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

Mealey's Insurance Insolvency

July 19, 2024
Insureds File Contempt Motion In Hurricane Coverage Row With Guaranty Association

LAKE CHARLES, La. — Insureds whose rental property purportedly incurred hurricane damage filed a contempt motion in Louisiana federal court against an independent adjustor for its failure to respond to a subpoena in their hurricane coverage dispute with the Louisiana Insurance Guaranty Association (LIGA), which was substituted for their now-insolvent insurer.
July 19, 2024
Receiver’s Determination Proposal In Reinsurer’s Liquidation Draws Feedback

WILMINGTON, Del. — Standard of review has emerged as an issue of contention in Delaware Chancery Court filings concerning final determination procedures in the liquidation of a life and health reinsurer, with the receiver’s proposal that an abuse of discretion standard be used for his proofs of claim recommendations drawing objections.
July 19, 2024
Discovery Deadline Unchanged In SEC Suit Against Owner Of Insurers In Receivership

WINSTON-SALEM, N.C. — A North Carolina federal magistrate judge granted in part a joint motion to extend the case schedule in the U.S. Securities and Exchange Commission’s suit alleging that an advisory services company, its former executive and its former owner, who also owned insurers now in receivership, defrauded clients of more than $75 million, allowing an extra 30 days for “additional fact discovery” but keeping the deadline for close of discovery.
July 18, 2024
Preliminary Injunction Entered In Fraud Suit Over Secured Loans

NEW YORK — A New York federal judge has entered a preliminary injunction against six defendants — including the parent company of Bermuda reinsurer 777 Re Ltd. — in a suit over fraud and racketeering allegations concerning a secured credit facility and related guaranty agreement.
July 17, 2024
Stay Granted In Hurricane Coverage Row After Guaranty Association Substitution

LAKE CHARLES, La. — A Louisiana federal judge granted a motion to stay filed by defendant Louisiana Insurance Guaranty Association (LIGA), which was substituted for a now-insolvent insurer in a hurricane coverage dispute, finding the stay appropriate due to the possibility of the restoration company that intervened in federal court intervening in a similar state court suit.
July 17, 2024
Magistrate Extends Response Filing Time For D&O Insurers In Coverage Dispute

INDIANAPOLIS — Without providing an explanation, an Indiana federal magistrate judge granted in part defendant insurers’ motion for extension to respond to a summary judgment motion filed by an insurer now in rehabilitation in its suit against them seeking a declaration that specified directors and officers (D&O) policies apply to cover claims in underlying litigation.
July 16, 2024
Judge Allows Insurer To Seal Portions Of Complaint Disputing Coverage For Diocese

SANTA ANA, Calif. — A federal judge in California on July 15 granted an insurer’s administrative motion to seal references to confidential information and documents in its declaratory judgment lawsuit disputing coverage for underlying sexual abuse lawsuits brought under the California Child Victims Act against The Roman Catholic Bishop of Orange.
July 16, 2024
Case Management Order Issued In Hurricane Coverage Suit After Substitution Denied

BATON ROUGE, La. — A Louisiana federal judge issued a case management order docketed July 15 in a Hurricane Ida coverage dispute after a magistrate judge denied a homeowner’s motion to substitute the Louisiana Insurance Guaranty Association (LIGA) for the defendant, a homeowners insurer that assumed policies for a now-insolvent insurer, finding substitution “improper” due to a lack of evidence regarding the defendant’s obligations under the policy.
July 16, 2024
Mass. Panel Reverses Board Ruling Denying Reimbursement To Workers’ Comp Insurer

BOSTON — A Massachusetts appellate court reversed a review board’s decision upholding the denial of a now-insolvent insurer’s claim for ongoing reimbursements from the Massachusetts Workers’ Compensation Trust Fund, finding that though the insurer was in a run-off period and not assessing premiums, the exception limiting reimbursements to insurers paying assessments into the fund is inapplicable to insurers in run-off.
July 05, 2024
N.C. High Court Remands For Specific Performance Of MOU Involving Insolvent Insurers

RALEIGH, N.C. — The North Carolina Supreme Court granted parties’ joint motion to remand a case to a lower court for implementation of a “specific performance remedy” outlined in the lower court’s judgment regarding enforcement of a memorandum of understanding (MOU) between insolvent insurers, specified companies and Greg E. Lindberg, who was recently convicted on retrial of bribing the North Carolina insurance commissioner.
July 03, 2024
Constructive Trust Claims Deadline Set In Liquidation Of Vesttoo And Affiliates

WILMINGTON, Del. — In the Chapter 11 liquidation of Vesttoo Ltd. and its dozens of affiliates, a Delaware federal bankruptcy judge set a July 22 deadline for asserting constructive trust claims and overruled the liquidating trustee’s objection regarding compensation for special counsel retained by the debtors.
July 02, 2024
Appeal Over Confirmation Of Vesttoo’s Liquidation Is Voluntarily Dismissed

WILMINGTON, Del. — An appeal of the order confirming the Chapter 11 plan of liquidation for Vesttoo Ltd. and its dozens of affiliates has been voluntarily dismissed pursuant to a joint stipulation.
June 27, 2024
2nd Circuit Dismisses Bid To Overturn Revival Of Adversary Proceeding

NEW YORK — In a summary order citing a lack of appellate jurisdiction, a Second Circuit U.S. Court of Appeals panel dismissed consolidated appeals over revival of an adversary proceeding in federal bankruptcy court relating to allegations of fraudulent conveyances from a reinsurer in liquidation.
June 26, 2024
2 Stipulated Dismissals Granted In Insurer’s Suit Over Asbestos Liabilities Row

OMAHA, Neb. — Two defendants referred to as reinsurers in a suit National Indemnity Co. (NICO) filed over a $157.2 million settlement it reached with Montana regarding alleged asbestos exposures have been dismissed with prejudice under a joint stipulation that a Nebraska federal judge granted June 24.
June 25, 2024
Judge Says Removal Timely In Asbestos Coverage Suit Against Guaranty Association

NEW ORLEANS — A Louisiana federal judge on June 24 denied a motion to remand filed by a man’s family members who sued numerous parties, including the Louisiana Guaranty Association (LIGA) as the purported statutory obligor for a now-insolvent insurer, alleging that the man’s death from mesothelioma resulted from his workplace asbestos exposure, finding that removal of the case to federal court was both permissible and timely.
June 25, 2024
Liquidating Trustee Answers Insurer’s Counterclaim In Breach Of Contract Suit

CINCINNATI — A viatical settlement provider’s liquidating trustee who sued a life insurer in Ohio federal court for breach of contract, seeking reimbursement from the insurer, has filed his answers to the insurer’s counterclaim.
June 25, 2024
Breach Of Contract Case Stayed In Row Between Insurer In Rehab And Malta Company

RALEIGH, N.C. — A North Carolina federal court granted an insurer in rehabilitation’s motion to stay the breach of contract case it filed against a Malta-based company for the company’s failure to make payments on a loan, staying the case until cross-motions for summary judgment are resolved in a related pending consolidated case.
June 25, 2024
Mold Inspector Files Notice Of Dismissal In Suit Against Guaranty Association

DELAND, Fla. — A mold inspection company, as an assignee of insureds, filed a notice of voluntary dismissal 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.
June 21, 2024
TRO Extended In RICO, Fraud Suit Involving Reinsurer’s Parent Company

NEW YORK — A New York federal judge has extended a temporary restraining order (TRO) entered against the parent company of Bermuda reinsurer 777 Re Ltd. and other defendants in a fraud and racketeering lawsuit over a secured credit facility and related guaranty agreement.
June 20, 2024
Insurer In Rehab Gets Stay In Breach Of Contract Suit Against Investment Firm

RALEIGH, N.C. — A North Carolina federal court granted an insurer in rehabilitation’s motion to stay the breach of contract case it filed against a Malta-based investment firm for the firm’s purported failure to make payments on a loan, staying the case until cross-motions for summary judgment are resolved in a related pending consolidated case.
June 19, 2024
N.C. High Court Extends Brief Deadline In Insurer’s Bid To Enforce $524M Judgment

RALEIGH, N.C. — Without providing reasoning, the North Carolina Supreme Court on June 18 ordered that an insurer be “allowed” an extension to file its brief in the insurer’s suit seeking enforcement of a $524,009,051.26 judgment against Greg E. Lindberg, the founder of a multinational investment company who was recently convicted by a federal jury of a scheme to bribe North Carolina’s insurance commissioner.
June 18, 2024
Procedural Proposals In Reinsurer’s Liquidation Draw Numerous Objections

WILMINGTON, Del. — A receiver’s procedural proposals for the liquidation of a life and health reinsurer have drawn numerous objections in the Delaware Chancery Court, with nonparty American Council of Life Insurers (ACLI) arguing that two of the procedures “would violate Delaware law, set a profoundly adverse and conflicting precedent, and further unduly harm ACLI’s members and the insurance marketplace.”
June 18, 2024
Firms Accused Of Participation In $1B RICO Insurance Fraud Scheme Seek Dismissal

RALEIGH, N.C. —Malta-based investment firms Standard Advisory Services Ltd. and Standard Financial Ltd. moved in North Carolina federal court to join other defendants’ motion for partial dismissal of the complaint related to the defendants’ alleged participation in a $1 billion Racketeer Influenced and Corrupt Organizations Act (RICO) scheme to defraud now-insolvent insurers and their policyholders by using policyholder money to purchase noninsurance companies and to divert policyholder money.
June 18, 2024
Stay Issued In Insurer’s Breach Of Contract Suit Against Wealth Management Firm

RALEIGH, N.C. — Finding “good cause,” a North Carolina federal judge on June 17 stayed a breach of contract suit filed by a now-insolvent insurer against a wealth management company alleged to have violated a loan agreement, staying the case until the resolution of cross-motions for summary judgment in a pending related consolidated case.
June 18, 2024
Guaranty Association Files Brief In Support Of Judgment In MSP Suit Against CMS

RALEIGH, N.C. — The North Carolina Insurance Guaranty Association (NCIGA) filed a brief in North Carolina federal court supporting its motion for summary judgment in its suit against the U.S. Department of Health and Human Services (DHHS), its secretary and the Centers for Medicare and Medicaid Services (CMS), seeking a determination that the NCIGA is not a primary plan under the federal Medicare Secondary Payer (MSP) statute and, therefore, not obligated to reimburse CMS regarding a workers’ compensation claim involving an insolvent insurer.