ROBERT L. BRACE

I have been an attorney since 1985 and an AV rated attorney since 1993. I have 20 years of experience in complex litigation and over 14 years of experience as an insurance insolvency practitioner. I have concentrated my practice in the area of the insolvency of domestic and offshore insurance companies, including ERISA employee welfare benefit plans.

I have served as lead counsel to policyholders in class actions, as counsel to domestic and international liquidators and counsel to independent fiduciaries appointed by the Department of Labor. I have collected over $40 million to pay unpaid claims. I am currently working as the attorney for an Independent Fiduciary selected by the Department of Labor and appointed by the Federal Court on one of the largest health insurance frauds in the country.

I am a member of the International Association of Insurance Receivers (IAIR) and the International Association of Insurance Fraud Agencies (IAIFA). I was certified as an Accredited Insurance Receiver in December 2002 by IAIR, demonstrating special competence with legal matters arising in connection with insurance insolvencies.

PROFESSIONAL MEMBERSHIPS

Santa Barbara County Bar Association (Chief Financial Officer 2004)
California Bar Association
The State Bar of California – (Bar No. 122240)
Committee on State Bar Approved Professional Liability Insurance
International Association of Insurance Receivers (Accredited Insurance Receiver Legal)
International Association of Insurance Fraud Agencies

All State Courts of California
U.S. District Court, Southern District of California
U.S. District Court, Eastern District of California
U.S. District Court, Central District of California
U.S. District Court, Northern District of California
9th Circuit Court of Appeals
2nd Circuit Court of Appeals
11th Circuit Court of Appeals

ADMITTED PRO HAC VICE

Circuit Court of Jackson County, Missouri
U.S. District Court, Western District of Missouri
U.S. District Court, Northern District of Texas
U.S. District Court, District of New Mexico
U.S. District Court, Southern District of New York
U.S. District Court, District of Nevada
U.S. District Court, Southern District of Florida
U.S. District Court, District of Columbia

PUBLISHED OPINIONS

Bailey, et al. v. Empire Blue Cross/Blue Shield, et al., 856 F. Supp. 837 (S.D.N.Y.1994)

Janice Loyd as Trustee and Liquidator of First Assurance v. Aguilar & Sebastinelli, et al., 208 F.3d 755 (9th Cir. 2000)

General Insurance Company of America v. Stephen Rhoades,
196 F.R.D. 620 (D.N.M. 2000)

John C. Craft, Special Deputy Liquidator of Meadowlark Insurance Company v. Sunwest Bank of Albuquerque, N.A., n/k/a NationsBank, 84 F. Supp. 2d 1226 (D.N.M. 1999)

PUBLISHED ARTICLES

A Lawyer Should Be Liable For Failing To Prevent Known Insider Looting Of A Corporate Client, Mealey’s Litigation Report: Insurance Insolvency, Volume 13, Issue #18, February 28, 2002, 13-18 Mealey’s Litig. Rep. Ins. Insolv. 13 (2002)

Enforcement Of NAIC Trusts Can Prove To Be Very Difficult For Liquidators of Insolvent Insurers, Mealey’s Litigation Report: Insurance Insolvency, Volume 14, Issue #7, September 12, 2002, 14-7 Mealey’s Litig. Rep. Ins. Insolv. 11 (2002)

The Adverse Impact That Unnecessary Regulatory Allegations Have Had On E&O Coverage In The Employers Mutual, LLC Litigation, Mealey’s Litigation Report: Insurance Insolvency, Volume 16, Issue #3, July 15, 2004, 16-3 Mealey’s Litig. Rep. Ins. Insolv. 22 (2004)

An Update On Employers Mutual, LLC Litigation: Florida Federal Judge Finds Exclusions Were Not Triggered In Malpractice Action Against 400 Insurance Agents, Mealey’s Litigation Report: Insurance Insolvency, Volume 17, Issue #11, March 2006, 17-11 Mealey’s Litig. Rep. Ins. Insolv. 16 (2006)

FACULTY

International Association of Insurance Receivers (“IAIR”) Workshop 1999 in Kansas City, Missouri. Lectured on Standing of Court Appointed Liquidator.

International Association of Insurance Fraud Agencies (“IAIFA”) meeting in June 2001 in Budapest, Hungary. Lectured on the Recovery of Assets to Pay Claims.

Federation of Regulatory Counsel meeting in December 2002 in San Diego, California. Lectured on Ethical Issues Created by Legal Representation of Troubled Insurer.

Santa Barbara Bar Association meeting in October 2002. Lectured on Lawyer Liability for Failing to Prevent Insider Looting of Corporate Client.

IAIFA meeting in April 2004 in London, England. Lectured on the Adverse Impact that Unnecessary Regulatory Allegations can have on E&O Coverage.

ASPPA, DOL Speaks: the 2005 Employee Benefits Conference in April 2005 in Washington, D.C. Lectured on fraudulent MEWAs.

American Bar Association, Tort Trial and Insurance Practice Section, in August 2005, Chicago convention of ABA. Lectured on the Anatomy of a Health Insurance Scam: Health Insurance Fraud Schemes and Their Impact on the Industry.

International Association of Insurance Receivers (“IAIR”) Workshop 2006 in San Diego, California. Lectured on Issues In Collecting On Professional Liability Insurance.

INSOLVENCY ENGAGEMENTS

1. Bailey, et al. v. Empire Blue Cross/Blue Shield, et al. United States District Court, Southern District of New York Case No. 93 CIV 61797(MP) [MDL 902 ERISA Litigation]. For facts of case see Bailey v. Empire, 856 F. Supp. 837 (1994).<

As lead counsel in the Bailey case, my firm sued over 400 insurance producers who sold defective health insurance to 10,000 insureds and collected over $12 million to pay $20 million in unpaid health claims. The case was prosecuted as a class action, which required me to communicate with all claimants and pay the unpaid claims after the recovery of funds from culpable defendants. The matter was heard before the Honorable Milton Pollack, Senior Federal District Judge in the Southern District of New York. See Judge Pollack’s comments at end of resume.

2. Janice Loyd as Trustee and Liquidator of First Assurance v. Aguilar & Sebastinelli, et al., United States District Court, Southern District of California Case No. 95-1194 BTM (JFS). See Loyd v. Aguilar & Sebastinelli, 208 F.3d 755 (9th Cir. 2000).

My firm represented Janice D. Loyd, the Bankruptcy Trustee and Liquidator of First Assurance and Casualty Company, Ltd., a Turks and Caicos insurer. My firm filed a civil case on behalf of the plaintiffs contending that a major brokerage firm, its account executive, and the operators of First Assurance were liable for fraud and for violations of RICO, in particular 18 U.S.C. 1962(c).

The major brokerage firm agreed to settle the class action for a principal and interest payment totaling at least $7 million.

3. Burditt, et al. v. Stickney, et al. United States District Court, Eastern District of California Case No. 96 6006 REC SMS [ERISA Litigation].

I was counsel to a class of policyholders of an insolvent ERISA plan. The Burditt action arose out of the sale of medical and dental insurance benefits issued by California Western Management Benefit Trust ("CWMBT"), an alleged MEWA.

4. Craft as Special Deputy Liquidator of Meadowlark v. Sunwest Bank, aka NationsBank. United States District Court for the District of New Mexico, Case No. CIV 98 966 BB/DJS. See also Craft v. Sunwest Bank, 84 F. Supp. 2d 1226 (D.N.M. 1999).

In Craft v. Sunwest Bank, I was retained by the Special Deputy Liquidator of Meadowlark Insurance Company. Meadowlark was operated by Travis Riley and Cheryll Coon who were convicted in Missouri for operating a RICO enterprise. Meadowlark left over $4 million in unpaid property and casualty claims.

Litigation was commenced in Federal Court in New Mexico against NationsBank, the successor to Sunwest Bank, for breach of an NAIC Trust Agreement. The bank and Meadowlark
entered into the NAIC Trust Agreement in February of 1990, which required the deposit of at least $1.5 million in cash, letters of credit on U.S. Banks and/or readily marketable securities. Instead of receiving these approved assets, Sunwest Bank accepted promissory notes, real property, and leases with a purported value of $2.6 million, but with a liquidated value of
$203,000. The lawsuit against NationsBank was to recover the difference between the trust fund minimum of $1.5 million and the liquidated value of the trust, $203,000, which was $1.3 million. The case settled on the second day of trial for $900,000.

5. Craft as Special Deputy Liquidator of Meadowlark Insurance Company v. Stephen J. Rhoades, et al., United States Circuit Court of Jackson County Missouri at Kansas City, Case No. 99-CV-225685.

I was also retained by the Liquidator of Meadowlark to pursue Meadowlark’s attorneys for malpractice.

A trial was held in November 2001 before Judge Forrest Hanna in the Jackson County Superior Court in Kansas City, Missouri. The theory against the law firm that represented Meadowlark for five years, working 2000 hours per year, was that it breached its duty of undivided loyalty by failing to stop the looting committed by Meadowlark’s insiders. Craft presented evidence that numerous “red flags” existed which should have alerted a reasonably prudent practitioner to conclude that Meadowlark was being operated as a tool of fraud for the benefit of Travis Riley and Cheryll Coon and to the clear detriment of Meadowlark. Given this factual scenario, the lawyer for the corporation was duty bound to intercede on the client’s behalf to stop the looting. Interdiction included seeking court or regulatory supervision. Legal authority for the case included the law review article “Taking the Entity Theory Seriously: Lawyers Liability for Failure to Prevent Harm to Organizational Clients Through Disclosure of Constituent Wrongdoing” by George C. Harris, which was published in 1998 in the Georgetown Journal of Legal Ethics and then cited as authority in 96 Restatement of Law, the Law Governing Lawyers (1998). Judge Hanna entered Judgment against Rhoades for $945,989. The Court concluded that Rhoades should have known that Riley and Coon were looting Meadowlark and, therefore, he should have resigned. All fees charged by Rhoades after the date he should have resigned were Ordered disgorged.

6. Craig as Joint Liquidator of Alpine Assurance Ltd. v. Chase Manhattan Bank, United States District Court, Northern District of Texas, Case No. CIV 3-00CV-822-G.

In Craig v. Chase, I was retained to recover funds allegedly on deposit in an NAIC Trust at Chase. The trust had been prematurely terminated by Chase without retention of funds to pay claims of over $6 million. The case settled for $3.1 million.

7. Thomas A. Dillon v. James Graf, et al., United States District Court, For the District of Nevada, Case No. CV-N-03-0119-HDM-VPC

8. Caroline Houck, et al. v. Board of Trustees of the International Union for Natural Health, Complementary & Alternative Medicine Professions Health and Welfare Fund, United States District Court, Central District, Case No. 03-2494 R (CWx)