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May 10, 2012 at 11:14 AM
The Pennsylvania Insurance Department (PID) will not be allowed to liquidate Penn Treaty Network America Insurance Company and American Network Insurance Company, providers of long-term care (LTC) insurance, according to a court decision on May 3.
The two companies had been placed into voluntary rehabilitation in January 2009, and within a short time thereafter the decision was made by the PID to liquidate them. At the time, the PID said that when the two companies, both monoline insurers, entered the market in the 1990s, it had priced policies aggressively and that resulted in policies written prior to 2000 being underpriced. Subsequent attempts to win approval for rate increases resulted in denials, not just in Pennsylvania but in numerous other states.
Penn Treaty American Corp. (PTAC), parent company of the two insurers, said that the court’s decision signaled “an unprecedented decision of significant national consequence” and cited areas in the court’s ruling that accepted testimony from one of PTAC’s experts, Dr. Stephen Holland, that “medical, lifestyle, and other advances are expected to benefit the companies’ claim costs in the future” and “that the medical advances he [the expert] identified together with lifestyle changes and new treatments will ameliorate the companies’ future claim payments.”
The court also heard testimony from Dr. Holland in October 2011 that “a breakthrough in the treatment of Alzheimer’s was imminent.” However, in an April presentation at an insurance conference, Dr. Holland cited a statistic that said, “Alzheimer’s is the only cause of death among the top 10 in America without a way to prevent or even slow its progression.” In an April interview, he had said that new blood tests intended to detect early signs of Alzheimer’s are not yet commercially available.
Rosanne Placey, press secretary for the PID, said in an interview, “We’re looking at our options to challenge the decision.” She added, “While Mr. [Penn Treaty CEO Eugene] Woznicki is chairman of the board of directors, we are still in charge as the statutory rehabilitator and would have responsibility for a rehabilitation plan. His [press] release makes it sound like things are heading back to business as usual. This decision does not return the company to an active status.”
Placey also said, “We are currently able to pay claims as they come due. So policyholders should not notice any chance in status at this time. Also, while the Penn Treaty action started in the prior administration, policyholder protection is still our No. 1 priority. So we will continue to seek the best result for policyholders.”
