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Angry customers of Aid Association for Lutherans go to arbitration

Two class action lawsuits against the Wisconsin-based Aid Association for Lutherans (AAL) have been moved out of the courts and will now be decided by a Member Dispute Resolution Program.

The ruling by Judge Charles Clevert, of the U.S. District Court in Milwaukee, upholds a 1999 AAL rule that requires members with grievances against the fraternal benefit society to go through a process of appeals designed to keep disputes out of court.

Now the society will be able to resolve the concerns addressed by the lawsuits without a lengthy, expensive court battle.

Although at least four lawsuits had challenged the AAL dispute resolution program, Clevert upheld the three-step process of appeal, mediation, and binding arbitration. His ruling was made on Nov. 2, 2001.

AAL was pleased by the ruling, saying that now the society will be able to work with its members to resolve the concerns addressed by the lawsuits without a lengthy, expensive court battle.

The lawsuits, which allege that AAL insurance agents persuaded insurance policyholders to exchange traditional whole life insurance policies for riskier universal life policies by using misleading interest rate illustrations and promises of vanishing premiums, will now be resolved through binding arbitration, paid for by AAL.

"AAL pays for the process, but the members have the right to approve or disapprove of the [person chosen to arbitrate]," says Bill Harke, a spokesperson for AAL. "Also we don't expect our members to come to Appleton [Wis.] for the arbitration. We bring the process to them."

Clevert's decision may also serve as a precedent for a similar lawsuit against AAL in Minnesota, according to AAL.

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