TENNESSEE REGULATOR FILES RICO SUIT OVER INSURERS' FAILURES.
Flowers is liquidator 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, 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 actions involving Virginia-based ROA and its affiliates, according to 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.
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|Publication:||Liability & Insurance Week|
|Date:||Feb 23, 2004|
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