GALVESTON
American National Insurance Co. has filed a lawsuit in federal court asserting one of its own directors colluded with a Pennsylvania firm to defraud the company of more than $1 million.
The lawsuit, filed in U.S. District Court for the Southern District of Texas in June, names LBH Insurance Ltd. as defendant.
LBH Insurance Ltd. denied all of American National’s assertions in a July 29 answer and counter-sued American National asserting breach of contract.
Law firms representing American National and LBH both declined to comment.
“LBH perpetrated a scheme to receive unauthorized commissions, received funds from unauthorized side-deals and generally misused its president’s employment to obtain funds,” according to the lawsuit.
Larry Blaine Hiwiller Jr., the president of LBH, began working for American National in 2016 as the director of worksite sales, according to the lawsuit.
Although he’s a central figure in American National’s complaint, Hiwiller isn’t named as a defendant in the lawsuit.
Hiwiller later that year asked for LBH to become an agent with Standard Life and Accident Insurance Co., a subsidiary of American National, according to the lawsuit.
It’s a violation both of Texas law and American National business practices for an officer of an insurance company to accept commission, according to the lawsuit.
The lawsuit asserts Hiwiller arranged for LBH to receive sales commissions in numerous ways between August 2017 and December 2021, ultimately defrauding the company of $918,388.
The lawsuit also asserts Hiwiller diverted $167,000 to LBH through rate renegotiations with a third-party company from July 2018 to June 2019 and renegotiated a product discount in 2020.
“LBH misapplied and embezzled funds from Standard Life through its commission scheme by diverting commission payments from other brokers or agents to itself, when LBH had no legitimate involvement with producing the business for which it received payments,” according to the lawsuit.
LBH filed an answer July 29 denying that it violated procedures and policies, contractual obligations or state law, according to the court records.
American National also was aware of Hiwiller’s relationship to LBH, according to the answer.
American National had “failed to mitigate any alleged damages, including failure to exercise due diligence and failing to raise any objection concerning LBH or Hiwiller’s relationship with LBH,” according to the legal answer.
In the same answer, LBH issued a counterclaim asserting American National wrongfully terminated its agreement with LBH and was seeking improper claw backs of commissions, according to court records.
American National asked for the return of the $1.09 million plus punitive damages and court costs, according to the lawsuit.
LBH is requesting damages of at least $175,000, according to court records.
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