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

Mealey's Insurance Insolvency

October 31, 2022
5-Year Sentence Set, $20.3M Forfeiture Order Sought Over Scheme Against Insurer

GREENSBORO, N.C. — Following imposition of a five-year prison sentence on the former manager of a roughly $34 million reinsurance portfolio who pleaded guilty to a wire fraud charge, the parties on Oct. 31 asked a North Carolina federal court to enter an order of forfeiture in the amount of $20,322,220.
October 31, 2022
Judge Deems Claims Not Covered In Asbestos Dispute Against Guaranty Association

NEW ORLEANS — A Louisiana federal judge on Oct. 28 granted an insurance guaranty association’s motion for summary judgment in an asbestos coverage suit filed against it as the alleged obligor for policies issued by a now insolvent insurer, finding that because the claims filed against the guaranty association were not filed until after the “claim bar date,” they are not covered claims.
October 31, 2022
Split Utah High Court Agrees That Insurance Liquidator’s Waiver Is Not Binding

SALT LAKE CITY — A split Utah Supreme Court affirmed a lower court order finding that a county failed to show a loss after a contractor insured under a surety agreement with a now insolvent insurer failed to finish the county’s municipal projects, holding that there was “no indication that the district court made findings . . . unsupported by the evidence” after it reviewed the liquidator’s release and waiver document signed by the county.
October 28, 2022
Trustee Asks Judge To Vacate Stay In Sale Of Asset Manager’s Insurance Policies

FORT LAUDERDALE, Fla. — A trustee responsible for trust liquidation moved a Florida federal court to vacate a stay of the sale of trust policies, asserting that because the 11th Circuit dismissed the appeal for lack of jurisdiction because the procedures order granting the sale of the trust’s insurance policies was not a final order, “the predicate for the stay no longer exists.”
October 27, 2022
Following Objections To Rehab Plan For Reinsurer, Receiver Proposes Schedule

WILMINGTON, Del. — After dozens of objections to his motion for approval of a proposed modified plan of rehabilitation for Scottish Re (U.S.) Inc. in Rehabilitation (SRUS) were filed in the Delaware Court of Chancery, the reinsurer’s receiver proposed a schedule under which a status conference would be held no sooner than mid-January.
October 26, 2022
Judge Rules On Omnibus Motion To Exclude Evidence In Asbestos Liability Suit

NEW ORLEANS — A Louisiana federal judge granted in part an omnibus motion in limine filed by defendants, including the Louisiana Insurance Guaranty Association (LIGA), in an asbestos liability suit, granting the motions to exclude the term “asbestos industry” and other financial information about the defendants, including the amount of liability coverage and certain testimony, finding that the excluded items fail to meet the court’s admissibility standards.
October 25, 2022
Numerous Entities Raise Objections To Rehabilitation Plan For Reinsurer

WILMINGTON, Del. — On the Oct. 24 objection deadline, numerous entities urged the Delaware Court of Chancery to reject a receiver’s motion for approval of proposed modified plan of rehabilitation for Scottish Re (U.S.) Inc. in Rehabilitation (SRUS), including a combined filing by cedents and retrocessionaires who assert that “it is likely that all creditors would fare materially better in a liquidation.”
October 25, 2022
Judge Denies Dismissal In Negligence Suit Against Auditor Of Insolvent Insurer

BURLINGTON, Vt. — A Vermont federal judge denied an accounting firm’s request for dismissal in a negligence suit filed against it by the liquidator of a now-insolvent insurer alleging that three years of audited financial statements failed to adequately state the financial position of the insolvent insurer, finding that none of the firm’s defenses bars the liquidator’s claims.
October 24, 2022
Pa. High Court Affirms Order Disallowing Funds Diversion By Insurers’ Liquidator

HARRISBURG, Pa. — The Pennsylvania Supreme Court affirmed an appellate court order denying a liquidator’s request for authorization to allocate assets from insolvent insurers’ estates to pay policyholder claims for benefits that exceed applicable statutory guaranty association limits and accrue more than 30 days after the insurance policies were terminated by the liquidations.
October 20, 2022
11th Circuit Tosses Appeal In Row Over Sale Of Asset Manager’s Insurance Policies

ATLANTA — The 11th Circuit U.S. Court of Appeals dismissed an investment manager’s appeal of a district court order granting the sale of policies terminating the trust in which the manager owns an interest, finding that the Circuit Court lacks jurisdiction because the challenged order is not a final decision.
October 18, 2022
Woman Objects To Testimony In Asbestos Liability Suit Involving Insolvent Insurer

NEW ORLEANS — A woman who filed an asbestos liability suit against a shipyard and others, including an insolvent insurer, filed a motion in limine with a federal court in Louisiana, seeking to exclude proposed expert testimony, asserting that the same expert’s testimony was excluded in another Louisiana federal court asbestos liability suit due to the plaintiff’s failure to establish the testimony as admissible hearsay.
October 14, 2022
Judge Approves Agency Request For Consultants In Insolvent Insurer’s Liquidation

TALLAHASSEE, Fla. — A Florida judge issued an order approving the Florida Department of Financial Services’ motion for compensation of outside consultants in anticipation of the assistance needed with its statutory duties as receiver in the liquidation of FedNat Insurance Co.
October 13, 2022
Magistrate Vacates Deadlines In Antitrust Coverage Row Involving Insolvent Insurer

KANSAS CITY, Kan. — A Kansas federal magistrate judge granted a liability insurer and defendant health insurer’s joint motion to vacate certain deadlines in an antitrust coverage dispute involving an insolvent excess insurer, noting the “unique procedural position of this case” where “a portion of the case” was stayed pending resolution of underlying antitrust litigation.
October 12, 2022
Stay Versus Dismissal Argued In Arbitration Bid In Fraud Suit Involving Reinsurance

GREENSBORO, N.C. — Agreeing to arbitration, the parties in an insolvent insurer’s suit against an actuary over an alleged scheme involving reinsurance disputed in recent filings whether the North Carolina federal court case should be stayed or dismissed.
October 11, 2022
Federal Judge Rules On Motions To Dismiss In RICO Suit Against Insolvent Insurer

AKRON, Ohio — A Ohio federal judge issued an order granting certain defendants’ dismissal motions for failure to state claim in a class action filed against Liberty HealthShare Inc., its CEOs and directors by health insurance plan members seeking a declaration that the health plans “were and are illegal contracts” and a ruling that the CEOs or directors were personally liable after Liberty was deemed an insolvent insurer under Virginia Code Annotated Section 38.2-215.
October 10, 2022
Judge Issues Stay In Hurricane Ida Coverage Dispute Against Insolvent Insurer

NEW ORLEANS — An insurance coverage dispute related to Hurricane Ida is stayed and administratively closed for six months, a Louisiana federal judge ruled in an order signed Oct. 7 and docketed Oct. 9, finding that pursuant to Louisiana law and a Fifth Circuit U.S. Court of Appeals decision, proceedings involving an insolvent insurer in federal court shall be stayed to prevent a federal court claimant from preempting other parties in the state court’s asset distribution in the liquidation proceeding.
October 07, 2022
Magistrate Urges Compliance With Status Report In Insolvent Health Plan Suit

CHICAGO — In a minute docket entry, an Illinois federal magistrate judge urged certain insurance broker defendants to continue “efforts to obtain compliance with the document subpoenas identified in the status report” in a breach of duty of care suit against the insurance brokers in connection with the sale of a now-insolvent health plan.
October 06, 2022
Federal Judge Grants Insurer Extension In Liquidator’s $21M Wrongful Acts Suit

SIOUX FALLS, S.D — A South Dakota federal judge granted an insurer’s request for an extension of time to respond to a motion by the liquidator of ReliaMax Surety Co. (RSC) to strike asserted affirmative defenses and for partial summary judgment in the liquidator’s suit seeking a declaratory judgment 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.
October 05, 2022
5th Circuit Affirms Judgment In Row Involving Insolvent Insurer, Holding Company

NEW ORLEANS — The Fifth Circuit U.S. Court of Appeals affirmed a district court’s judgment dismissing a Texas attorney’s lawsuit seeking unpaid attorney fees from a holding company that provided commercial vehicle insurance through an insurer that was declared insolvent and put into liquidation.
October 03, 2022
Consolidation Bid Follows Adversary Proceeding In Row Over Bankruptcy Court’s Stay

NEW YORK — Parties in a stay dispute that is playing out in two cases in different jurisdictions will have an Oct. 6 hearing in New York federal bankruptcy court on a motion to consolidate and expedite that court’s proceedings on the issue under a second amended order issued Sept. 30.
October 03, 2022
Panel Affirms, Says Guaranty Association Not Required To Pay COLA Interest

WASHINGTON, D.C. — A District of Columbia appellate panel affirmed a compensation review board’s decision that the D.C. Insurance Guaranty Association was not statutorily obligated to pay penalties for the late payment of cost-of-living allowances (COLA) or accrued interest on the underpayment of workers’ compensation benefits, finding that the “claims for the statutory late-payment penalties and for accrued interest were not” covered claims.
September 30, 2022
Florida Agency Seeks Approval To Hire Advisers In Insolvent Insurer Liquidation

TALLAHASSEE, Fla. — After a Florida court entered a consent order appointing the Florida Department of Financial Services as receiver in the liquidation of FedNat Insurance Co., the department moved to approve compensation of outside consultants in anticipation of the assistance needed with its statutory duties as receiver.
September 30, 2022
Federal Judge Dismisses Claims Against Insurer In Asbestos Liability Dispute

NEW ORLEANS — A Louisiana federal judge on Sept. 29 issued an order dismissing without prejudice claims against an alleged insurer of a now-deceased former shipyard president in a wrongful death asbestos suit against numerous defendants, including an insolvent insurer.
September 30, 2022
Court Again Extends Objection Deadline On Rehab Plan For Reinsurer

WILMINGTON, Del. — The deadline to object to a proposed modified plan of rehabilitation for Scottish Re (U.S.) Inc. in Rehabilitation (SRUS) is now Oct. 24 after a Delaware vice chancellor for the second time granted an extension following a joint stipulation by the receiver for SRUS and dozens of interested insurers.
September 29, 2022
Panel Affirms Order Enforcing ‘Bar’ Date For Claim Submission In Liquidation Case

NEW YORK — A New York appellate court affirmed a lower court order denying a non-profit association’s motion to reject a referee’s decision enforcing a “bar date” that prevented it from submitting a claim in the liquidation of an insolvent insurer, finding that the lower court decision was correct because “no constitutional, equitable, or public policy considerations” supported changing the bar date for the association’s alleged hardship.