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Superintendent of Ins. of the State of N.Y. v. Baker & Hostetler, 668 F. Supp.
1054 (N.D. Ohio 1987). The court held that notwithstanding law firm's
attorney's lien, a law firm for an insurer in liquidation is required, under both
New York and Ohio law, to deliver to the New York Superintendent of
Insurance all records, accounts or books of the insolvent insurer in its
possession. The court added that if the law firm was found to have a security
interest in the records, books and accounts it would be treated as a secured
creditor under New York law.
Pennsylvania
First National Bank of Maryland v. Commonwealth of Pennsylvania, 107 Pa.
Commonwealth 441, 528 A.2d 696 (1987). First National Bank of Maryland
petitioned the court to compel the Insurance Commissioner to issue a
summary order suspending and/or supervising the business of U.S. Mortgage
Insurance Company. The court held that mandamus cannot be invoked to
direct the exercise of judgment or discretion in a particular way, but is available
only to compel a tribunal or administrative agency to act when it has been
"sitting on its hands". The Commissioner is empowered to order supervision
or suspend the business of an insurer when he has "reasonable cause to
believe that an insurer has engaged in any act, practice or transaction that
would subject it to formal delinquency proceedings." Overall, the
Commissioner has discretion to act as he feels it best to protect the interest of
the insurer and policyholders.
First National Bank of Maryland v. Commonwealth of Pennsylvania, 102 Pa.
Commonwealth 474, 518 A.2d 871 (1986). The First National Bank of Maryland
moved for a writ of preemptory mandamus to compel the Insurance
Commissioner to issue a summary order suspending the business of U.S.
Mortgage Insurance Co., take possession of the insurer's assets and halt the
payment of claims by the insurer. The court held that mandamus would only
lie to compel official performance of a ministerial act or a mandatory duty
where there is a clear legal right in the plaintiff, a corresponding duty in the
defendant, and a lack of any other adequate remedy at law. The court denied
the bank's motion concluding that the Commissioner acted within his
discretionary authority and took appropriate actions, including having his
deputy meet with U.S. Mortgage which agreed to stop writing new business
and to reduce its staff.
Koken v. Legion Ins. Co., 831 A.2d 1196 (Pa. Commw. Ct. 2003). The
Commissioner of Insurance (“Commissioner”) was acting as the rehabilitator of
an insolvent property and casualty insurer. The Commissioner filed a petition to
convert rehabilitation into liquidation and the shareholders intervened. The
insurer had cash flow problems, but still reported policyholder surplus in excess
of liabilities indicating it would have enough assets to pay all obligations. The
court noted that a commissioner, acting as a rehabilitator, does not trump a
companies board of directors in every aspect. Instead, a rehabilitator only has
power to supersede the board when such action is needed to correct the
insurer’s condition. The power includes exercising the insurers’ boards’ powers,
but a rehabilitator can not amend insurers’ bylaws to confer on his or herself
adequate authority to consent to an insurers’ liquidation.
Texas
Eckert v. Montemayor, No. 03‐04‐00507‐CV, 2005 Tex. App. LEXIS 2376 (Tex.
App. Mar. 31, 2005). The court held that a staff attorney for the Texas
Department of Insurance met her burden in establishing the affirmative defense
of official immunity. The staff attorney was given official immunity, because she
was performing a discretionary function and acting in good faith when drafting