insurance company that is required by law to know where every dollar is at every moment, took 42 days to respond. Midland eventually paid me the money and offered me a settlement to resolve all of our differences and then reneged on that agreement.
My issues with Midland National were not complicated by large commission chargebacks, but I know some agents have had that problem. In dealing with the various lawsuits and consumer complaints Midland, acting in its own best interests, has frequently refunded a policy to the consumer to avoid another lawsuit. Midland is then going back to their agents (who sold what Midland told them to sell the way Midland told them to sell it) and demanding a refund of the commissions they paid the agent. If an agent carefully reviews the compensation agreement with Midland National, or its sister company North American for Life and Health, they will find language like this
“In addition and not limited by the forgoing, North American reserves the right to chargeback commissions at any time, in its sole discretion, pursuant to paragraphs 7 and 9 of the agent contract, which are expressly incorporated herein.”
The reality for any life insurance agent is that they can NEVER really count on the commissions they expect to receive from Midland National nor can they spend a commission dollar from Midland National without wondering whether Midland will sue them for that money years later. Sometimes this is three or four years after the agent made the sale and in amounts of $30, 000 or more, and Midland National is VERY aggressive in collecting their money.
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