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

Mealey's Insurance Insolvency

January 20, 2023
Insurer In Rehab Seeks Damages In D&O Coverage Suit, Argues Claims Not Related

INDIANAPOLIS — An Indiana federal judge ordered an insurer in rehabilitation and primary and excess directors’ and officers’ (D&O) insurers it sued for breach of contract to file a joint jurisdictional statement by Feb. 17, providing each party’s citizenship “and whether the amount in controversy exceeds $75,000.”
January 18, 2023
Conn. Judge Rules On ‘Forum Shopping’ Suit Claiming Receiver’s Wrongful Rejection

HARTFORD, Conn. — A Connecticut judge granted a homeowners insurer’s motion to dismiss a suit alleging that a builder’s insurer in liquidation wrongfully rejected the homeowner’s challenges to settlement of water damage claims against the builder, finding that because the homeowner’s claims have already been tried in California state and federal courts, forum non conveniens requires dismissal.
January 18, 2023
Magistrate Recommends Escrow Payment Per Agreement With Insolvent Insurer

CENTRAL ISLIP, N.Y. — A New York federal magistrate judge recommended that an order be entered to disburse funds in escrow to an insolvent insurer and a law firm in a title insurer’s suit against the insolvent insurer and others seeking to be discharged from liability under an escrow agreement, finding that the title insurer has satisfied the elements of its interpleader action.
January 18, 2023
Hearing Scheduled For Remaining Defendants In Insolvent Health Plan Dispute

CHICAGO — An Illinois federal magistrate judge issued a minute docket entry scheduling an in-person status hearing for the remaining parties in a breach of duty of care suit filed by an independent fiduciary against insurance brokers in connection with the sale of an insolvent health plan.
January 18, 2023
Reinsurer’s Liquidators Report Bermuda Judgment In Favor Of Largest Known Creditor

NEW YORK — The Supreme Court of Bermuda has issued a judgment in favor of the largest known creditor of Bermuda insurer and reinsurer PB Life and Annuity Co. Ltd. (PBLA), PBLA’s joint provisional liquidators (JPLs) told a New York federal bankruptcy court.
January 17, 2023
Louisiana Federal Judge Remands In Hurricane Damage Suit Against Insolvent Insurer

NEW ORLEANS — A Louisiana federal judge granted a homeowner’s motion to lift a stay and remand in a suit filed against a now-insolvent insurer over alleged property damage from Hurricane Ida, finding that because the amended complaint added the Louisiana Insurance Guaranty Association (LIGA) as successor-in-interest to the now-insolvent insurer, complete diversity is lacking.
January 11, 2023
Vice Chancellor Applies Freestone To Stay Requests Regarding Rehabilitation

WILMINGTON, Del. — Applying In re Liquidation of Freestone Insurance Co. in a suit over transactions involving reinsurance agreements, a Delaware vice chancellor stayed claims against an insurer that is in rehabilitation in Pennsylvania but not against its wholly owned subsidiary.
January 09, 2023
Piercing Of Corporate Veil Sought In Adversary Complaint In Bankruptcy Court

NEW YORK —The joint provisional liquidators (JPLs) of Bermuda insurer and reinsurer PB Life and Annuity Co. Ltd. (PBLA) and other debtors have named PBLA’s former principal and hundreds of entities allegedly affiliated with him as defendants in an adversary proceeding in New York federal bankruptcy court.
January 04, 2023
Panel Says Liquidation Of Insurer Gave Notice For Filing Time Limit In Fraud Suit

LAKE CHARLES, La. — A Louisiana appellate court affirmed a lower court’s dismissal of a surviving spouse’s suit to enforce an Arkansas court’s medical malpractice judgment, finding that the lower court’s decision that the surviving spouse’s fraud claims were prescribed for lack of timely filing “was not manifestly erroneous” because the liquidation of the medical malpractice insurer should have sufficed to begin running of the prescription for filing the fraud claim.
January 03, 2023
Rehabilitator: Independent Auditor Failed Obligation To Run-Off Insurer

MINNEAPOLIS — Alleging that an independent auditor “failed in its obligation to present an accurate picture of” a run-off insurer’s financial condition, the insurer’s statutory rehabilitator asserted claims of professional negligence, breach of fiduciary duty and breach of contract in Minnesota federal court.
January 03, 2023
Former Exec Pleads Guilty To New Criminal Charge Of Conspiracy In Alleged Schemes

CHARLOTTE, N.C. — A former executive entered a guilty plea in North Carolina federal court to a recently revealed criminal charge of conspiracy to commit offenses against the United States over allegations that he took part in schemes to, among other things, “evade regulatory requirements meant to protect policyholders” and conceal the “true use of insurance company funds” for the owner’s benefit.
January 03, 2023
Former Advisory Firm’s Dismissal Bid Disputed In SEC Suit Over Alleged Fraud

DURHAM, N.C. — Wrangling in North Carolina federal court over allegations of “a series of fraudulent and improper schemes” that defrauded clients of more than $75 million, a former investment advisory firm asserts that it “was not meaningfully involved in these transactions,” and the U.S. Securities and Exchange Commission contends that “the acts of its officers and agents constitute the acts of” the firm.
December 23, 2022
Judge Rules On Liquidator’s Motion To Strike Defenses In D&O Coverage Dispute

SIOUX FALLS, S.D. — A South Dakota federal judge granted in part a liquidator’s motion to strike a specialty insurer’s asserted affirmative defenses and for partial summary judgment in the liquidator’s declaratory judgment suit seeking a declaration 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, finding that summary judgment is appropriate for the defense of failure to state a claim.
December 22, 2022
Insureds Seek Coverage In Wind Damage Suit Against Insurance Guaranty Association

ST. PETERSBURG, Fla. — Florida homeowners filed a breach of contract suit in Florida state court against the Florida Insurance Guaranty Association (FIGA), as successor of a liquidated insurer, seeking coverage for purported damage of their home during a windstorm.
December 21, 2022
Jury Finds Co-Founder Of Collapsed Hedge Fund Liable For Fiduciary Breach

NEW YORK — A co-founder of the collapsed hedge fund Platinum Partners is liable for a claim of fiduciary breach, and a March 2020 release does not bar his liability, a federal jury in New York said in a verdict handed down Dec. 20, awarding the plaintiffs $8,150,601.80 in compensatory damages.
December 16, 2022
4th Circuit Affirms Dismissal, Says Remedies Not Exhausted In MSP Requirement Row

RICHMOND, Va. — The Fourth Circuit U.S. Court of Appeals affirmed a district court’s order dismissing a complaint filed by the North Carolina Insurance Guaranty Association (NCIGA) seeking an advisory opinion as to whether it is required to reimburse Medicare pursuant to the Medicare Secondary Payer (MSP) statute for medical bills Medicare pays on behalf of insured persons, finding that the lower court correctly dismissed the association’s complaint after determining that it lacked jurisdiction due to the association’s failure to exhaust administrative remedies.
December 15, 2022
Case Management Plan Filed In Florida Court Over Hurricane Irma Coverage Dispute

SANFORD, Fla. — A condominium association and the Florida Insurance Guaranty Association filed a case management plan Dec. 14 in a Florida court after the condominium association sued its now-insolvent insurer, for which the guaranty association is the receiver, seeking coverage for damage caused by Hurricane Irma.
December 15, 2022
Certiorari Sought Over Prior Exclusive Jurisdiction Ruling In Conservatorship Row

WASHINGTON, D.C. — Seeking U.S. Supreme Court review in an insurance conservatorship dispute, petitioners argue that the challenged affirmation of dismissal “conflicts with longstanding precedent of this Court and various circuit courts as to the scope of two judge-made rules governing when federal courts must abstain from adjudicating constitutional claims against state officials under” 42 U.S. Code Section 1983.
December 13, 2022
Judge: Order In Risk-Corridor Dispute With Insolvent Insurer ‘Speaks For Itself’

WASHINGTON, D.C — A federal judge denied in part and granted in part an insolvent insurer’s motion for clarification of a previous order and opinion in a suit seeking a declaratory judgment that the government owes insurers millions of dollars under the Patient Protection and Affordable Care Act (ACA) risk-corridor program, finding that the government’s counterclaim for setoff failed to state a valid claim “to an offset against the amounts owed” by the insurer.
December 12, 2022
Federal Judge Dismisses Claims In Row Over Alleged ‘No Value’ Insurance Policies

TRENTON, N.J. — A New Jersey federal judge on Dec. 9 granted a successor insurer’s motion to dismiss counterclaims in its declaratory judgment suit seeking a declaration that life insurance policies it issued that are now owned by an insolvent insurer are void ab initio, finding that the insolvent insurer’s counterclaims for fraud, negligent misrepresentation, violations of the Texas Deceptive Trade Practice Act (DTPA) and promissory estoppel were insufficiently alleged.
December 07, 2022
11th Circuit Affirms Judgment For Trustee In Fiduciary Duty Row With Asset Manager

ATLANTA — The 11th Circuit U.S. Court of Appeals on Dec. 6 affirmed a district court’s order granting summary judgment in favor of a trustee of retained insurance policies in a breach of contract and fiduciary duty suit filed against him by an asset manager owning fractional interests in the retained policies, finding that the asset manager’s relationship with the trustee was an “arms-length contractual relationship” rather than a fiduciary relationship.
December 05, 2022
Fraudulent Transfer Suit Parties Dispute DUFTA Solvency Evaluation Framework

WILMINGTON, Del. — In a motion and opposition that pertain to compelling production of bid and valuation documents, parties in a putative class suit alleging fraudulent transfers from an insurance subsidiary dispute the applicable framework for evaluating solvency under the Delaware Uniform Fraudulent Transfer Act (DUFTA) in Delaware Chancery Court.
December 02, 2022
Magistrate Rules On Conditions Disputed In Trust Termination Insurance Policy Sale

FORT LAUDERDALE, Fla. — A Florida federal magistrate judge granted in part trust investment manager Acheron Capital Ltd.’s motion to exclude certain conditions required by a liquidating trustee who has stated that Acheron, as a prospective bidder on interests in insurance policies, must sign a purchase agreement, finding that the conditions are not appropriate pursuant to a court order adopting a prior report and recommendation.
December 01, 2022
Magistrate Grants Motion To Seal Settlement Docs In Insolvent Health Plan Dispute

CHICAGO — A federal magistrate judge issued a minute docket entry granting an independent fiduciary’s motion to remove from the docket confidential settlement communications in a breach of duty of care suit against insurance brokers in connection with the sale of an insolvent health plan.
November 30, 2022
2 More Subpoenas Granted In Bankruptcy Court Per Requests Of Insurer’s Liquidators

NEW YORK — Following applications by the joint provisional liquidators (JPLs) of Bermuda insurer and reinsurer PB Life and Annuity Co. Ltd. (PBLA) and other debtors, a New York federal bankruptcy judge on Nov. 29 and 30 entered orders authorizing subpoenas to two individuals.