According to Finkbohner, one such agent sold Ms. Barnes' mother, Annie, a life insurance policy in 1989, then intentionally allowed the policy to lapse while he continued to collect the premiums. A second policy was secretly issued later, Finkbohner said.
Annie Barnes, who was confined to a wheelchair from a stroke, died in 1993, said the Mobile lawyer.
"There was evidence that the sales manager and two agents collected money after the first policy lapsed, and put it on what they said was a policy owned by a relative, but it was a documented forged policy," Finkbohner said.
American General disputed the plaintiff's claim, Finkbohner said. The agent and another involved in handling the Barnes policy were later fired by American General, but given good recommendations when they applied at other companies and were hired, he said. Finkbohner declined to name the agents.
The $35 million verdict was broken down into $20 million in compensatory damages and $15 million in punitive damages, he said.
Last July, Liberty National filed an affidavit acknowledging that the company had paid out $20.3 million in settlements to 126 Mobile County plaintiffs.
The affidavit was filed with the $2.9 million settlement the company reached with Ruby Coram, a Mobile County woman who was awarded $4.6 million by a Mobile County jury in 1994.
The affidavit was unusual because in most settlements both sides sign promises of confidentiality.
"We've been punished enough," said Birmingham attorney Edgar Elliott shortly after filing the affidavit for Liberty National.
Friday's verdict indicated the punishment may not be over.
Mike McGlothren, who tried the case with partner Steve Olen, said the jury believed his clients, James and Betty Strickland, who alleged that Liberty National agent John Carlisle understated the value of their life insurance policies to get them to trade for a smaller policy.
By inducing the Stricklands to switch policies, Carlisle was able to get a new sales commission, the plaintiffs alleged. McGlothren said evidence was presented during the Strickland trial showing it was a corporate policy to get customers to switch policies.
In other lawsuits, Liberty National lawyers have asserted that switching policies is often the best thing for policyholders. The seven policies the Stricklands exchanged provided $28,000 worth of coverage, McGlothren said, while the new policy sold by Carlisle provided $10,000 in coverage.
The case involved many of the same allegations made in a class-action lawsuit filed earlier this year against Liberty National in Jefferson County, McGlothren said.
That suit alleges that in the 1980s and early 1990s, Liberty National persuaded customers to exchange policies for new coverage, thereby lowering the cash value of the policy while also reducing the level of coverage.
The alleged fraud against the Stricklands occurred in 1987, though his clients only learned about it in 1994, McGlothren said.
In the same affidavit in which Liberty National released the figures that it has paid out in Mobile, the company - without admitting wrongdoing - listed the names of several former agents whose actions resulted in many of the legal problems. Carlisle was one of those.
Testimony in previous trials had revealed allegations of forgery and widespread fraud by Liberty National agents and managers at one of the company's Mobile offices in the late 1980s and early 1990s.
Last year, Liberty National sent notices to policyholders listing improvements and controls instituted to avoid problems like those named in more than 250 lawsuits filed against the company in Mobile County.
Houston-based American General is the largest home-service company in the nation, followed by Torchmark Corp., the Birmingham-based parent company of Liberty National.
Home-service insurance, which dominated the industry earlier in the century, is insurance sold the old-fashioned way. Company employees - not independent agents - call on customers who often live in low-income neighborhoods.
The policies they sell are usually small, commonly with $10,000 to $20,000 in coverage. Critics of the industry charge that the policies are a bad bargain. Defenders say home-service companies serve a low-income population that most insurance companies aren't interested in.
