FIRM WINS PENNSYLVANIA SUPREME COURT ARGUMENT BENEFITING BOTH INSURANCE CONSUMERS AND INSURANCE COMPANIES
In a unanimous decision of first impression on complex issues of insurance law, the Pennsylvania Supreme Court ruled that the Pennsylvania Insurance Commissioner, acting as Liquidator of an insolvent insurance company, cannot force policyholders to pay back payments they received before an insurance company is taken over by the Commissioner due to insolvency. The Supreme Court's decision involved four consolidated cases by the Insurance Commissioner against Ingram Micro, Inc., Apple Computer, Inc., H.J. Heinz Company and Mitsui & Co. (U.S.A.), Inc. (Ario, et al., v. Ingram Micro, Inc., et al., Nos. 19, 20, 21 & 22 MAP 2006).
The Pennsylvania Insurance Commissioner, as Liquidator of Reliance Insurance Company, sued the four Fortune 500 companies demanding they return -- as voidable "preferences" under Pennsylvania’s insurance insolvency statute -- approximately $5 million in claims payments received because the companies were paid within one year before Reliance was ordered into insolvency proceedings. The Supreme Court rejected the Commissioner's attempt to sue the policyholders, and agreed with Elliott Greenleaf’s arguments that the statute cannot be used to force policyholders to pay back insurance claims payments received in the ordinary course of business prior to an insolvency.
Firm Shareholders Frederick P. Santarelli and Roger J. Harrington, Jr. successfully represented the policyholders in both the trial level at the Commonwealth Court and before the Pennsylvania Supreme Court.