Fidelity Mutual Life (PA)
Task Force Opposes Settlement Offer
The Rehabilitator on Jan. 13 mailed to guaranty associations in states where FML is licensed (all states but Alaska, Hawaii and Wyoming) an offer to settle guaranty association claims for assessments against FML dating back to 1992.
The task force had filed objections to the Rehabilitator's petition to settle the assessment claims. (See Weekly Wire of December 18 for related story on the Court's ruling.) For states that have a premium tax offset for guaranty association assessments, the proposed payment of assessments is conditioned upon the taxing authorities agreeing to grant a tax offset before the assessment is paid.
The task force is negotiating with the rehabilitator to obtain a settlement that eliminates this condition. Guaranty Associations are therefore urged NOT to accept the offer contained in FML's Jan. 13 letter.
Task Force Chair - Frank Gartland; Staff Contact - Sean McKenna The Universe Life (ID)Claims Processing Audit Completed
Peterson Worldwide finished their audit of the claims processing by Universe Life. The audit found no overall problems with the claims processing. An earlier sample of claims revealed that 40% of the sample claims had discrepancies in the pricing of claims. Fortunately, the Genelco system has a correction mechanism which corrected the claims when the explanation of benefit forms were processed. Peterson Worldwide confirmed the corrections.
Two batches of claims have been sent to the guaranty associations for payment. Universe Life processes claims every Thursday. The EOBs will be shipped overnight to NOLHGA for distribution to affected guaranty associations.
Tad Rhodes, task force chairman, and other task force representatives met with the liquidator and his representatives in Boise, Idaho on Jan. 14. They discussed, among other things, plans for continuing claims processing and payment; the need for additional information on certain policies and claims; the transfer of the group universal health policies to Trustmark; and litigation.
A bid package has been prepared for the long-term care business. Parties interested in receiving the solicitation letter and package should contact Dana Carroll no later than Feb. 5.
Task Force Chair - Tad Rhodes; Staff Contact - Executive Life (CA)Unisys Drops Tennessee Case
Unisys recently chose not to pursue its declaratory action against the Tennessee association in Unisys Corp. vs. Tennessee Life and Health Insurance Guaranty Association. Unisys filed this declaratory action against the association on April 9, 1997 seeking participant level coverage for the portions of its retirement plan which were invested in four ELIC group annuity contracts. Unisys' theory was that its resident plan participants were the owners of, or "beneficiaries, assignees or payees" of annuity contracts under the Tennessee act.
Unisys has brought similar suits against the Alaska, Hawaii, Massachusetts Michigan, New Jersey, North Dakota, Ohio, Oregon, South Dakota, Washington and Wisconsin associations, but has not yet received a favorable court decision. Under the applicable rules, Unisys may refile its suit against the Tennessee association at any point until January 12, 2000 without prejudice.
In other news, the GIC Litigation Working Group of the NOLHGA Legal Committee is scheduled to meet Friday, Feb. 26 in Tampa. Administrators are welcome to attend and are encouraged to authorize their counsel to attend. Please contact Chrissy Haley at 703.787.4101 for further information.
Task Force Chair - Art Dummer; Staff Contact -MO Supreme Court To Hear Quackenbush Case
On January 19, 1999, the Missouri Supreme Court sustained the Missouri Association's Application for Transfer of Quackenbush v. Missouri Life and Health Insurance Guaranty Association. Having accepted the case, Missouri's high court will review the state court of appeals' October 6th decision finding guaranty association coverage for certain structured settlement annuities despite Missouri's clear statutory exclusion of allocated annuities which were not "issued to and owned by an individual." (See Executive Life Insurance Co. (CA), Weekly Wire 10/9/98).
Although the allocated annuity exclusion provision within the Missouri Act is not found in the Model Act, NOLHGA found the Missouri Court of Appeals' use of the Act's liberal construction language to expand coverage beyond legislative intent raised an issue of national importance to NOLHGA and its members. As amicus curiae, NOLHGA filed "Suggestions" in support of Missouri's Application for Transfer. (See Weekly Wire 12/18/98). A request from the Missouri Association for continued amicus support is expected.
Staff Contact -CALENDAR/CONFERENCE CALLS
Jan. 22 Legal Committee Claims Valuation Subgroup, Dallas, TX 10-3, CT
Feb. 25-26 NOLHGA Legal Committee, Tampa, FL