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May 10, 2012 at 10:08 AM
The Pennsylvania Insurance Department is looking at the options it has for challenging a court ruling in favor of parties who are trying to keep a long-term care insurance (LTCI) company out of liquidation, a department representative said Wednesday.
The Pennsylvania department representative, Rosanne Placey, was responding to a ruling issued last week by a Pennsylvania state judge, Mary Hannah Leavitt. In the ruling, Leavitt blocked efforts by the Pennsylvania department to liquidate Penn Treaty Network America Insurance Company and a Penn Treaty Network America subsidiary, American Network Insurance Company, (ANIC).
“This decision does not return the company to active status,” Placey said in a statement. “We still serve as rehabilitator.”
Penn Treaty was one of the pioneers in developing the modern LTCI industry. It ran into trouble when policyholders proved to be more likely to keep their policies than the company had expected. The Pennsylvania department has been acting as the rehabilitator for Penn Treaty and ANIC since January 2009, before Tom Corbett, a Republican, succeeded Ed Rendell, a Democrat, as governor of Pennsylvania and appointed Michael Consedine to be insurance commissioner.
Leavitt agreed with the companies’ directors that the department might be able to rehabilitate the companies by increasing coverage prices and by getting court permission to reduce policyholders’ benefits.
Penn Treaty Chairman Eugene J. Woznicki said the decision could give the company and its subsidiary the flexibility they need to emerge from rehabilitation and could make the LTCI market more attractive to insurers.
Placey noted that the Pennsylvania department is in charge of the day-to-day operations of Penn Treaty and ANIC and would have responsibility for implementing any rehabilitation plan.
