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

Mealey's Insurance Insolvency

December 19, 2023
N.C. High Court Grants Review Of Fraud Judgment In Insolvent Insurers’ Suit

RALEIGH, N.C. — The North Carolina Supreme Court granted discretionary review to the purchaser of now-insolvent insurers and his affiliated companies’ regarding an appellate court’s decision affirming a judgment for fraud in a breach of contract suit.
December 19, 2023
Unsecured Creditors Update Proposed Liquidation Plan In Vesttoo Chapter 11 Cases

WILMINGTON, Del. — The Official Committee of Unsecured Creditors on Dec. 18 filed an amended proposed combined disclosure statement and Chapter 11 plan of liquidation for the jointly administered cases of Vesttoo Ltd. and 48 affiliates in Delaware federal bankruptcy court.
December 18, 2023
Liquidation Order Prompts Letters, Order In Environmental Claims Row

NEWARK, N.J. — After all parties in a suit over environmental investigation and remediation briefly weighed in on the implications of a different court’s liquidation order pertaining to one defendant, a New Jersey federal magistrate judge delayed a status conference and granted that defendant “leave to file a motion for relief relating to the Liquidation Order.”
December 18, 2023
Flood Insurer Submits List Of Parties Remaining In Hurricane Ida Coverage Dispute

NEW ORLEANS — A flood insurer that was sued for breach of contract for its alleged failure to adequately cover claims related to Hurricane Ida submitted to a federal court a notice advising that the remaining parties are the insured, flood insurer and Louisiana Insurance Guaranty Association (LIGA), as statutory successor for an insolvent homeowner’s insurer.
December 18, 2023
Judge Agrees With Report, Tosses Hurricane Coverage Row With Insolvent Insurer

LAFAYETTE, La. — A Louisiana federal judge granted a woman’s motion to dismiss a hurricane coverage suit against her insolvent homeowners insurer, agreeing with a magistrate judge’s recommendation to dismiss the case after the judge suspended the homeowner’s legal counsel upon discovering that they had made duplicate filings in other cases related to Hurricanes Laura and Delta.
December 14, 2023
Israeli Law Raised In Feedback On Liquidation Plan For Vesttoo And Its Affiliates

WILMINGTON, Del. — In two Dec. 13 filings citing Israeli law and other issues, Vesttoo Ltd. and its affiliated debtors and a venture capital organization and individual that report significant related interests urge a Delaware federal bankruptcy court not to approve a Chapter 11 plan of liquidation and related arrangements as currently proposed.
December 14, 2023
Default Not Entered In Row With Guaranty Association Over Leaky Dishwasher Damage

WEST PALM BEACH, Fla. — A Florida state court deputy clerk issued a notice stating that homeowners’ motion for default will not be granted against the Florida Insurance Guaranty Association (FIGA) in a breach of contract suit filed against it and their insolvent insurer related to purported water damage from a leaking dishwasher.
December 14, 2023
Panel Issues Ruling In $5M Enforcement Action Against Owner Of Insolvent Insurers

RALEIGH, N.C. — A North Carolina appeals court vacated a lower court injunction enjoining the owner of insolvent insurers from withdrawing without the North Carolina Insurance commissioner’s consent more than $5,000 from any entity controlled by the owner in an enforcement action for a $524,009,051.26 judgment, finding that the lower court lacked jurisdiction to issue the injunction.
December 14, 2023
Louisiana Federal Judge Dismisses Hurricane Coverage Suit After Counsel Suspension

LAFAYETTE, La. — A Louisiana federal judge dismissed a hurricane coverage suit, concurring with a magistrate judge’s report and recommendation to grant a homeowner’s motion for dismissal against his now-insolvent insurer after the judge suspended the homeowner’s legal counsel for purported insurance fraud related to alleged misconduct in filing hurricane-coverage suits.
December 14, 2023
Texas Judge Finds Health Insurer Insolvent, Places It Into Liquidation

AUSTIN, Texas — A Texas state court judge granted the Texas Department of Insurance’s (TDI) application to place Bright Healthcare Insurance Company of Texas into liquidation, appointing the state insurance commissioner as receiver and issuing an automatic stay in any proceeding against the insurer.
December 14, 2023
Insured’s Remand Bid Denied In Hurricane Coverage Row With Insurer In Receivership

NEW ORLEANS — A Louisiana federal judge denied a homeowner’s motion to remand to state court his breach of contract and bad faith suit against his now-insolvent insurer alleging that the insurer failed to cover damage from Hurricane Ida, finding that because the homeowner did not amend his complaint to add the Louisiana Insurance Guaranty Association (LIGA) as a defendant, there is still “complete diversity between the parties.”
December 14, 2023
Chancellor Grants Request To Extend Bar Date In Insolvent Health Plan Liquidation

WILMINGTON, Del. — A Delaware vice chancellor granted parties’ request to extend bar dates as applied to state special deputy receivers for related insolvent health insurers regarding the court’s assignment for the benefit of creditors (ABC) proceeding to liquidate the assets of Friday Health Plans Inc. (FHP) and Friday Health Plans Management Services Co. Inc. (FHP MSC).
November 30, 2023
5th Circuit Affirms Judgment In Civil Rights Suit Involving Guaranty Association

NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals affirmed a district court’s grant of summary judgment to an off-duty sheriff’s deputy and the Louisiana Insurance Guaranty Association (LIGA), which intervened on behalf of his insolvent homeowners insurer, in a suit alleging excessive force and civil rights violations regarding the deputy’s restraint of a restaurant customer, finding that video footage shows that the deputy’s “use of force was not clearly excessive or clearly unreasonable” in response to the customer’s “severe intoxication and threatening behavior.”
November 30, 2023
Judge Orders Former CIO To Pay $75,000 To Resolve Insolvent Insurers’ RICO Suit

RALEIGH, N.C. — A North Carolina federal judge issued an order finding a former chief investment officer (CIO) liable and ordering him to pay $75,000 to insolvent insurers in a $1 billion Racketeer Influenced and Corrupt Organizations (RICO) Act suit accusing him, the owner of the insurers and other individuals and affiliated companies of participating in a scheme to defraud the insurers and their policyholders by using policyholder money to purchase non-insurance companies and to divert policyholder money to the owner.
November 27, 2023
Unsecured Creditors Propose Liquidation Plan For Vesttoo And Its Affiliates

WILMINGTON, Del. — The Official Committee of Unsecured Creditors has proposed a Chapter 11 plan of liquidation for the jointly administered cases of Vesttoo Ltd. and 48 affiliates in Delaware federal bankruptcy court, with a Dec. 13 objection deadline.
November 27, 2023
Judge Grants Substitution Motion In Hurricane Coverage Row With Insolvent Insurer

NEW ORLEANS — A Louisiana federal judge granted a motion to substitute the Louisiana Insurance Guaranty Association (LIGA) as a defendant in a property owner’s breach of contract and bad faith suit against its now-insolvent insurer that purportedly failed to cover alleged losses from Hurricane Ida, finding that substituting LIGA as a defendant is permitted in an action seeking to resolve covered claims.
November 22, 2023
Health Care IT Providers Join Dismissal Motion In Insolvent Plan Liquidation

WILMINGTON, Del. — Health care information technology (IT) companies submitted in Delaware state court a joinder to a dismissal motion filed by the special deputy receiver for Friday Health Insurance Co. Inc. to dismiss or stay an assignment for the benefit of creditors (ABC) proceeding to liquidate the assets of Friday Health Plans Inc. (FHP) and Friday Health Plans Management Services Co. Inc. (FHP MSC), asserting “that the pendency of multiple, concurrent insolvency proceedings . . . creates the potential” for inconsistent rulings.
November 20, 2023
Judge Issues Remand, Says Guaranty Association Is Insolvent Insurer’s Obligor

NEW ORLEANS — A Louisiana federal judge granted homeowners’ motion to file an amended complaint and name the Louisiana Guaranty Association (LIGA) as a defendant in their breach of contract suit against their now-insolvent homeowners insurer for its purported failure to adequately cover their losses from Hurricane Ida, finding that LIGA is the statutory obligor for the insolvent insurer and that the case must be remanded to state court due to the absence of subject matter jurisdiction.
November 17, 2023
Borrower, Insurer Stipulate To Counterclaims Dismissal In $14.5M Loan Default Suit

RALEIGH, N.C — A borrower sued for $14.5 million in North Carolina federal court for its alleged failure to make a first loan interest payment and a health insurer that sued it filed a joint stipulation to voluntarily dismiss the borrower’s counterclaims against the health insurer, one of three insurers in rehabilitation who sued the borrower for breach of contract.
November 16, 2023
Judge Grants Request To Amend Complaint To Add Guaranty Association, Issues Remand

NEW ORLEANS — One day after a Louisiana federal judge granted a homeowner’s motion to add the Louisiana Insurance Guaranty Association (LIGA) to his hurricane coverage suit against his now-insolvent insurer, the homeowner added LIGA as a defendant in his amended complaint.
November 16, 2023
Judge Allows Insured To Add Guaranty Association, Says No ‘Dilatory Purpose’

NEW ORLEANS — A Louisiana federal judge granted a homeowner’s motion to amend his complaint and add the Louisiana Insurance Guaranty Association (LIGA) as a defendant in a hurricane coverage suit against his now-insolvent insurer, finding in part that though LIGA is a nondiverse party, the homeowner had no “dilatory purpose” in amending the complaint.
November 15, 2023
Judge Denies Dismissal In Hurricane Coverage Suit, Says Substitution Has No Impact

LAKE CHARLES, La. — A Louisiana federal judge denied dismissal of a homeowners’ bad faith suit against their now-insolvent homeowners insurer for purportedly failing to adequately compensate them for damages caused by Hurricane Laura, finding that substituting the Louisiana Insurance Guaranty Association (LIGA) does not impact the court’s subject matter jurisdiction.
November 15, 2023
Collapsed Hedge Fund’s Co-Founder Appeals Offset Ruling To 2nd Circuit

NEW YORK — A co-founder of the collapsed hedge fund Platinum Partners who argued that application of New York offset law should reduce his liability to zero has filed an appeal in the Second Circuit U.S. Court of Appeals over a ruling that left him liable for just under $2.8 million.
November 14, 2023
Judge Tosses Hurricane Ida Suit Against Insurer, Cites No Basis For Jurisdiction

NEW ORLEANS — A Louisiana federal judge dismissed a breach of contract suit filed by a homeowner against his now-insolvent insurer for failure to adequately compensate the homeowner for purported damage from Hurricane Ida, finding that the court no longer has subject matter jurisdiction after the homeowner named the Louisiana Insurance Guaranty Association (LIGA) as a defendant.
November 14, 2023
Conversion Bid Denied, Exclusivity Terminated In Vesttoo Bankruptcy Cases

WILMINGTON, Del. — A Delaware federal bankruptcy judge has denied without prejudice a U.S. trustee’s motion to convert the jointly administered Chapter 11 cases of Vesttoo Ltd. and 48 affiliates to Chapter 7 cases.