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

Mealey's Insurance Insolvency

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.
November 13, 2023
Judge Suspends Firm, Tosses Homeowner’s Hurricane Coverage Suit Against Insurer

LAKE CHARLES, La. — Concurring with a federal magistrate judge’s findings, a Louisiana federal judge adopted the magistrate’s report and recommendation, dismissing a homeowner's hurricane coverage suit against its now-insolvent insurer when the homeowner failed to appear after court suspension of his legal counsel for “multiple issues” with the firm’s hurricane-related cases.
November 09, 2023
Appellate Court Agrees To Move Up Schedule Date In Shareholder Liquidation Appeal

RALEIGH, N.C. — A North Carolina Court of Appeals clerk on Nov. 8 filed an order in response to a peremptory setting motion filed by the North Carolina Commissioner of Insurance and two insurers in liquidation in a shareholder’s appeal of their liquidation order, agreeing to calendar the case “as soon as practicable.”
November 08, 2023
Debtors In Vesttoo Bankruptcy Cases Note Agreement With Unsecured Creditors

WILMINGTON, Del. — In a Nov. 7 objection to conversion to Chapter 7, Chapter 11 debtors Vesttoo Ltd. and 48 affiliates tell a Delaware federal bankruptcy court that they hope to close on a sale of assets “around December 1” and “if such a sale is not possible or cannot come together in that time frame . . . will have worked with [the Official Committee of Unsecured Creditors] toward a singular liquidating plan.”
November 08, 2023
Delaware Insurance Commissioner Seeks Liquidation Order For Arrowood Indemnity

WILMINGTON, Del. — Delaware Insurance Commissioner Trinidad Navarro filed a complaint in the Delaware Chancery Court, seeking a liquidation order declaring that Arrowood Indemnity Co. is insolvent and requesting that the court appoint the commissioner as receiver.
November 02, 2023
Hurricane Coverage Row With Insolvent Insurer Dismissed After Counsel Suspended

LAKE CHARLES, La. — A Louisiana federal judge adopted a federal magistrate judge’s report and recommendation advising dismissal of a homeowner’s hurricane coverage suit against her now-insolvent insurer when the homeowner failed to appear following the court’s suspension of her legal counsel due to the firm’s alleged misconduct in handling hurricane coverage cases.
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).