Mealey's Insurance Insolvency
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June 24, 2019
Judge Bars Government Investigations Evidence In Breach Of Duties Dispute
COLUMBIA, S.C. — In a case over a bank’s alleged breach of duties as trustee of a reinsurance trust for an insolvent insurer, a South Carolina federal judge on June 21 excluded evidence related to government investigations but refused to bar evidence concerning bank secrecy act/anti-money laundering compliance (BSA/AML) training (Accident Insurance Company Inc. v. U.S. Bank National Association, et al., No. 16-2621, D. S.C., 2019 U.S. Dist. LEXIS 103923).
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June 24, 2019
U.S. Supreme Court Decides To Hear Health Insurers Over $12B ACA Dispute
WASHINGTON, D.C. — The U.S. Supreme Court on June 24 granted certification to health insurers to decide whether the United States evaded its statutory promise to pay them for losses when the government blocked $12 billion in funding under the Patient Protection and Affordable Care Act (ACA) risk-corridor program (Land of Lincoln Mutual Health Insurance Co. v. United States, No. 18-1038, Moda Health Plan Inc., et al. v. United States, No. 18-1028, Maine Community Health Options v. United States, No. 18-1023, U.S. Sup.).
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June 24, 2019
Judge Approves $9.5M Settlement Between Insured, Insurer In Liquidation
CONCORD, N.H. — A New Hampshire judge on June 3 approved a $9.5 million settlement between the liquidator of The Home Insurance Co. and one of its insureds regarding alleged liabilities for asbestos bodily injury and environmental exposures (In the matter of the liquidation of The Home Insurance Co., No. 2003-EQ-0106, N.H. Super., Merrimack Co.).
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June 20, 2019
Federal Judge Dismisses Dispute Over Assessment Sought By HMO’s Liquidator
SALT LAKE CITY — Addressing the factors in State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d 979 (10th Cir. 1994), a Utah federal judge on June 3 chose to dismiss a declaratory judgment action, which alleged that an assessment made by a health maintenance organization’s (HMO) liquidator against another HMO is preempted by federal Medicare law (Molina Healthcare of Utah Inc. v. Todd E. Kiser, No. 19-00025, D. Utah, 2019 U.S. Dist. LEXIS 93299).
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June 19, 2019
Parties Ask To Dismiss Runoff Insurer’s Third-Party Aiding, Abetting Claims
NEW YORK — In seven separate motions, third-party defendants on June 14 asked a New York federal court to dismiss a runoff insurer’s third-party complaint alleging aiding-and-abetting fraud and breach of fiduciary duty in a “massive fraudulent scheme” for failing to make particularized allegations against them (Melanie L. Cyganowski v. Beechwood Re Ltd., et al., No. 18-12018, S.D. N.Y.).
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June 19, 2019
Defendants Were Involved In Scheme To Defraud, Insurer’s Receiver Argues To Court
ANDERSON, S.C. — An insurer’s special deputy receiver in June 14 motions argues that two defendants played a role in an alleged scheme to defraud a multiple-employer self-insured health plan with fraudulent letters of credit (LOC) and, thus, a South Carolina federal court should not dismiss the receiver’s claim under the Racketeer Influenced and Corrupt Organization Act against them (Michael J. FitzGibbons, et al. v. Alton Atkinson, et al., No. 17-2092, D. S.C.).
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June 18, 2019
Kentucky Supreme Court Denies Review Of Ruling On Failure To Request Funds
FRANKFORT, Ky. — In a case over statutory and regulatory violations against state agencies, the Kentucky Supreme Court on June 5 denied discretionary review of a lower court’s ruling that an insolvent self-insured employer’s president was required to request a refund of security with the commissioner for the Kentucky Department of Workers’ Claims (James R. Martin v. Kentucky Individual Self-Insurance Guaranty Fund, et al., No. 2018-SC-000552-D, Ky. Sup., 2019 Ky. LEXIS 258).
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June 18, 2019
Liquidator: Panel’s Attorney Fees Award To Reinsurer Exceeded Authority
CHICAGO — An insolvent insurer’s liquidator argues in a June 7 reply filed in Illinois federal court that a panel exceeded its authority when it issued attorney fees in its $437,000 arbitration award to a reinsurer (Catalina Holdings [Bermuda] Ltd. v. Jennifer Hammer, No. 18-5642, N.D. Ill.).
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June 14, 2019
Panel Affirms Ruling On Negligence Claim Against Insurance Agents
EL PASO, Texas — A Texas appeals panel on June 12 upheld the entry of summary judgment on negligence claims against insurance agents regarding their procurement of a liquor liability policy from an insolvent insurer and the eventual lack of coverage for two underlying Dram Sham Act lawsuits against a bar establishment (R&M Mixed Beverage Consultants Inc. v. Safe Harbor Benefits Inc., et al., No. 08-17-00054-CV, Texas App., 8th Dist., 2019 Tex. App. LEXIS 4840).
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June 14, 2019
Judge Asks If Breach Of Contract Case Against Insolvent Insurer Should Be Dismissed
LOS ANGELES — A California federal judge on June 12 ordered insureds to show cause why their breach of contract case against an insolvent insurer should not be dismissed and, instead, handled in the insurer’s liquidation (Yancy Alvarez, et al. v. Access General Insurance Co., No. 18-336, C.D. Calif., 2019 U.S. Dist. LEXIS 98817).
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June 13, 2019
Judge Stays SEC’s Case Over Schemes To Defraud Insurers, Reinsurance Trusts
NEW YORK — A New York federal judge on June 10 stayed a lawsuit by the Securities and Exchange Commission that alleges that two individuals “perpetrated multiple schemes to defraud their advisory clients, which were insurance companies and reinsurance trusts” (Securities and Exchange Commission v. Alexander C. Burns, et al., No. 18-09477, S.D. N.Y.).
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June 12, 2019
CIGA: Claims Against Government Were Improperly Dismissed On Preemption
SAN FRANCISCO — In their dispute over who is responsible for payment to insureds of workers’ compensation plans that become insolvent, Secretary of Health and Human Services Alex Azar II and the California Insurance Guarantee Association (CIGA) in a May 25 brief tell the Ninth Circuit U.S. Court of Appeals that a lower court’s judgment is final and appealable because the judgment resolved all their respective claims, rights and liabilities (California Insurance Guarantee Association v. Alex Azar II, et al., Nos. 17-56526 & 17-56528, 9th Cir.).
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June 11, 2019
Liquidators File Breach Of Fiduciary Duty Case Over Reinsurance Transactions
WILMINGTON, Del. — Two limited liability companies and liquidators for one of the companies filed a 101-page complaint in a Delaware state court on June 7, alleging breach of fiduciary duty with regard to transactions involving reinsurance agreements (Principal Growth Strategies LLC, et al. v. AGH Parent LLC, et al., No. 2019-0431, Del. Chan.).
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June 7, 2019
Panel Affirms Lift Of Stay In Malpractice Case Despite Insurer’s Liquidation
NEW YORK — The First Department New York Appellate Division on June 4 upheld a lower court’s ruling lifting a stay of a medical malpractice lawsuit that had been stayed due to a liquidation order placed against one of the defendant’s insurers (Cynthia I. Caimares v. Aimee Erickson, et al., No. 20620/17E, N.Y. App. Div., 1st. Dept., 2019 N.Y. App. Div. LEXIS 4321).
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June 6, 2019
Third-Party Action Over Reinsurance Proceeds Voluntarily Dismissed
NEW YORK — A reinsurer and the liquidator for Home Insurance Co. informed a New York federal judge on May 30 that they voluntarily dismiss a third-party action following the dismissal of the main action over proceeds allegedly owed to the insolvent insurer under three facultative reinsurance certificates (Roger A. Sevigny v. Trygvesta Forsikring A/S, Trygvesta Forsikring A/S v. Cerberus Holding Company LLC, No. 16-4874, S.D. N.Y.).
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June 4, 2019
Judge Stays Dispute Until Resolution Of Insurers’ Receivership Litigation
ST. LOUIS — A Missouri federal judge on June 3 held that he would abstain from hearing a dispute between the special deputy receiver (SDR) for three insolvent insurers and a preneed cemetery trust over whether a merchandise and services trust remains property of a receivership proceeding and will instead stay the case until resolution of a concurrent Texas state court receivership proceedings (Winner Road Properties LLC v. BMO Harris Bank, N.A. v. Jo Ann Howard & Associates, P.C., No. 16-1395, E.D. Mo., 2019 U.S. Dist. LEXIS 92546).
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June 4, 2019
Investment Company Seeks Dismissal Of Liquidators’ Case Over Fraud Scheme
NEW YORK — Calling the allegations against it the “written equivalent of a Russian nesting doll,” an investment holdings company argues in a May 31 reply brief that a New York federal court should dismiss a second amended complaint filed by two hedge funds’ liquidators concerning the alleged massive fraud scheme that caused the hedge funds’ collapse (Martin Trott, et al. v. Platinum Management [NY] LLC, et al., No. 18-10936, S.D. N.Y.).
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May 31, 2019
Liquidators: Investment Company Should Not Be Able To Evade Liability
NEW YORK — In response to a motion to dismiss a second amended complaint (SAC), two hedge funds’ liquidators argue in a May 29 brief to a New York federal court that an investment holdings company should not be permitted “to evade responsibility for the substantial assistance it provided” in an alleged massive fraud scheme that caused the hedge funds’ collapse (Martin Trott, et al. v. Platinum Management [NY] LLC, et al., No. 18-10936, S.D. N.Y.).
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May 30, 2019
Reinsurer Rejects Insurer’s Liquidator’s Reasoning For Seeking To Vacate Award
CHICAGO — A reinsurer tells an Illinois federal court in a May 24 opposition that an insolvent insurer’s liquidator seeks to vacate or modify a $437,000 arbitration award for attorney fees “not because of the purported reason that the panel exceeded its authority in issuing the award, but because it does not agree with the panel’s interpretation of the parties’ contracts” (Catalina Holdings [Bermuda] Ltd. v. Jennifer Hammer, No. 18-5642, N.D. Ill.).
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May 30, 2019
Panel Reverses Dismissal Of Insolvent Insurer Shareholder’s Lawsuit
WASHINGTON, D.C. — Finding that the Rooker-Feldman doctrine is inapplicable to the case, the District of Columbia Circuit U.S. Court of Appeals on May 28 reversed the dismissal of a lawsuit filed by the sole shareholder of an insolvent health insurer against the District of Columbia and the insurer’s rehabilitator for their alleged unlawful acts (D.C. Healthcare Systems Inc. v. District of Columbia, et al., No. 17-7141, D.C. Cir., 2019 U.S. App. LEXIS 15698).