A 3-judge panel at the 8th U.S. Circuit Court of Appeals has backed a district court in a case involving Employers Reinsurance Company and Massachusetts Mutual Life Insurance Company.
A U.S. District Court judge in Kansas City, Mo., ruled that the companies’ reinsurance treaty included a “follow the settlements” provision, and that Employers Re, Kansas City, Mo., had no contractual right to stop making reimbursement payments because of concerns about how MassMutual, Springfield, Mo., was handling disability insurance claims.
The 3-judge 8th Circuit panel affirmed the district court ruling.
The 8th Circuit panel agrees that the reinsurance treaty includes a follow-the-settlements provision, and an offset provision in the treaty does not appear to permit “ERC to cease all reimbursements on the basis of its own unilateral conclusion that MassMutual had improperly submitted claims in the past,” Judge Joan Ericksen writes in an opinion for the panel.
MassMutual is pleased with the decision, a company representative said.
Representatives for Employers Re, which is now a unit of Swiss Re Ltd., Zurich, were not immediately available to comment on the ruling.
MassMutual assumed an excess disability income reinsurance agreement with Employers Re from another insurer in 1996.