A civil lawsuit over an alleged $15 million insurance fraud scheme involving the deceased mother-in-law of Indianapolis businessman Stephen Hilbert is set for a jury trial in October.

The Wall Street Journal  published a story about the legal battle on its front page on Monday morning. IBJ first reported details of the dispute in January 2009 and followed up in July.

Houston-based American General Life Insurance Company is attempting to invalidate a $15 million policy it issued in January 2006 insuring the life of Germaine “Suzy” Tomlinson—Hilbert’s mother-in-law—who died Sept. 28, 2008, at age 74. AIG alleges the policy was part of a stranger-originated life insurance scheme.

In such cases, outside investors essentially wager on when an insured person will die. In a typical transaction, an investor entices someone—usually a senior citizen—to take out a multimillion-dollar life insurance policy. Investors then purchase the policy and pay the premiums, making themselves the beneficiaries. In return, the insured person receives an upfront cut of the eventual death payout.

Under the arrangement, the sooner the insured person dies, the better the return for investors.

The initial defendants in the Tomlinson case were J.B. Carlson, owner of the locally-based Carlson Media Group; Nevada insurance broker Geofrey A. Vanderpal; and Delaware-based Willmington Trust Co.

Carlson has argued that Tomlinson served as vice chairman and a director of his company, which paid annual premiums of $387,275 on the policy. As trustee, Carlson has argued he’s entitled to the $15 million payout. In court documents, Carlson said Tomlinson began attending Carlson Media Group board meetings in November 2002, making the $15 million policy “key man” insurance.

Hilbert’s wife, Tomisue, last summer intervened in the insurance tussle, arguing that AIG should not invalidate the $15 million policy. Instead, she said the proceeds should go to Tomlinson’s five adult children.

IBJ alerted Hilbert and the Indiana Department of Insurance to AIG’s lawsuit in January 2009. Hilbert initially feared foul play, but the Indianapolis Metropolitan Police Department ruled Tomlinson's death an accidental bathtub drowning. Investigators believe Tomlinson slipped in the tub and hit her head on the spigot.

But the WSJ story adds some intriguing new details about Tomlinson’s last hours, noting, for example, that police found her dead in the bathtub “fully clothed from an evening out at a martini bar, high heels still on her feet.”

According to the WSJ, Carlson was the last person to see Tomlinson alive. The newspaper said Carlson took her home “tipsy” after accompanying her to the fifth anniversary party of the Blu Martini.

“I placed her in a love seat and walked toward the door, I clapped my hands to get her attention and told her to lock the door … The last time I saw Suzy Tomlinson, she was alive,” Carlson reportedly told the WSJ.

But Hilbert isn’t convinced by that explanation, according to the newspaper. His mother-in-law didn't take baths, he told reporters. Hilbert did not return a call Monday from IBJ.