Respecting His Elders
John Hargrove goes after insurance salespeople who prey on the elderly
Published in 2006 Florida Super Lawyers magazine
By Dan Millott on June 14, 2006
John Hargrove’s first contact with the day-to-day problems faced by the elderly touched close to home in 2000 when his mother passed away after suffering from Alzheimer’s disease.
“She was in the nursing home for just 48 hours,” he says, “but I then realized that nursing homes are nothing like they are pictured in the ads.”
So Hargrove, a senior partner for Gordon, Hargrove & James, a large Fort Lauderdale law firm that has a roster of blue-chip corporate clients, decided to do something about it.
He began to explore where he could put his legal skills to good use for seniors.
“The area of nursing home abuse was already widely covered by other lawyers. But then another area opened my eyes,” Hargrove says. “I was visiting our Orlando office and met Charles Strube, a retiree with a compelling story. Strube had been sold an equity indexed annuity (EIA). What he thought he was buying was an insurance product providing him with a source of income as soon as he bought the policy. He sadly learned that his money would be tied up for 20 years.”
Since he was in his late 70s, chances of Strube ever seeing any income were dicey at best. The story Strube told Hargrove astounded him, so he began to research the whole area of EIAs.
Hargrove’s research uncovered these facts: EIAs are complicated; they are sold by minimally trained and unsupervised agents; and they are not regulated by the National Association of Securities Dealers.
Hargrove learned that the minimal training given to agents concentrates on making a sale, not on the product’s specifics. He also found that commissions to agents are high, up to 16 to 17 percent, and that the agents get their money up front. That explains why Strube and other seniors have to wait to get any money — the company has to cover those front-end sales expenses.
The average value of an EIA is $50,000. So areas with concentrations of seniors are prime targets for sales. They have the money, and they’re often easy touches. Hargrove describes the process as “10-3-l.” The agents make 10 calls, get three appointments and make one sale.
“An agent who goes into an area like The Villages or Sun City and sells two policies a week could make $2,500 in commissions,” he says. “It’s like shooting fish in a barrel.” Hargrove says seniors are vulnerable, because if they do fall prey and buy an EIA, unlike Strube, they are usually too isolated or embarrassed to tell anyone.
“Jaber Gubrium, a geriatric sociologist, notes that as you get older, your group of friends shrinks and you tend to open your door to anyone,” Hargrove says.
In Florida, where thousands of seniors move in weekly, Hargrove, almost alone, has started to get the word out that he wants cases where seniors have bought an EIA and now want their money back. He has handled more than 50 cases so far.
“As lawyers, we think of ourselves as available when anyone has a problem, but we live in a world of lawyers. The corporate clients have lawyers; the pro bono clients have lawyers; the high-net-worth person has lawyers; and even lawyers live in a world of lawyers. But in a senior community, they are isolated, and if they lose that nest egg, they don’t know what to do.”
For Hargrove’s senior clients, he works on a contingency fee of 40 percent with a twist. “If it was a $50,000 policy and I get that money back, I get nothing,” he says. “If I get $70,000 from the insurance company or agent, then I get $20,000. In most of the cases we get substantially more than that.”
Hargrove is virtually alone in this type of practice. “It really makes the juices flow,” he says.
While he loves his work with corporations such as Sun-Sentinel or Bell South, he has a special passion for helping poorly treated seniors.
“Now what I want to do is to let these elderly folks know there is help.”
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