Consedine v. Penn Treaty Network Am. Ins. Co.

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Cited authorities 23

Cited in 13

Precedent Map

Decision Date	18 January 2013
Parties	Michael F. CONSEDINE, Insurance Commissioner of the Commonwealth of Pennsylvania, Plaintiff v. PENN TREATY NETWORK AMERICA INSURANCE COMPANY, Defendant. Michael F. Consedine, Insurance Commissioner of the Commonwealth of Pennsylvania, Plaintiff v. American Network Insurance Company, Defendant. Re: Petition for Liquidation of Penn Treaty Network America Insurance Company (In Rehabilitation) and American Network Insurance Company (In Rehabilitation).
Court	Pennsylvania Commonwealth Court

63 A.3d 368

Michael F. CONSEDINE, Insurance Commissioner of the Commonwealth of Pennsylvania, Plaintiff

v.PENN TREATY NETWORK AMERICA INSURANCE COMPANY, Defendant.

Michael F. Consedine, Insurance Commissioner of the Commonwealth of Pennsylvania, Plaintiff

v.American Network Insurance Company, Defendant.

Re: Petition for Liquidation of Penn Treaty Network America Insurance Company (In Rehabilitation) and American Network Insurance Company (In Rehabilitation).

Commonwealth Court of Pennsylvania.

Argued by Trial.

Closing Arguments Feb. 21 and 22, 2012.

Decided May 3, 2012.

Publication Ordered Dec. 28, 2012.

As Amended Jan. 18, 2013.

Thomas S. Harty, James R. Potts and Mia Meloni, Philadelphia, for rehabilitator.

Douglas Y. Christian, Damian L. DiNicola and Benjamin Schmidt, Philadelphia, for Penn Treaty American Corporation.

OPINION AND ORDER

OPINION BY Judge LEAVITT.

+------------------------------+
                ¦TABLE OF CONTENTS AND GLOSSARY¦
                +------------------------------¦
                ¦                              ¦
                +------------------------------+

+---------------------------------------------+
                ¦                                        ¦Page¦
                +---------------------------------------------+

+-------------------------------------------------------------------+
                ¦    ¦                                                       ¦      ¦
                +----+-------------------------------------------------------+------¦
                ¦I.  ¦Introduction                                           ¦374   ¦
                +----+-------------------------------------------------------+------¦
                ¦    ¦                                                       ¦      ¦
                +----+-------------------------------------------------------+------¦
                ¦II. ¦Syllabus                                               ¦375   ¦
                +----+-------------------------------------------------------+------¦
                ¦    ¦                                                       ¦      ¦
                +----+-------------------------------------------------------+------¦
                ¦III.¦Findings of Fact                                       ¦380   ¦
                +-------------------------------------------------------------------+

+--------------------------------------------------+
                ¦   ¦A.¦Business and History of PTNA and ANIC ¦380 ¦
                +--------------------------------------------------+

+----------------------------------------------------------------------------+
                ¦    ¦    ¦i.   ¦The Companies                                       ¦380    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦ii.  ¦The Companies' Products                             ¦380    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦iii. ¦OldCo and NewCo Business                            ¦385    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦iv.  ¦Reserves                                            ¦386    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦v.   ¦Reinsurance                                         ¦387    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦vi.  ¦Financial Condition of the Companies                ¦387    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦vii. ¦Conditions that Led to Rehabilitation               ¦388    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦viii.¦The Rehabilitation Orders                           ¦389    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦ix.  ¦April 2009 Preliminary Report and Plan of           ¦390    ¦
                ¦    ¦    ¦     ¦Rehabilitation                                      ¦       ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦x.   ¦Rehabilitation Implementation Committee             ¦391    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦xi.  ¦Milliman August 2009 PowerPoint Projections         ¦391    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦xii. ¦Termination of New Premium Rate Increase Filings    ¦392    ¦
                +----------------------------------------------------------------------------+

+--------------------------------------------------------------------+
                ¦    ¦B. ¦Companies' Statutory Surplus as of December 31, 2009¦393   ¦
                +----+---+----------------------------------------------------+------¦
                ¦    ¦C. ¦Scope of Expert Evidence                            ¦394   ¦
                +--------------------------------------------------------------------+

+----------------------------------------------------------------------------+
                ¦    ¦    ¦i.   ¦Rehabilitator's Experts                             ¦394    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦ii.  ¦Intervenors' Experts                                ¦395    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦iii. ¦Actuarial Projections of the Companies' Financial   ¦396    ¦
                ¦    ¦    ¦     ¦Conditions                                          ¦       ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦iv.  ¦Actuarial Principles and Concerns                   ¦397    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦v.   ¦Changes in Milliman's Projections                   ¦399    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦vi.  ¦Actuarial Caveats and Limitations                   ¦401    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦vii. ¦Credibility of Data Used in Projections             ¦402    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦viii.¦Actuarial Standard of Practice No. 25               ¦402    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦ix.  ¦Actuarial Standard of Practice No. 18               ¦403    ¦
                +----------------------------------------------------------------------------+

+------------------------------------------------+
                ¦   ¦D.¦Milliman Expert Report and Testimony¦403 ¦
                +------------------------------------------------+

+--------------------------------------------------------------------------+
                ¦    ¦    ¦i.  ¦Milliman Morbidity or Claim Costs Assumption       ¦403    ¦
                +----+----+----+---------------------------------------------------+-------¦
                ¦    ¦    ¦ii. ¦Milliman Morbidity Improvement Assumption          ¦407    ¦
                +----+----+----+---------------------------------------------------+-------¦
                ¦    ¦    ¦iii.¦Milliman Mortality Assumption                      ¦409    ¦
                +----+----+----+---------------------------------------------------+-------¦
                ¦    ¦    ¦iv. ¦Milliman Voluntary Lapsation Assumption            ¦409    ¦
                +----+----+----+---------------------------------------------------+-------¦
                ¦    ¦    ¦v.  ¦Milliman Interest Rate Assumption                  ¦409    ¦
                +----+----+----+---------------------------------------------------+-------¦
                ¦    ¦    ¦vi. ¦Milliman Claim Adjudication and Wellness Assumption¦410    ¦
                +----+----+----+---------------------------------------------------+-------¦
                ¦    ¦    ¦vii.¦Milliman Premium Rate Increase Assumption          ¦411    ¦
                +--------------------------------------------------------------------------+

+----------------------------------------------------------------------------+
                ¦    ¦E.  ¦United Health Actuarial Services, Inc. Expert Report and  ¦412    ¦
                ¦    ¦    ¦Testimony                                                 ¦       ¦
                +----------------------------------------------------------------------------+

+----------------------------------------------------------------------------+
                ¦    ¦    ¦i.   ¦United Health Morbidity or Claim Costs Assumption   ¦413    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦ii.  ¦United Health Morbidity Improvement Assumption      ¦414    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦iii. ¦United Health Mortality Assumption                  ¦414    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦iv.  ¦United Health Voluntary Lapsation Assumption        ¦414    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦v.   ¦United Health Interest Rate Assumption              ¦415    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦vi.  ¦United Health Claim Adjudication and Wellness       ¦415    ¦
                ¦    ¦    ¦     ¦Assumption                                          ¦       ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦vii. ¦United Health Premium Rate Increase Assumption      ¦415    ¦
                +----+----+-----+----------------------------------------------------+-------¦
                ¦    ¦    ¦viii.¦United Health Agents' Commission Assumption         ¦419    ¦
                +----------------------------------------------------------------------------+

+----------------------------------------------------------------------------+
                ¦    ¦F.  ¦Gross Premium Reserve                                     ¦419    ¦
                +----+----+----------------------------------------------------------+-------¦
                ¦    ¦G.  ¦Ernst & Young Report                                      ¦420    ¦
                +----+----+----------------------------------------------------------+-------¦
                ¦    ¦H.  ¦State Regulation of Long–Term Care Insurance Rate Making  ¦421    ¦
                +----+----+----------------------------------------------------------+-------¦
                ¦    ¦I.  ¦Impact of Medical Advances on Future Long–Term Care       ¦424    ¦
                ¦    ¦    ¦Insurance Claims

...

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...is per se invalid unless every policyholder will fare as well in rehabilitation as in liquidation.” Consedine v. Penn Treaty Network Am. Ins. Co., 63 A.3d 368, 453 (Pa.Commw.Ct.2012). Rather, the Supreme Court's focus in Neblett was on whether the rehabilitation plan at issue in that case w......
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...rights of some policyholders in order to minimize the potential harm to all of the affected parties." Consedine v. Penn Treaty Network American Insurance Co. , 63 A.3d 368, 452 (Pa. Cmwlth. 2012) ( Penn Treaty ) (citing Mutual Fire II , 614 A.2d at 1094 ) (emphasis added). This authority in......
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...the Commonwealth Court issued a decision that addressed a live dispute over the Liquidation Standard. Consedine v. Penn Treaty Network Am. Ins. Co. , 63 A.3d 368 (Pa. Commw. Ct. 2012), aff'd sub nom. In re Penn Treaty Network Am. Ins. Co. , 632 Pa. 272, 119 A.3d 313 (2015). The Pennsylvania......

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