South Dakota Court Upholds Assessments Against Former Member Insurer

In a December 12, 2021, decision, a South Dakota Circuit Court ruled in favor of the South Dakota Life & Health Insurance Guaranty Association, upholding assessments in connection with the 2017 insolvencies of Penn Treaty and ANIC. In this case, the protesting company was a Multiple Employer Welfare Arrangement (MEWA), which was required to remain a guaranty association member insurer under South Dakota law until a 2019 change in the law eliminated that requirement. The company in this case paid the assessments issued in 2017, 2018, and 2019. After the 2019 change in the law, the company challenged the 2020 and 2021 assessments for Penn Treaty and ANIC.

The protests were referred to a hearing examiner, who concluded that assessments for prior insolvencies were improper and precluded under ERISA. The Circuit Court reversed on appeal, concluding that the assessment obligations at issue, even though billed in installments, were incurred in 2017 while the protesting company was a member insurer, and that the 2019 amendments changing the company’s member insurer status could not be retroactively applied to relieve it of those obligations. The Court further held that ERISA does not preempt payment of the assessments. More particularly, the court held that the “exclusive purpose” provision in ERISA does not preempt the authority of states to regulate MEWAs or to impose regulatory expenses as a cost of doing business in the state. Based on that analysis, the protesting company was ordered to pay the assessments, with interest. The deadline for appeal to the South Dakota Supreme Court is February 4.

Linda Becker To Retire—Timothy Langland Selected as New Kansas GA Administrator

Linda Becker, who has served as Administrator of the Kansas Life & Health Insurance Guaranty Association for more than 25 years, will retire effective February 28, 2022. She will be succeeded by Timothy Langland, who has been a member of the Kansas and Missouri guaranty association Boards for the last seven years.

Linda is the Chair of the Life & Health Insurance Company of America Task Force and also serves on the Lincoln Memorial/Memorial Service and Benicorp Task Forces. Previously, she served as Chair of the MPC Executive Committee Asset Recovery Subgroup (she still serves as a member), and she also served on the MPC Executive Committee, Accounting Issues Committee, Administrators Education Steering Committee, Assessment Data Task Force, and Centennial Life Insurance Company Task Force. She is also a member of the Society of Financial Examiners and the International Association of Insurance Receivers.

Timothy previously served as Chief Compliance Officer and Associate General Counsel at Kansas City Life Insurance Company, and he has worked as an attorney in the life insurance industry for over 20 years. He has insurance certifications from the Life Office Management Association (Fellow) and the American University (Chartered Licensed Underwriter) and previously held Series 7 and 24 registrations with FINRA.