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In hearings in her courtroom and in marathon discussions, regulators, creditors, bondholders, health insurers, and the company's owners, led by New York investment firm Broadbill Partners LP, fell to arguing over the corpse of Penn Treaty.
The owners didn't see why Penn Treaty couldn't just jack up its fees, as if it were a badly funded health insurer struggling to realign claims and premiums.
In rulings including a scathing 2012 opinion, the judge rejected the state plan and wrote that Penn Treaty had assets to pay claims for years, if the state let it boost its rates enough.
But Ario's department, and fellow insurance regulators in other states, continued to resist large increases for Penn Treaty's aging customers.
In proceedings under Ohio law to liquidate an insolvent insurance company, the United States asserted that its claims as obligee on various of the company's surety bonds were entitled to first priority under 31 U.
Losses grew as customers aged and actuaries recorded costs that might have passed quietly to reinsurance - a sort of insurer underworld of risk-swapping - if Penn Treaty had been liquidated when it was first taken over. Thus, such actual performance is an essential part of the "business of insurance." Because the Ohio statute is integrally related to the performance of insurance contracts after bankruptcy, it is a law "enacted . This plain reading of the Mc Carran-Ferguson Act comports with the statute's purpose. The preferences conferred upon employees and other general creditors, however, do not escape preemption, because their connection to the ultimate aim of insurance is too tenuous. BLACKMUN, J., delivered the opinion of the Court, in which REHNQUIST, C. KENNEDY, J., filed a dissenting opinion, in which SCALIA, SOUTER, and THOMAS, JJ., joined, post, p. The District Court granted summary judgment for the United States. In contrast, as explained supra, at 513, the Ohio liquidation statute before us does not increase the reliability or solvency of the insurer. (b) The Ohio statute, to the extent that it regulates policyholders, is a law enacted "for the purpose of regulating the business of insurance." Because that phrase refers to statutes aimed at protecting or regulating, directly or indirectly, the relationship between the insurance company and its policyholders, SEC v. Pireno does not support petitioners' argument to the contrary, since the actual performance of an insurance contract satisfies each prong of the Pireno test: performance of the terms of an insurance policy (1) facilitates the transfer of risk from the insured to the insurer; (2) is central to the policy relationship between the insurer and the insured; and (3) is confined entirely to entities within the insurance industry. for the purpose of regulating the business of insurance" within the meaning of § 2(b). (d) The preference accorded by Ohio to the expenses of administering the insolvency proceeding is reasonably necessary to further the goal of protecting policyholders, since liquidation could not even commence without payment of administrative costs. 939 F.2d 341 (CA 6 1991), affirmed in part, reversed in part, and remanded. Payments to members of domestic mutual insurance companies shall be limited in accordance with law. (b) Federal regulation No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance: Provided, That after June 30, 1948, the Act of July 2, 1890, as amended, known as the Sherman Act, and the Act of October 15, 1914, as amended, known as the Clayton Act, and the Act of September 26, 1914, known as the Federal Trade Commission Act, as amended. ., shall be applicable to the business of insurance to the extent that such business is not regulated by State Law. The Arizona law regulated the business of insurance because, by allowing a state official to ensure that the merger of two insurance companies did not reduce the "security of and service to be rendered policyholders," id., at 462, the state law functioned to preserve the reliability of an ongoing insurance business.They took what they saw as a principled stand backed by the National Association of Insurance Commissioners: If Penn Treaty could greatly boost its fees as anxious customers aged, why should Americans trust long-term-care salespeople, or any insurance agent, when they promise initial rates that buyers can afford?The state hired new experts and proposed benefit cuts. A proposal to split Penn Treaty into a good-assets and a bad-assets company was criticized by the insurers that would have to help pay for it.
And you and I, not just through taxpayer-funded Medicaid but also through our health-insurance premiums, which go up when long-term-care insurers fail and leave more-solvent health insurers, their owners, and their customers to fund claims.