Updated version: Shortly after the original version of this story appeared, the Pennsylvania department responded with a statement, which is included at the end of this article.
Members of the Pennsylvania Supreme Court have decided 5-0 to keep the Pennsylvania Insurance Department from liquidating Penn Treaty Network America Insurance Company and an affiliate.
See also: Penn Treaty rehabilitator posts update
A lower-level state court, the Commonwealth Court, ruled in favor of a team of challengers led by Eugene Woznicki, the chairman of the Penn Treaty board and a longtime Penn Treaty executive, in 2012. The Supreme Court upheld the lower-court ruling.
Penn Treaty helped create the modern U.S. long-term care insurance industry. It ran into financial problems when regulators found that the company’s LTCI obligations were outstripping the company’s ability to support the LTCI obligations.
State insurance regulators put the company in rehabilitation in 2009. At this point, the company is still generating the revenue it needs to pay claims, the Supreme Court says in an opinion explaining its ruling.
In a separate legal action, the Woznicki team and Pennsylvania insurance regulators are working on a Penn Treaty rehabilitation plan. A court held a hearing on a proposal July 13.
Back in 2012, a state court blocked an effort by the Pennsylvania department to turn rehabilitation proceedings for Penn Treaty and the affiliate, American Network Insurance Company, into liquidation proceedings, based partly on concerns that liquidation would hurt the LTCI policyholders, and in part on concerns that regulators had not been entirely candid with the court.