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In re Penn Treaty Network America Ins. Co.

Pennsylvania Commonwealth Court

December 22, 2021

An en banc panel of the Pennsylvania Commonwealth Court overruled exceptions filed by a statutory liquidator to a ruling by a three-judge panel of the same court during the course of the ongoing liquidation of a long-term care insurer. The liquidator had applied for a declaration that she is authorized under Article V of The Insurance Department Act of 1921 to allocate assets from the insurer’s estate to a captive insurer, created by the liquidator, to cover policyholder claims for benefits that exceed applicable statutory guaranty association limits and will accrue more than 30 days after the insurer’s policies terminated by virtue of the insurer’s liquidation. The issue arose when the liquidator determined that the insurer was obligated under policies issued to cover claims up to a certain dollar amount. But during liquidation, the insurer’s policy obligations were transferred to guaranty associations to continue coverage and to pay claims up to the limits set in the applicable state law, which is a lower dollar amount than the insurer’s original obligation under the policies. So the Liquidator took steps to create a way to provide coverage for claims in excess of guaranty association limits. The en banc panel held that the liquidator’s proposal lacked support in Article V and the enabling act for the Pennsylvania Life and Health Insurance Guaranty Association, codified in Article XVII of The Insurance Company Law of 1921.

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