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Legion Court Proceedings and July 19, 2005 Pennsylvania Supreme Court Ruling Legion Insurance Company, a Philadelphia based company, was previously the policy-issuing carrier for The Psychiatrists' Program. In February 2002, Legion was downgraded from A- (excellent) to B (fair) by A.M. Best and Company, the insurance industry rating firm. As of April 1, 2002, Legion was placed in Rehabilitation at the request of the Pennsylvania Insurance Commissioner. Functioning in Rehabilitation meant that the company's operations and finances were under the control of the Commissioner and the Pennsylvania Insurance Department. In late August 2002, the Commissioner petitioned the Pennsylvania Commonwealth Court for authority to liquidate Legion. Acting on behalf of Program participants, Psychiatrists' Purchasing Group (PPG) requested and received the Court's permission to be an “Intervenor” in the case. On June 26, 2003, the Court issued an Order authorizing Legion' s liquidation but, in response to the filings and testimony presented by PPG, the June 26 Order authorized Program participants to have “direct access” to reinsurance that had been purchased for the Program. On July 25, 2003, the Pennsylvania Commonwealth Court issued an Order of Liquidation for Legion, effective July 28, 2003, at which time the Pennsylvania Insurance Commissioner became the Statutory Liquidator of the company. Again responding to the filings and testimony presented by PPG on behalf of Program participants, the Order of Liquidation specifically addressed the handling of Program related claims and it incorporated the Court's June 26 Order, which granted PPG “direct access” to the Program's reinsurance issued by Transatlantic Reinsurance Company. In October 2003 and again in June 2004, the Pennsylvania Insurance Commissioner sent mailings to certain Legion insureds from past years. Program participants were among those who received these mailings, which addressed the filing of Proof of Claim forms and indicated that June 30, 2005 was the deadline for actual receipt of completed forms. (Additional information about the Proof of Claim forms can be found at Legion Proof of Claim Form and Letters. ) Subsequently, in the Pennsylvania Supreme Court, the Insurance Commissioner appealed the direct access provisions and other portions of the Commonwealth Court’s Orders. On January 8, 2004 , the Commonwealth Court issued an Opinion and additional Orders, one of which essentially placedthe entire Legion liquidation on hold while the Supreme Court appeal was pending. This Order was subsequently modified in early March to provide that the liquidation of Legion could proceed to the extent such liquidation did not impede the rights of PPG and the other policyholder Intervenors pending the Pennsylvania Supreme Court’s ruling on the Commissioner’s appeal of their “direct access” rights. In its January 8, 2004 rulings, the Commonwealth Court also ordered that all court actions, including any mediations and discovery, against Program participants, were to be stayed (put on hold) until the Pennsylvania Supreme Court rendered its decision on the Commissioner’s appeal from the Commonwealth Court’s June 2003 decision granting PPG direct access to Legion’s reinsurance with Transatlantic. While the Commonwealth Court’s jurisdiction is limited to Pennsylvania, PPG’s legal counsel advised that courts in other states often tend to give “full faith and credit” to orders of this kind. On March 8, 2005 , the Pennsylvania Supreme Court heard oral argument on the Commissioner’s appeal of the Commonwealth Court ’s Orders. On July 19, 2005, the Pennsylvania Supreme Court issued a ruling that affirmed the Commonwealth Court ’s Orders, including the provisions granting direct access to reinsurance. While there are still questions about the full impact of the Pennsylvania court rulings, the reinsurer (Transatlantic) has begun providing direct access to funding for Program claims. In the meantime, in June 2005, PPG filed a Proof of Claim on behalf of Program participants. Legion subsequently issued a Notice of Determination denying the claim, and PPG filed an objection in response to the Notice. In August 2007, acting as Statutory Liquidator of Legion, the Pennsylvania Insurance Commissioner asked the Pennsylvania Commonwealth Court to appoint a Referee to hear PPG’s objection. The Court did not grant the Liquidator’s request for a Referee and, instead, the matter is being heard by the Court itself. Commonwealth Court Orders and related documents can be accessed at www.ins.state.pa.us . Inquires regarding individual claims should be submitted to the Program manager, Professional Risk Management Services (PRMS), at (800) 245-3333 or TheProgram@prms.com. UPDATED October 30, 2007 |
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