MPC Meets in Columbus

The following are summaries of task force insolvency reports presented during the Members' Participation Council meeting held May 22 in Columbus, Ohio.

  Staff Contact - Sean McKenna American Chambers Life Insurance Company (Ohio)

Bart Boles (Tex.) updated meeting attendees on the wind down of claims administration, which is being handled by LaShelle, Coffman & Boles (LCB). He noted that the firm, which is fielding almost 400 inquiries a month, continues to require backup data from Antares to process the claims; in addition, the firm is coordinating with Antares on a mass reconciliation of funds held by Antares that belong to the guaranty associations. Considering the limited amount of claims data available from Antares, Boles also briefed attendees on different approaches individual guaranty associations might take once claims administration is no longer being handled by LCB.

Task Force Chair Chuck Gullickson (S.Dak.) reported on the small block of life policies in the estate, which was transferred to Madison National, and on the liquidator's asset recovery efforts. He added that the task force's future activities will include the wind up of claims processing by LCB; archiving of minimal data for future claims inquiries; monitoring litigation, including asset recovery; and preparing a "Lessons Learned" report.

Task Force Chair - Chuck Gullickson;   Staff Contact - Bankers Commercial Life Insurance Company (Tex.) & Statesman National Life Insurance Company (Tex.)

Legal Counsel Frank O'Loughlin (Rothgerber, Johnson & Lyons) briefed attendees on settlement agreements between the NOLHGA task forces and the BCL and Statesman receivers concerning a disagreement on guaranty association administrative-level claims. Under the agreements, which are similar in both insolvencies, all legal proceedings on the matter will be dropped and the receiver will approve the guaranty association claims. O'Loughlin also reported that a supplemental BCL RFP was mailed to 30 additional companies; no expressions of interest have been received yet.

Statesman Task Force Chair Neil Rucksdashel (Wash.) informed attendees that as of September 1, 2002, the guaranty associations should receive a disbursement from the assuming companies, either by cancellation of their promissory notes or in cash, of several million dollars as a result of their participation in the liquidation plan.

Task Force Chairs - William Falck & Neil Rucksdashel;   Staff Contact - Paul Peterson Guarantee Security Life Insurance Company (Fla.)

Task Force Chair Frank Gartland (Ohio) reported that there is $13 million remaining in the estate, and that the task force is trying to obtain another distribution to affected guaranty associations. The task force is working with the Guaranty Reassurance Corporation (GRC), Midland National, and the receiver on a plan to distribute the assets and close the estate. Gartland also reported that GRC will be liquidated by year-end and will distribute its assets to the guaranty associations.

Task Force Chair - Frank Gartland;   Staff Contact - Bill O'Sullivan Unison International Life Insurance Company (Okla.)

Task Force Chair Bart Boles (Tex.) reported that the task force is working with the receiver to close this estate. Approximately $6.7 million has already been distributed to the guaranty associations, and the task force expects an additional $1.5 million to be distributed. Boles added that the receiver would soon issue the final request for updated claim information from the guaranty associations, and he urged the affected associations to be prompt in supplying their information.

Task Force Chair - Bart Boles;   Staff Contact - Bill O'Sullivan

HIPAA, Asset Recovery, and Other Reports

There were a number of other presentations at the MPC General Session on May 22. Noreen Parrett (LaFollette, Godfrey & Kahn) updated attendees on the privacy provisions in the Health Insurance Portability and Accounting Act (HIPAA) of 1996. In her presentation, which was sponsored by the Administrators' Education Steering Committee, Parrett noted that the act expressly covers health plans, health care providers, and health care clearinghouses and spells out how these groups must establish safeguards to protect information such as patient name and address, social security number, and payment information. These safeguards include designating a privacy officer, training employees on HIPAA requirements, and establishing technical and administrative policies to protect against privacy violations.

Jack Falkenbach (Del.) briefed attendees on the work of the MPC Asset Recovery Group. A report from the group reviewing the asset position of various insolvencies was included in the briefing materials for the May MPC meeting, and Falkenbach announced that the group would update the report on a semi-annual basis. Once the new report is prepared, it will be made available on the NOLHGA Web site or the Information Resource Center (IRC).

MPC Chair William Falck (Fla.) and others updated attendees on a number of MPC Executive Committee matters. Andrea Bowers (S.C.) reported that the meeting site selection committee has tentatively chosen New Orleans, La., as the site for the first MPC meeting in 2003. Salt Lake City, Utah, is scheduled to host the year's second meeting.

Falck announced that a Plan of Operations Subgroup has been formed to update NOLHGA's model plan of operations. He also reported that Candie Kinch (Idaho), Lowell Miller (N.C.), and Tom Peterson (Ky.) have been reappointed to the MPC Chair Selection Committee and that a new subgroup has been formed to develop ways to implement some of the recommendations in the Health Insurance Issues Committee's 2001 report on handling health insurance insolvencies more effectively. Peter Leonard (Calif.) is chair of the subgroup.

Bill O'Sullivan (NOLHGA) provided attendees with an update on activity concerning financial services modernization and on NOLHGA's efforts in this area. He reported that hearings on insurance regulation are likely to be held in the House in June or July; however, it is not clear at this time whether those hearings will address the issue of optional federal chartering.

NOLHGA has undertaken a project, in conjunction with Baker & Daniels, to educate key federal officials about how state guaranty associations operate. Several meetings with congressional staffers for this purpose have already taken place. In addition, the NOLHGA Legal Committee issued a memo in March on the minimum standards spelled out in the ACLI optional federal chartering proposal; the committee is now examining issues that may be raised with respect to providing guaranty protection under optional federal charter legislation.

  Staff Contact - Sean McKenna