Free Order on Motion for Order - District Court of Colorado - Colorado

Case 1:01-cv-00275-JLK

Document 832

Filed 07/24/2006

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 01-cv-0275-JLK DOMINICK PAOLONI, et al., Plaintiffs, vs. DONALD I. GOLDSTEIN, et al., Defendants, and NBSA, LLC, et al., Relief Defendants. _____________________________________________________________________________ ORDER PERMITTING RELEASE OF MEDICAL RECORDS AND INFORMATION BY VIATICAL ADMINISTRATORS, INC. _____________________________________________________________________________ THIS MATTER comes on before the Court upon Plaintiffs'Motion for Order Allowing Release of Medical Information in Accordance With Orders of The United States Bankruptcy Court for the Southern District of Florida. This Court, through its extensive involvement in these proceedings, is fully apprised of the circumstances surrounding this particular motion as well as the entire case. Therefore, the Court makes the following findings and enters the order set forth herein. FINDINGS 1. Viatical Administrators, Inc. (" VAI" is a corporation organized and existing under )

the laws of the State of Colorado. VAI' principal place of business is Fort Wayne, Indiana. VAI s was organized by the Plaintiffs in this action for the purpose of administering life insurance

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policies involved in what is known as the American Benefits Group Program (" ABG Program" ) and the Reliance Program and to coordinate the efforts of the Plaintiffs in this litigation. 2. On April 10, 2003, in the bankruptcy proceeding of In re Reliance Financial &

Investment Group, Inc., Case No. 02-33249-BKC-PGH, pending in the United States Bankruptcy Court for the Southern District of Florida (the " Reliance Bankruptcy Proceeding" a Settlement ) and Compromise of Controversy Among the Trustee, Viatical Administrators, Inc., the Denver Group and Viatical Liquidity, LLC was entered into (the " Settlement Agreement" Pursuant to ). the Settlement Agreement, VAI was delegated the responsibility to conduct and provide what is referred to as " administration"or " servicing"of insurance policies and beneficial interests therein in the ABG Program and the Reliance Program. Since April 10, 2003, in accordance with the Settlement Agreement, which was made an Order of the United States Bankruptcy Court for the Southern District of Florida in the Reliance Bankruptcy Proceeding, VAI has conducted administration and servicing of the insurance policies and beneficial interests therein in accordance with the Settlement Agreement. As a result of VAI' long-term administration and servicing of s the insurance policies and beneficial interests, VAI is intimately familiar with the insurance policies, the beneficial interests therein and the economic factors and considerations surrounding the economic viability of continuing such administration on an indefinite basis. 3. John P. Barbee, Trustee of the Debtors in the Reliance Bankruptcy Proceeding, in

connection with the two major creditor groups in the Reliance Bankruptcy Proceeding, VAI and Viatical Liquidity, LLC, has determined it to be in the best interests of the beneficiaries of the insurance policies in the ABG Program and Reliance Program to at this time sell the insurance policies and beneficial interests and to distribute the proceeds derived from such sale pro rata to the beneficiaries of the insurance policies. In furtherance of this decision, the Trustee has filed in

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the Reliance Bankruptcy Proceeding Trustee' Omnibus Motion for Order i) Authorizing the s Trustee to Sell his Ownership Interests in Life Insurance Policies Together with Attendant Beneficial Interests Pursuant to inter alia, Paragraph 36 of Settlement Agreement Dated April 10, 2003; ii) Approving Bidding Procedures; iii) Scheduling Sale; iv) Scheduling Hearing to Confirm Sale; and v) Approving Amendments to Paragraph 36 of the Settlement Agreement; vi) Binding Third Parties to the Amendments; vii) Approving Forms of Confidential Agreement and Important Notice to Beneficiaries; viii) Approving Order for Administration of the Policies for Entry After Sale; and ix) for Entry of Protective Order (the " Trustee' Omnibus Motion for Sale of Policies" s ). Pursuant to the Trustee' Omnibus Motion for Sale of Policies, the Trustee seeks authority to s conduct an auction of the insurance policies and beneficial interests therein in accordance with the procedures set forth in the Trustee' Omnibus Motion for Sale of Policies. Furthermore, the s Trustee seeks entry of a protective order for the purpose of preserving and protecting the confidentiality of information, which is considered to be private, including medical records and health information, of viators. 4. In order to obtain the highest and best price for the insurance policies and

beneficial interests therein, potential bidders will require the ability to conduct a due diligence review of the insurance policies, including medical records and health information of viators in the possession of VAI so as to evaluate the value of the insurance policies and beneficial interests. Under this Court' current Protective Order Regarding Confidential Information and Order for s Release of Medical Information before VAI could release any medical records or health information to potential bidders, VAI, as well as potential bidders, would be required to comply with the above-referenced orders. Such compliance would burden the bidding procedure and would be duplicative of the procedure required by the United States Bankruptcy Court for the

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Southern District of Florida in the Reliance Bankruptcy Proceeding established to protect private information of viators, including medical records and health information. It is thus in the best interests of the beneficiaries of the life insurance policies, including those whose interests are represented in this litigation that VAI be permitted to release medical records and health information of viators in connection with the sale of the insurance policies in accordance with protections and procedures established by the United States Bankruptcy Court for the Southern District of Florida in the Reliance Bankruptcy Proceeding, rather than pursuant to the Protective Order Regarding Confidential Information and the Order for Release of Information. IT IS, THEREOFRE, ORDERED, ADJUDGED AND DECREED as follows: 1. Notwithstanding the Protective Order Regarding Confidential Information and

Order for Release of Medical Information, VAI may release medical records and information in its possession, custody and/or control in accordance with protections and procedures established and/or ordered by the United States Bankruptcy Court for the Southern District of Florida in the Reliance Bankruptcy Proceeding. 2. In all other respects, including with respect to medical records and information,

VAI shall remain bound by the Protective Order Regarding Confidential Information and Order for Release of Medical Information. IT IS SO ORDERED this 24th day July, 2006. BY THE COURT:

s/John L. Kane John L. Kane, Senior Judge United States District Court