Court Halts Illinois Suspension of Medical Liability Insurer PLICA

A Chancery Court Judge in Cook County Illinois has halted a state insurance department order that prohibited a medical liability insurer from writing new business in the state.

On Oct. 22, Illinois Director of Insurance Michael McRaith suspended the operations of Professional Liability Insurance Company of America (PLICA), claiming that the insurer’s financial condition and erosion of policyholder surplus were such that it should not be allowed to continue writing business. The state lifted PLICA’s certificate of authority to write new business for a year.

Attorneys for PLICA appealed and on Nov. 2 won a restraining order against enforcement of the suspension. The company can continue writing insurance in Illinois.

PLICA said in a statement that the claims against it by Illinois officials are “unfounded and without merit.” The insurer says it is financially sound; it also says that competitors have been spreading distortions about its financial condition to producers and insureds.

A court hearing has been scheduled for Dec. 8. According to Kirk Wittner, counsel for the insurer, PLICA filed its most recent financial statements with insurance officials in New York, where it is domiciled. For the period ending Sept. 30, 2009, PLICA reported it had policyholder surplus of $26.3 million.The company said New York has not taken any regulatory action against the firm.

In August, the Connecticut Department of Insurance restricted PLICA’s operations in that state to the service of existing business.