Mealey's Insurance Insolvency : Mealey's : Legal News & Analysis

Mealey's Insurance Insolvency

January 04, 2023
Panel Says Liquidation Of Insurer Gave Notice For Filing Time Limit In Fraud Suit

LAKE CHARLES, La. — A Louisiana appellate court affirmed a lower court’s dismissal of a surviving spouse’s suit to enforce an Arkansas court’s medical malpractice judgment, finding that the lower court’s decision that the surviving spouse’s fraud claims were prescribed for lack of timely filing “was not manifestly erroneous” because the liquidation of the medical malpractice insurer should have sufficed to begin running of the prescription for filing the fraud claim.
January 03, 2023
Rehabilitator: Independent Auditor Failed Obligation To Run-Off Insurer

MINNEAPOLIS — Alleging that an independent auditor “failed in its obligation to present an accurate picture of” a run-off insurer’s financial condition, the insurer’s statutory rehabilitator asserted claims of professional negligence, breach of fiduciary duty and breach of contract in Minnesota federal court.
January 03, 2023
Former Exec Pleads Guilty To New Criminal Charge Of Conspiracy In Alleged Schemes

CHARLOTTE, N.C. — A former executive entered a guilty plea in North Carolina federal court to a recently revealed criminal charge of conspiracy to commit offenses against the United States over allegations that he took part in schemes to, among other things, “evade regulatory requirements meant to protect policyholders” and conceal the “true use of insurance company funds” for the owner’s benefit.
January 03, 2023
Former Advisory Firm’s Dismissal Bid Disputed In SEC Suit Over Alleged Fraud

DURHAM, N.C. — Wrangling in North Carolina federal court over allegations of “a series of fraudulent and improper schemes” that defrauded clients of more than $75 million, a former investment advisory firm asserts that it “was not meaningfully involved in these transactions,” and the U.S. Securities and Exchange Commission contends that “the acts of its officers and agents constitute the acts of” the firm.
December 23, 2022
Judge Rules On Liquidator’s Motion To Strike Defenses In D&O Coverage Dispute

SIOUX FALLS, S.D. — A South Dakota federal judge granted in part a liquidator’s motion to strike a specialty insurer’s asserted affirmative defenses and for partial summary judgment in the liquidator’s declaratory judgment suit seeking a declaration that coverage exists under a claims-made excess insurance policy above a directors and officers (D&O) policy with regard to a $21 million wrongful acts claim, finding that summary judgment is appropriate for the defense of failure to state a claim.
December 22, 2022
Insureds Seek Coverage In Wind Damage Suit Against Insurance Guaranty Association

ST. PETERSBURG, Fla. — Florida homeowners filed a breach of contract suit in Florida state court against the Florida Insurance Guaranty Association (FIGA), as successor of a liquidated insurer, seeking coverage for purported damage of their home during a windstorm.
December 21, 2022
Jury Finds Co-Founder Of Collapsed Hedge Fund Liable For Fiduciary Breach

NEW YORK — A co-founder of the collapsed hedge fund Platinum Partners is liable for a claim of fiduciary breach, and a March 2020 release does not bar his liability, a federal jury in New York said in a verdict handed down Dec. 20, awarding the plaintiffs $8,150,601.80 in compensatory damages.
December 16, 2022
4th Circuit Affirms Dismissal, Says Remedies Not Exhausted In MSP Requirement Row

RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals affirmed a district court’s order dismissing a complaint filed by the North Carolina Insurance Guaranty Association (NCIGA) seeking an advisory opinion as to whether it is required to reimburse Medicare pursuant to the Medicare Secondary Payer (MSP) statute for medical bills Medicare pays on behalf of insured persons, finding that the lower court correctly dismissed the association’s complaint after determining that it lacked jurisdiction due to the association’s failure to exhaust administrative remedies.
December 15, 2022
Case Management Plan Filed In Florida Court Over Hurricane Irma Coverage Dispute

SANFORD, Fla. — A condominium association and the Florida Insurance Guaranty Association filed a case management plan Dec. 14 in a Florida court after the condominium association sued its now-insolvent insurer, for which the guaranty association is the receiver, seeking coverage for damage caused by Hurricane Irma.
December 15, 2022
Certiorari Sought Over Prior Exclusive Jurisdiction Ruling In Conservatorship Row

WASHINGTON, D.C. — Seeking U.S. Supreme Court review in an insurance conservatorship dispute, petitioners argue that the challenged affirmation of dismissal “conflicts with longstanding precedent of this Court and various circuit courts as to the scope of two judge-made rules governing when federal courts must abstain from adjudicating constitutional claims against state officials under” 42 U.S. Code Section 1983.
December 13, 2022
Judge: Order In Risk-Corridor Dispute With Insolvent Insurer ‘Speaks For Itself’

WASHINGTON, D.C — A federal judge denied in part and granted in part an insolvent insurer’s motion for clarification of a previous order and opinion in a suit seeking a declaratory judgment that the government owes insurers millions of dollars under the Patient Protection and Affordable Care Act (ACA) risk-corridor program, finding that the government’s counterclaim for setoff failed to state a valid claim “to an offset against the amounts owed” by the insurer.
December 12, 2022
Federal Judge Dismisses Claims In Row Over Alleged ‘No Value’ Insurance Policies

TRENTON, N.J. — A New Jersey federal judge on Dec. 9 granted a successor insurer’s motion to dismiss counterclaims in its declaratory judgment suit seeking a declaration that life insurance policies it issued that are now owned by an insolvent insurer are void ab initio, finding that the insolvent insurer’s counterclaims for fraud, negligent misrepresentation, violations of the Texas Deceptive Trade Practice Act (DTPA) and promissory estoppel were insufficiently alleged.
December 07, 2022
11th Circuit Affirms Judgment For Trustee In Fiduciary Duty Row With Asset Manager

ATLANTA — The 11th Circuit U.S. Court of Appeals on Dec. 6 affirmed a district court’s order granting summary judgment in favor of a trustee of retained insurance policies in a breach of contract and fiduciary duty suit filed against him by an asset manager owning fractional interests in the retained policies, finding that the asset manager’s relationship with the trustee was an “arms-length contractual relationship” rather than a fiduciary relationship.
December 05, 2022
Fraudulent Transfer Suit Parties Dispute DUFTA Solvency Evaluation Framework

WILMINGTON, Del. — In a motion and opposition that pertain to compelling production of bid and valuation documents, parties in a putative class suit alleging fraudulent transfers from an insurance subsidiary dispute the applicable framework for evaluating solvency under the Delaware Uniform Fraudulent Transfer Act (DUFTA) in Delaware Chancery Court.
December 02, 2022
Magistrate Rules On Conditions Disputed In Trust Termination Insurance Policy Sale

FORT LAUDERDALE, Fla. — A Florida federal magistrate judge granted in part trust investment manager Acheron Capital Ltd.’s motion to exclude certain conditions required by a liquidating trustee who has stated that Acheron, as a prospective bidder on interests in insurance policies, must sign a purchase agreement, finding that the conditions are not appropriate pursuant to a court order adopting a prior report and recommendation.
December 01, 2022
Magistrate Grants Motion To Seal Settlement Docs In Insolvent Health Plan Dispute

CHICAGO — A federal magistrate judge issued a minute docket entry granting an independent fiduciary’s motion to remove from the docket confidential settlement communications in a breach of duty of care suit against insurance brokers in connection with the sale of an insolvent health plan.
November 30, 2022
2 More Subpoenas Granted In Bankruptcy Court Per Requests Of Insurer’s Liquidators

NEW YORK — Following applications by the joint provisional liquidators (JPLs) of Bermuda insurer and reinsurer PB Life and Annuity Co. Ltd. (PBLA) and other debtors, a New York federal bankruptcy judge on Nov. 29 and 30 entered orders authorizing subpoenas to two individuals.
November 29, 2022
Federal Judge Issues Order Removing Lender From Appeal In Debtor Insurer Case

WILMINGTON, Del. — A Delaware federal judge issued an order removing a lender as a party to an appeal of a federal bankruptcy court’s order denying relief from a stay in a related bankruptcy case, finding that the parties, including the receiver for an insolvent insurer, consented to the stipulation.
November 28, 2022
Reinsurer Wins Summary Judgment In Implied Indemnification, Defense Suit

NEW YORK — Granting summary judgment in favor of a reinsurer on Nov. 23, a federal judge in New York ruled in part that an insurer had to show prejudice to be absolved of responsibility because of late notice but was not actually prejudiced.
November 23, 2022
Bankruptcy Trustee Seeks $200,000 Settlement To Pay Lender In Debtor Insurer Case

WILMINGTON, Del. — A Chapter 7 bankruptcy trustee for insurance company debtors moved a Delaware federal bankruptcy court to approve paying $200,000 to the debtors’ prepetition lender out of a $1.4 million global approved settlement resolving the trustee and Florida and Texas receivers’ claims against the debtors’ directors and officers (D&O claims), asserting that the payment was negotiated as part of the global settlement but that the earlier motion to approve the settlement inadvertently omitted the specific $200,000 payment request.
November 22, 2022
SEC Argues That Execs In Fraud Suit Are Advisers, Dismissal Should Be Denied

DURHAM, N.C. — Arguing in part that the two individuals sued meet the relevant definition of “investment adviser” and that “numerous new statements raised” in one motion should be disregarded, the U.S. Securities and Exchange Commission in a Nov. 21 brief urges a North Carolina federal court to deny dismissal of its complaint alleging “a series of fraudulent and improper schemes” that defrauded clients of more than $75 million.
November 17, 2022
Insured In Defense Costs Row Challenges Exclusion Based On Reinsurer’s Liquidation

NEW CASTLE, Del. — Challenging an insurer’s refusal to reimburse its defense costs, an insured tells the Delaware Superior Court that the exclusion invoked does not apply for reasons including the absence of the words “liquidation,” “reinsurer” and “insolvency.”
November 16, 2022
Judge Denies Motion To Appeal Order In Dispute With Insurance Guaranty Association

NEW ORLEANS — A Louisiana federal judge denied creditors’ motion to file an appeal of a Louisiana federal bankruptcy court’s interlocutory order in a bankruptcy suit involving the Louisiana Insurance Guaranty Association (LIGA) and alleged insurers of an insulation supplier that was also a defendant in separate personal injury asbestos suits, finding that the creditors failed to show “that the bankruptcy court’s order limiting the scope of the corporate deposition presents an issue of law, let alone a controlling issue of law.”
November 16, 2022
Federal Judge Remands, Says Insurer Citizen Of State And Was Not Improperly Joined

NEW ORLEANS — A Louisiana federal judge granted remand to a property and casualty insurance company investor who filed a breach of fiduciary duty suit against the company, which was placed into receivership after it allegedly failed to maintain sufficient reinsurance to cover losses from a hurricane, finding that remand was appropriate because the company was a citizen of Louisiana and failed to show that it was improperly joined.
November 15, 2022
Bankruptcy Judge Rules On Discovery Disputes Including Google Document Production

NEW YORK — A New York federal bankruptcy judge on Nov. 14 entered several orders in a proceeding involving Bermuda insurer and reinsurer PB Life and Annuity Co. Ltd. (PBLA) and other debtors, including an order setting a deadline to produce Google documents in a discovery dispute.