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

Mealey's Insurance Insolvency

September 12, 2023
Judge Remands Bad Faith Homeowners Insurance Suit Against Insolvent Insurer

BATON ROUGE, La. — A Louisiana federal judge remanded to state court a bad faith homeowners insurance coverage suit over purported water damage from a plumbing leak, finding that remand is appropriate for lack of subject matter jurisdiction due to the Louisiana Insurance Guaranty Association (LIGA) being added as a defendant after the insurer was placed into liquidation.
September 12, 2023
Justice Alito Grants Insurance Regulators’ Request To Extend Time To File Cert

WASHINGTON, D.C. — In a docket-only entry, Justice Samuel A. Alito Jr. granted a request filed by state insurance regulators for Maine, Massachusetts and Washington to extend the time to file a petition for writ of certiorari with the U.S. Supreme Court in response to the regulators’ argument that they “cannot reasonably frame a petition for writ of certiorari” to appeal the Pennsylvania Supreme Court’s judgment affirming an appellate court’s approval of a plan of rehabilitation for the Senior Health Insurance Company of Pennsylvania (SHIP) because the Pennsylvania Supreme Court did not yet issue an opinion.
September 11, 2023
Georgia Insurance Commissioner Joins Motion To Dismiss Liquidation Proceeding

WILMINGTON, Del. — The Georgia insurance commissioner on Sept. 8 filed with a Delaware state court chancellor a joinder to 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), asserting that the Delaware Chancery Court should not allow ABC proceedings to “circumvent” state court orders related to rehabilitation or liquidation.
August 31, 2023
Insolvent Insurer’s State Plans Notify Delaware Chancellor Of Joinder

WILMINGTON, Del. — State plans affiliated with Friday Health Plans Inc. (FHP) notified a Delaware state court chancellor that they filed a joinder to 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), asserting that each state has its own pending receivership proceedings.
August 31, 2023
Wrangling Over Automatic Bankruptcy Stay Continues In Letter Of Credit Fallout

WILMINGTON, Del. — Arguing that the filing of a Chapter 15 case violates a consent order, Chapter 11 debtor Vesttoo Ltd. and 48 affiliated entities on Aug. 30 asked a Delaware federal bankruptcy court to issue a contempt order and sanctions against Bermuda-based White Rock Insurance (SAC) Ltd. and “the putative joint provisional liquidators [JPLs] of segregated cells.”
August 24, 2023
Enforcement Of Automatic Bankruptcy Stay Sought For Foreign Proceedings

WILMINGTON, Del. — Citing reports of litigation in Bermuda and Israel, Chapter 11 debtor Vesttoo Ltd. and 48 affiliated debtors moved in Delaware federal bankruptcy court for enforcement of the automatic stay against Bermuda-based White Rock Insurance (SAC) Ltd. and “the putative joint provisional liquidators [JPLs] of segregated cells.”
August 23, 2023
Homeowner Seeks Video Conference In Hail Damage Suit Against Insolvent Insurer

GALVESTON, Texas — A Texas homeowner filed a motion in Texas state court asking for a scheduled status conference to be held via video in his breach of contract suit against a now-insolvent insurer over its purported failure to cover hail damage, asserting that remote conferencing would be appropriate due to the “unnecessary travel time” needed for legal counsel to appear in person.
August 23, 2023
Guaranty Association Seeks Stay In Breach Of Contract Suit Over Windstorm Damages

SARASOTA, Fla. — The Florida Guaranty Association (FIGA) moved to enforce a mandatory six-month stay in a homeowner’s breach of contract suit filed against FIGA and a now-insolvent insurer for failure to adequately compensate for a wind damage claim, arguing that pursuant to Florida law, proceedings involving an insolvent insurer shall be stayed for six months.
August 22, 2023
Judge Grants Remand After Guaranty Association Added To Hurricane Coverage Row

NEW ORLEANS — A Louisiana federal judge granted a homeowner’s motion to remand in a breach of contract and bad faith suit filed against a now-insolvent insurer over its purported failure to cover damages related to Hurricane Ida, finding that because the homeowner added the Louisiana Guaranty Association (LIGA) as a defendant, diversity jurisdiction is defeated.
August 22, 2023
Hurricane Ida Coverage Suit Against Insolvent Insurer Dismissed By Property Owner

NEW ORLEANS — The owner of a New Orleans multifamily dwelling allegedly damaged by Hurricane Ida voluntarily dismissed his breach of contract and breach of the duty of good faith and fair dealing suit filed in a Louisiana federal court against his insurer, a Florida company that was placed into receivership by a Florida court.
August 18, 2023
Hurricane Coverage Suit Dismissed After Guaranty Association Added As Defendant

NEW ORLEANS — A Louisiana federal judge granted a homeowner’s motion to add the Louisiana Insurance Guaranty Association (LIGA) as a defendant and dismissed the homeowner’s breach of contract suit against LIGA and a now-insolvent insurer, finding that the court no longer has subject matter jurisdiction because the homeowner and LIGA are both citizens of Louisiana.
August 17, 2023
Insurer Seeks Distribution Of $100M To Subclass Member In ACA Risk-Corridor Row

WASHINGTON, D.C — An insolvent health insurer that sued the federal government alleging that the government failed to pay money owed under the Patient Protection and Affordable Care Act (ACA) for the ACA risk-corridor program filed a motion in a District of Columbia federal court seeking to distribute more than $100 million of a judgment entered for a subclass member.
August 15, 2023
Judge Stays Wind Damage Case Against Homeowners Insurer, Cites Receivership Filing

McALLEN, Texas — A Texas federal judge on Aug. 14 stayed a breach of contract case against a homeowners insurer related to its purported failure to adequately cover a claim for wind damages, finding that a stay is merited because the Florida Department of Financial Services’ (DFS) “filing of the petition for receivership operates as an automatic stay under Florida law.”
August 15, 2023
Under Stipulation, Reinsurer May Intervene In California Liquidation Proceeding

LOS ANGELES — Following a stipulation by a liquidator and a reinsurer who had a dispute playing out in two jurisdictions, a California judge has ruled that the reinsurer may intervene in the state court action.
August 15, 2023
Appellees To Court: Uphold Adversary Proceeding Ruling Under McCarran–Ferguson

NEW YORK — Urging a New York federal court to uphold a bankruptcy judge’s order partially staying an adversary proceeding in an expansive dispute involving a reinsurer, four entities collectively referred to as the NC Insurance Cos. argue in their appellees’ brief that the adversary proceeding is reverse-preempted under the McCarran–Ferguson Act (MFA).
August 11, 2023
Judge Compels Arbitration, Grants Dismissal In Fraud Suit Involving Reinsurance

GREENSBORO, N.C. — Compelling arbitration and granting dismissal without prejudice in a suit over an alleged scheme involving reinsurance, a North Carolina federal judge on Aug. 10 said in part that the plaintiff’s consent to arbitrate all claims means “there is no reason for this case to remain on this Court’s docket.”
August 09, 2023
Justice Seals Communications With Liquidated Insurer, But Not Asbestos Settlement

NEW YORK — A New York justice found no good reason to seal or redact the amount a liquidator settled asbestos claims for, but said communications among the liquidator, counsel and the referee who oversaw the settlements included discussion of litigation strategy and would be sealed.
August 04, 2023
Nevada Judge Grants Receiver’s Request To Liquidate Health Insurer

LAS VEGAS — A Nevada state court judge granted the state insurance commissioner’s motion to place a health insurer into liquidation, finding that the commissioner, acting as receiver, established grounds for liquidation pursuant to state law.
August 04, 2023
Wisconsin Judge OKs Rehab Plan For Reinsurer Of Town Mutual Insurers

MADISON, Wis. — A Wisconsin judge has approved a rehabilitation plan for Wisconsin Reinsurance Corp. and its subsidiary 1st Auto & Casualty Insurance Co. that will, among other things, “re-mutualize” Wisconsin Re, establish a reinsurance pool for town mutual insurers that Wisconsin Re would administer and narrow 1st Auto’s focus.
August 03, 2023
Florida Guaranty Association Dismisses $186,000 Suit Against Window Cleaners

CLEARWATER, Fla. — Florida Insurance Guaranty Association (FIGA), as successor in interest to the Florida Department of Financial Services, voluntarily dismissed its suit in Florida state court seeking damages of $186,570.68 from a window cleaning company that was allegedly negligent when cleaning windows at condominiums insured by a now-insolvent insurer.
August 03, 2023
Assignee Of Insolvent Colorado Health Insurer Seeks Liquidation In Delaware Court

WILMINGTON, Del. — A limited liability company, acting as assignee for the benefit of creditors of Friday Health Plans Inc. (FHP) and Friday Health Plans Management Services Co. Inc. (FHP MSC) petitioned a Delaware state court for assignment for the benefit of creditors, seeking, among other things, to liquidate the assets of the FHP and FHP MSC.
August 01, 2023
Judge Reverses Dismissal Of Adversary Proceeding Challenging Transfers

NEW YORK — Applying the “conceivable effect” test and finding “related to” jurisdiction, a New York federal judge on July 31 reversed dismissal of a Puerto Rico insurance company’s adversary proceeding against entities it alleged received fraudulent conveyances from a reinsurer that is in liquidation.
July 26, 2023
Delaware Court Enters Liquidation, Injunction Order For Life And Health Reinsurer

WILMINGTON, Del. — A Delaware Chancery Court vice chancellor has granted a receiver’s motion for entry of a liquidation and injunction order pertaining to life and health reinsurer Scottish Re (U.S.) Inc. (SRUS); among other things, the order gives the receiver discretion to “reject any executory contract to which SRUS is a party.”
July 26, 2023
Judgment Appealed To 10th Circuit In Coverage Row Involving Liquidated Insurer

DENVER — A health care insurer with an excess errors and omissions (E&O) policy issued by a now-insolvent insurer appealed to the 10th Circuit U.S. Court of Appeals a district court’s order granting judgment for a liability insurer seeking a declaration that a directors and officers (D&O) policy issued to the health insurer does not provide coverage for claims in an underlying multidistrict litigation antitrust dispute.
July 26, 2023
Magistrate Denies Request To Add Guaranty Association In Hurricane Coverage Suit

LAKE CHARLES, La. — A Louisiana federal magistrate judge denied homeowners’ motion to amend to add the Louisiana Guaranty Association (LIGA) as a defendant in a suit against their now-insolvent insurer over failure to adequately compensate them for hurricane-related losses, finding that amendment would be “futile” because it would require dismissing the suit “for lack of subject matter jurisdiction.”