TENNESSEE REGULATOR FILES RICO SUIT OVER INSURERS' FAILURES.Tennessee Insurance Commissioner Paula Flower has filed a federal lawsuit against Reciprocal of America and related companies, charging them with violating the federal Racketeer Influenced and Corrupt Organizations Act in connection with the failure of several malpractice liability insurers.Flowers is liquidator Liquidator Person appointed by an unsecured creditor in the United Kingdom to oversee the sale of an insolvent firm's assets and the repayment of its debts. for three malpractice risk retention groups domiciled in Tennessee: Reciprocal Alliance, American National Lawyers Insurance Reciprocal and Doctors Insurance Reciprocal. Their collapse in January 2003 left thousands of doctors, hospitals and lawyers without malpractice coverage, as well as unpaid claims totaling at least $200 million, Flowers said. Defendants in the lawsuit, Flowers v. General Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. , include corporate officers and investors of Reciprocal of America. It alleges that General Re capped its reinsurance liability in a secret side agreement, but ROA's top officials were still reassuring policyholders, creditors and regulators the financial picture was sound. The Tennessee lawsuit is related to ongoing multi-state receivership receivership In law, state of being in the hands of a receiver, a person appointed by the court to administer, conserve, rehabilitate, or liquidate the assets of an insolvent corporation for the protection or relief of creditors. actions involving Virginia-based ROA ROA See: Return on assets ROA See: Right of accumulation ROA See return on assets (ROA). and its affiliates, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Flowers. It was filed in the same federal court in Tennessee that is handling three combined class actions filed on behalf of the three companies' policyholders. Virginia Insurance Commissioner Alfred W. Gross filed a similar lawsuit in Richmond federal court last November. That lawsuit is now the subject of a conditional transfer order by the Panel on Multi-District Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. . |
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