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American Chambers Life (OH)

Westlake Claims Office

The contact information for individuals at Antares Westlake claims office remains the same as reported in the April 27th Weekly Wire. Anne Hancock has been at the Westlake offices this week, and is scheduled to be there again from June 25 - 29th. As a reminder, Anne Hancock's phone number (in Westlake) is 440.414.2154 and her fax number is 440.414.2102. Her e-mail address stays the same.

Task Force Chair - Chuck Gullickson; Staff Contact -

Court Rejects Claims Against PA P&C Fund

In a June 5, 2001 decision, the United States District Court for the Eastern District of Pennsylvania dismissed federal constitutional claims that were filed against the Pennsylvania Property and Casualty Guaranty Association ("PPCIGA") following PPCIGA's assertion of statutory offset against liability under certain medical malpractice policies for payments made by various primary health insurance carriers.

This federal court action was filed on March 5, 2001, asserting a civil rights claim under 42 U.S.C. Section 1983 on the basis that PPCIGA is a government entity, acting under color of state law and that PPCIGA's assertion of statutory offset constitutes an unconstitutional deprivation of plaintiff's property and/or contract rights under the insurance contracts and a related settlement agreement. The plaintiff also included a count for declaratory judgment seeking a determination as to the scope and applicability of the statutory offset provisions and the amount of PPCIGA's liability.

PPCIGA responded with a motion to dismiss, arguing that the plaintiff failed to allege deprivation of a constitutionally protected property right, and that the propriety of PPCIGA's assertion of the statutory offset provision is a question of state law over which the federal court should not exercise supplemental jurisdiction, particularly in light of the fact that the issue is pending before the state court. In the alternative, PPCIGA asked for a stay of the federal court proceedings pending the outcome of the state court litigation. On June 5, 2001, the federal court entered an order granting PPCIGA's motion to dismiss concluding, in a lengthy opinion, that PPCIGA's assertion of statutory offset does not constitute a deprivation of a constitutionally protected property right. The Court's decision did not address whether PPCIGA was in fact a governmeny entity acting under color of state law. A copy of the court's decision is available upon request.

Staff Contact - Joni Forsythe

Legal Seminar - Deadline Extended

To accommodate those who need a few extra days to get their registration forms in, the deadline for registration and hotel reservations has been extended to Tuesday, June 19th. NOLHGA's 10th Annual Legal Seminar is being held at the Marriott Marquis in New York City on July 12 - 13th. For a brochure or further information, please contact Meg Melusen or Aimee Frye of NOLHGA.

Staff Contact -

NAIC Summer 2001 Meeting

The following is a summary of meetings attended by NOLHGA staff at the Summer NAIC meeting:

Insolvency (E) Task Force

The Task Force heard reports from its Receivers Handbook, Model Act Revision and Federal Issues Discussion Working Groups. The Task Force also discussed whether the NAIC should continue to produce the NAIC Report on Receiverships in its current form or employ some alternative means for publishing information on receiverships. Ultimately, the Task Force decided to add to its list of charges for 2001 the development of a format for reporting information on receiverships. In addition, the Task Force considered other charges for 2001.

Insolvency (E) Task Force Working Groups

Receivers Handbook Working Group

Chapter Coordinators provided the Working Group with the following status reports regarding updates for the Handbook's 2001 Supplement: (i) Chapter 2 -- Data Processing: comments have been received from PricewaterhouseCoopers with respect to addressing computer security issues; (ii) Chapter 5 -- Claims: materials are being prepared to address Statement of Statutory Accounting Principle 55 and possibly the use of the internet in claims administration; (iii) Chapter 9 -- Legal Considerations: non-substantive changes will be made to update case citations and technical issues.

In addition, the Working Group decided to appoint a new subgroup to prepare a receiver's checklist as part of the 2002 supplement to the handbook. The checklist will serve as a guide for receivers early in an insolvency case.

Model Act Revision Working Group

The Model Act Revision Working Group (MARG) reviewed a list of issues to be addressed in connection with its project to revise the NAIC Insurers Rehabilitation and Liquidation Model Act. Three subgroups were formed to address these issues. Each subgroup subsequently met at the NAIC to organize its efforts. The subgroups intend to provide a status report on their assigned issues by August 1, and the entire working group will tentatively hold an interim meeting or teleconference on August 15. NOLHGA staff representatives will be working with each of the subgroups on guaranty association related issues.

Federal Issues Discussion Group

The group heard reports on: (i) the federal superiority case arising out of the American Mutual Liability Insurance Company insolvency; (ii) a federal forfeiture case arising out of the Thunor Trust insolvency; and (iii) a recent case dealing with the application of the McCarran Ferguson Act.

Interstate Insurance Receivership Commission

James Stinson, who served on the Commission's Receivership Law Advisory Committee (RLAC), reported on efforts to resolve issues with respect to amendments to the Uniform Receivership Law proposed by the Reinsurance Association of America (RAA). Based on those efforts, Mr. Stinson recommended that the proposed amendments be adopted with the exception of an amendment relating to Section 702(E). The Commission passed a resolution approving Mr. Stinson's recommended changes.

The Commission also agreed to expose for comment an additional RAA proposed amendment concerning Section 615 of the URL. Section 615 currently provides life guaranty associations with the right to continue reinsurance for the purpose of meeting their coverage obligations. The RAA proposed amendment, among other matters, would require that receivers and guaranty associations affirmatively assume or reject reinsurance contracts within a certain period of time following receivership.

Finally, the Commission reported that consideration was being given to disbanding the Compact in light of the inability to attract other member states. The Commission solicited input from interested parties on this topic. National Treatment of Companies Working Group The principal mission of this working group is to provide oversight for the NAIC's work with respect to multi-state coordination of insurer licensing and regulatory oversight of insurer mergers and acquisitions. However, it was also reported that the working group intends to identify problems with receiverships involving groups of insurers and multiple guaranty association participation, including problems relating to the handling of state deposit funds.

Staff Contact - Bill O'Sullivan

New NOLHGA Employees

Two new employees joined NOLHGA this week. Tom Gentry joins NOLHGA as the controller. Tom was formerly the controller and director of administration at the National Business Aviation Association. Current Controller Jay Jagolta will be leaving in the end of June for Dakar, Senegal, where his wife will work for the United States Agency for International Development. Anna Fung joins NOLHGA as the accounts payable assistant. Anna was formerly an accounts payable associate at PSINet. Former accounts payable assistant Su Page left NOLHGA in May to pursue the adoption of a child.

Staff Contact - Sean McKenna

Puerto Rico Association Survey

Last week, the Puerto Rico Life Insurance Guaranty Association sent a survey to all state guaranty associations regarding state coverage of HMOs and other medical/hospital services organizations. The Puerto Rico Legislature is considering a "safety net" coverage for these health plans, possibly under their guaranty association statute. The survey should take only a few minutes to complete, and prompt attention is greatly appreciated.