Download PDF - Goodmans

appointment of a receiver to wind up the affairs of the insurance company
than by permitting the business to be closed by the managers or directors of
the insolvent corporation as trustees authorized by the statute, it was within
the court's power to appoint a receiver.
New Jersey
Chandler v. Omnicare/HMO, Inc., 756 F. Supp. 187 (D.N.J. 1990). The New
Jersey District Court dismissed (1) an action brought by a terminated employee
against the former employer's insolvent health insurer (Omnicare/The HMO,
Inc.) for continuation of health insurance coverage and damages; and (2) a
cross‐claim by the former employer against the insurer in rehabilitation on
Burford abstention grounds. The court found that New Jersey has a complex
and thorough regulatory scheme to rehabilitate insolvent insurers which can
best be accomplished without interference from outside courts that would
simultaneously dissipate the insolvent insurer's assets.
Fortunato v. New Jersey Life Ins., 254 N.J. Super. 420 (App. Div. 1991). The
Appellate Division held that the Chancery Division should not have denied the
Commissioner's request for an order directing him to rehabilitate New Jersey
Life Insurance Company. The Chancery judge had refused to grant the request
for rehabilitation because there were issues of fact concerning the existence of
insolvency, including the issue of whether a reinsurance agreement had been
repudiated. The reinsurance issue was scheduled for arbitration at a later date.
While the Uniform Insurers Liquidation Act [N.J.S.A. 17B:32‐2, before
amendment by P.L.1992, c. 65] gives the Superior Court original jurisdiction
over the Commissioner's petition, it does not require a full hearing before the
court issues orders. The Commissioner's determination that further business
by the insurer would be hazardous was a finding of fact, an informed
prediction, and was neither arbitrary nor unreasonable. Because the insurer
failed to demonstrate to the contrary, the Commissioner's determination was
sufficient to grant the rehabilitation order.
Smith v. Monmouth Title & Mortgage Guaranty Co., 110 N.J. Eq. 117, 159 A. 509
(1932). It was held that the statutory circumstances under which the courts
may enjoin an insurance company from exercising franchises and appoint a
liquidator are jurisdictional. The court is without such jurisdiction absent an
application of the banking and insurance commissioner when they have not
declined to act.
New York In re Lawyers Title & Guaranty Co., 145 Misc. 776 (1938). The insurance
commissioner did not institute a reorganization proceeding but rather
expressly assented to the jurisdiction of the court. The validity of the
proceeding was therefore not affected.
Matter of Knickerbocker Life Ins. Co., 199 A.D. 503, 191 N.Y.S. 780 (1922). On
the application of the administrator of the estate of a beneficiary of a policy,
the court refused to appoint a receiver of the assets and property of an
insolvent life insurance company in the possession of the insurance
commissioner. If the claimant was entitled to receive any portion of the fund
in the commissioner's possession, the claimant could apply to the
commissioner or the court and obtain speedy relief.
People v. Norwegian Underwriters, 139 Misc. 70, 247 N.Y.S. 707 (1931). The
court held that the attorney‐general could not interfere in the affairs of the
corporation. The power to revoke a certificate lies with the insurance
commissioner. The only complaint made was that the corporation was