Kentucky Central Life (KY)
KCL Liquidator Wins Appeal
The Kentucky Central Liquidator has received a favorable Court of Appeals decision in his appeal of a trial court's February 1999 summary judgment in favor of Deloitte & Touche in a case involving claims of professional (auditor) negligence. The Liquidator has claimed that Deloitte & Touche negligently failed to identify inappropriate loans and management self-dealing in its 1986 through 1992 audits of Kentucky Central. Deloitte & Touche had received a summary judgment on the grounds that the Liquidator's suit was barred by Kentucky's one year statute of limitations. The Court of Appeals has reversed that judgment on the basis that the professional malpractice claim against Deloitte & Touche did not arise until Kentucky Central was placed into rehabilitation on February 12, 1993, and the Liquidator's lawsuit was therefore timely filed. According to the Kentucky Court of Appeals, no damages were incurred prior to rehabilitation, and damages were necessary for a cause of action for negligence to accrue and for the limitation period to begin to run. Deloitte & Touche now has until July 20 to petition the Court of Appeals for rehearing and/or until July 30 to petition the Kentucky Supreme Court for discretionary review of the Court of Appeals decision.
Task Force Chair - John Colpean; Staff Contact - Joni Forsythe Bankers Commercial Life (LA)Policy Cancellation Notices Mailed
Cancellation notices were mailed the week of July 9 to applicable policyholders that are covered by the Colorado and Texas guaranty associations. Cancellation will become effective August 15. Remaining associations that may also cancel a handful of policies include Louisiana, New Mexico and Oklahoma. Notices will be sent if these associations decide to cancel any applicable policies.
In addition, responses to the follow-up letters mailed to policyholders with a claim listed in the pre-March 2000 potential claim inventory (the initial letters sent to providers garnered little response) are now being received at New Era. The letters included details of the outstanding claim and requested confirmation of whether the benefits have been paid under their Bankers policy. Claim filles will be permanently closed if no response is received by August 31. The task force consultants will continue to monitor the response rate and adjudication of these claims by New Era.
Task Force Chair - William Falck; Staff Contact - National Heritage Life (DE)Blutrich, Pfeffer Sentenced
The Orlando Sentinel reported on June 30, 2001, that two principals involved in the looting of NHL, Michael Blutrich and Lyle Pfeffer, expressed disappointment at the extent of their criminal sentence reduction by the United States District Court in Orlando, Florida. Both Blutrich and Pfeffer had been sentenced to 25-year federal prison terms as a result of their criminal convictions arising out of the NHL insolvency. Both individuals cooperated with federal authorities in New York in gathering evidence used in the convictions of organized crime figures relating to a wide variety of crimes. The federal court recognized the immensity of the crimes committed by Blutrich and Pfeffer when considering the request for a reduced sentence. Instead of reducing the 25-year term to 6 years each as requested by the defendants, the court reduced the sentence to 16 years, 8 months for each defendant.
Meanwhile, another figure convicted of various crimes arising out of the NHL insolvency, Shalom Weiss, continues to fight extradition to the United States from Austria. The Orlando Sentinel reported that the Austrian Court of Appeal has indicated that Weiss may be released from jail in Austria, as early as this week, unless his right to appeal his criminal conviction in the United States is reinstated. Weiss waived his appellate rights concerning his criminal conviction after he became a fugitive from justice during jury deliberations in his criminal trial in Orlando. After conviction for a wide variety of crimes, the federal court in Orlando sentenced Weiss to an 845-year prison term.
Task Force Chair - Dan Orth; Staff Contact -MPC Meeting
July 27 is the last day for those attending the August 20-22 MPC Meeting in Denver to make their hotel reservations. Attendees should make their reservations directly with the Brown Palace Hotel at 800.321.2599, and should request the NOLHGA rate of $185.
Staff Contact - Sean McKennaLegal Seminar
NOLHGA's 10th Annual Legal Seminar in New York City attracted 150 attendees to hear about the key legal issues affecting guaranty associations and the insurance industry. Complete coverage of the meeting will be published in the next edition of the NOLHGA Journal.
Staff Contact - Sean McKennaPete Marigliano
After serving three years as NOLHGA's Manager of Communications, Pete will be leaving NOLHGA. He has accepted a position as a Foreign Service Officer with the U.S. Department of State. Pete's last day will be August 17
Staff Contact - Sean McKenna