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

Mealey's Insurance Insolvency

October 31, 2023
Conversion To Chapter 7 Sought For Vesttoo Bankruptcy Cases By U.S. Trustee

WILMINGTON, Del. — A Delaware federal bankruptcy judge on Oct. 30 set a Nov. 8 hearing on a motion to convert the jointly administered Chapter 11 cases of Vesttoo Ltd. and 48 affiliates to Chapter 7 cases.
October 30, 2023
Md. Panel Says Insurance Commissioner Authorized To Amend Lease In HMO Liquidation

ANNAPOLIS, Md. — A Maryland appellate court affirmed a lower court order requiring a landlord to repay the security deposit to its tenant, a now-insolvent health maintenance organization (HMO), and to pay $8,000 to the tenant for furniture left on the premises, finding that because the Maryland insurance commissioner was appointed receiver for the insurer, the commissioner, alone, or through an agent, was permitted to make changes to the lease, which did not violate state or federal constitutions.
October 25, 2023
Homeowner Sues Guaranty Association, Cites ‘Duty To Indemnify’ For Unpaid Claim

FORT MYERS, Fla. — A homeowner alleging that her insurer failed to pay any part of a claim for home damage sued the Florida Insurance Guaranty Association (FIGA) in a Florida state court, asserting that because FIGA is the statutory receiver for the insurer that was ordered into liquidation, it “has a duty to indemnify” the homeowner for the unpaid claim.
October 24, 2023
Guaranty Association Seeks Extension In Suit Alleging Dishwasher Leak Water Damage

WEST PALM BEACH, Fla. — The Florida Insurance Guaranty Association (FIGA) filed in a Florida state court a request for additional time to respond to a complaint against it and an insolvent homeowners insurer in the homeowners’ breach of contract suit related to purported water damage from a leaking dishwasher.
October 24, 2023
Judge Adopts Recommendation In Row With Insured Whose Insurer Is In Receivership

WEST PALM BEACH, Fla. — A Florida federal judge adopted a magistrate judge’s report and recommendation advising that default be entered against a tractor-trailer driver and its owner who was insured by a now-insolvent insurer in a suit alleging negligence related to an auto accident, finding the report’s reasoning “accurate and thorough.”
October 23, 2023
Reinsurer Gets Arbitration Order Over Liquidator’s Opposition In California Court

LOS ANGELES — Saying in part that the dispute is “precisely the type . . . that must be resolved through an independent action, not the summary claims process,” a California judge granted a reinsurer’s motion to compel arbitration with an insurer in liquidation over a disagreement regarding the calculation of sliding scale commissions.
October 23, 2023
Insureds Seek Dismissal In Hurricane Coverage Row Involving Liquidated Insurer

ST. CROIX, Virgin Islands — Homeowners notified a federal court in the Virgin Islands that because one of the insurer defendants was never served, the case against it should be dismissed in the insureds’ Hurricane Maria coverage suit involving an insurer in liquidation.
October 20, 2023
Amended Briefing Schedule Approved In Suit Liquidating Insolvent Health Plan

WILMINGTON, Del. — A Delaware state court chancellor approved parties’ proposed amended briefing schedule in 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).
October 20, 2023
Panel Affirms Liquidation Of Workers’ Comp Group Fund In Row Over Unpaid Claims

FRANKFORT, Ky. — A Kentucky appeals court affirmed a lower court’s liquidation order regarding an insolvent workers’ compensation self-insured group fund, finding that because the group fund was declared insolvent and placed into liquidation, the Kentucky Group Self-Insurance Guaranty Fund is statutorily obliged to meet the obligations of the insolvent insurer.
October 19, 2023
Delaware Supreme Court Won’t Certify Interlocutory Appeal On Intervention Denial

WILMINGTON, Del. — The Delaware Supreme Court has declined to accept an appeal from an interlocutory order denying Arrowood Indemnity Co.’s motion to intervene in a suit that seeks to compel the Delaware insurance commissioner to start liquidation proceedings against Arrowood.
October 18, 2023
Judge Grants Extension To Respond In $1B RICO Suit Filed By Insolvent Insurers

RALEIGH, N.C. — A North Carolina federal judge granted a former chief investment officer’s (CIO) motion for an extension of time to respond to an amended complaint in a $1 billion Racketeer Influenced and Corrupt Organizations Act (RICO) suit accusing him, the owner of now-insolvent insurers and other people 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.
October 18, 2023
Debtors In Vesttoo Chapter 11 Case Ask Bankruptcy Court To Establish Bar Dates

WILMINGTON, Del. — Vesttoo Ltd. and 48 affiliated entities (collectively, the debtors) have asked a Delaware federal bankruptcy court to set a series of bar dates in their jointly administered Chapter 11 case, starting with a Dec. 1 deadline for nongovernmental entities or individuals to file proof of claims that arose before the debtors filed for bankruptcy.
October 13, 2023
Reconsideration Denied In Bid To Substitute Guaranty Association For Insurer

NEW ORLEANS — A Louisiana federal judge denied a request to reconsider an order denying substituting a now-insolvent insurer with the Louisiana Insurance Guaranty Association (LIGA) in a suit seeking coverage for purported damage to a home caused by Hurricane Ida, finding that there are no obligations transferred from an insolvent insurer to LIGA permitting it to “step into the shoes of the insolvent insurer.”
October 06, 2023
Magistrate Recommends Default Against Insured With Auto Insurer In Receivership

WEST PALM BEACH, Fla. — A Florida federal magistrate judge issued a report and recommendation advising that default be entered against a tractor-trailer driver and its owner who was insured by a now-insolvent insurer in a suit alleging negligence related to an auto accident, finding that the defendants’ violations of court orders by failing to appear are “willful and in bad faith.”
October 06, 2023
Oklahoma Judge Approves Receiver’s $1.8M Request In Liquidation Of Friday Health

OKLAHOMA CITY — An Oklahoma judge approved a fee and costs request filed by the receiver of Friday Health Plans of Oklahoma (FHPOK), seeking $1,868,131.46 for legal and administrative fees and fees for prescription and medical claims, finding the amounts requested to be “justified.”
October 06, 2023
Hurricane Coverage Suit Remanded After Guaranty Association Added As Defendant

NEW ORLEANS — A Louisiana federal judge remanded to state court a homeowner’s hurricane coverage suit against his now-insolvent insurer, finding that remand is appropriate because adding the Louisiana Insurance Guaranty Association (LIGA) as a defendant in the amended complaint defeats subject matter jurisdiction.
October 04, 2023
Unsecured Creditors In Vesttoo Chapter 11 Case Get Leave To Conduct Discovery

WILMINGTON, Del. — The Official Committee of Unsecured Creditors in the jointly administered Chapter 11 case of Vesttoo Ltd. and 48 affiliated entities has been granted leave by a Delaware federal bankruptcy judge to conduct discovery.
September 29, 2023
Federal Judge Remands Hurricane Ida Coverage Dispute For Lack Of Jurisdiction

NEW ORLEANS — A Louisiana federal judge remanded to state court homeowners’ bad faith and breach of contract suit against their now-insolvent insurer, which they allege failed to pay for damages resulting from Hurricane Ida, finding that the court lacks jurisdiction because the homeowners added the Louisiana Insurance Guaranty Association (LIGA) as a defendant in their amended complaint.
September 28, 2023
Briefing Schedule Approved In Health Plan Assignment For Benefit Of Creditors Suit

WILMINGTON, Del. — A Delaware state court chancellor approved parties’ proposed briefing schedule regarding the motion filed by special deputy receiver of Friday Health Insurance Co. Inc. to dismiss or stay the assignment for the benefit of creditors (ABC) proceeding to liquidate the assets of (FHP) and Friday Health Plans Management Services Co. Inc. (FHP MSC).
September 28, 2023
Offset Applied In Finalizing Damages Against Collapsed Hedge Fund’s Co-Founder

NEW YORK — In a ruling involving interpretation of what he called a “somewhat ambiguous” part of a New York offset law, a New York federal judge reduced what would otherwise have been a liability of more than $15.2 million against a co-founder of the collapsed hedge fund Platinum Partners to just under $2.8 million.
September 27, 2023
Judge Grants Motion To File Amended Complaint In Hurricane Ida Coverage Row

NEW ORLEANS — A Louisiana federal judge granted homeowners’ motion to file an amended complaint and add the Louisiana Insurance Guaranty Association (LIGA) as a defendant in their breach of contract and bad faith suit against their now-insolvent insurer over its failure to cover purported damages caused by Hurricane Ida, finding no evidence that the motion to amend is “to defeat federal jurisdiction” and that because diversity jurisdiction no longer exists, the case must be remanded to state court.
September 20, 2023
Homeowner Sues Insolvent Insurer Over Failure To Cover Hurricane Damages

FORT MYERS, Fla. — A homeowner filed a breach of contract suit against his insolvent homeowners insurer, alleging that the insurer failed to compensate him for damages caused by Hurricane Ian.
September 20, 2023
Partial Grant Of Extension Urged In Shareholder Appeal Of Liquidation Order

RALEIGH, N.C. — The North Carolina commissioner of insurance and insurers in liquidation urged a North Carolina appellate court to partially grant a shareholder’s request for a 30-day extension to file its opening brief appealing the liquidation order, asserting that a week’s extension is appropriate in light of the inability of the insurers to satisfy annuity contracts until the appeal is resolved.
September 20, 2023
Mold Inspector Seeks Default Against Florida Insurance Guaranty Association

DELAND, Fla. — A mold inspection company, as an assignee of insureds, filed a motion for default in a Florida state court in the company’s breach of contract suit against the Florida Insurance Guaranty Association (FIGA), a servicer of claims against a homeowners insurer ordered into receivership, asserting that the court should enter default against FIGA or require it to file an answer within 10 days.
September 19, 2023
Judge Remands Hurricane Ida Coverage Suit After Guaranty Association Intervenes

NEW ORLEANS — A Louisiana federal judge granted homeowners’ motion to dismiss a breach of contract suit against their homeowners insurer for its purported failure to compensate them for damages to their home from Hurricane Ida, finding that after the Louisiana Guaranty Association (LIGA) intervened, the court lacks subject matter jurisdiction.