Court Rules in Legion Insurance Case

The Assembly learned at its November meeting that the Pennsylvania Supreme Court has affirmed the ruling of a lower court, the Commonwealth Court of Pennsylvania, in the Legion Insurance Company liquidation case granting Psychiatrists' Purchasing Group (PPG) direct access to reinsurance for APA members who were covered by Legion Insurance policies. APA had filed an amicus brief in the Commonwealth Court, arguing that direct access should be granted as APA members with insurance were third-party beneficiaries of Legion's reinsurance contracts with Transatlantic Reinsurance Company. This reasoning was accepted by the court.

Reinsurance is coverage that one insurance carrier provides for another such company. Thus the state supreme court upheld the lower court's ruling that APA members who had purchased professional liability coverage through Legion are eligible to have claims against them covered by the reinsurance, according to a memo from PPG President and CEO Alan Levenson, M.D.

As under Legion, claims will be processed by Professional Risk Management Services.

In 2003 the Commonwealth Court of Pennsylvania ordered that Legion be liquidated and agreed to admit PPG as an intervenor in order to request access to the reinsurance funds. The Commonwealth Court ruling stated that proceeds of the reinsurance Legion had purchased were not part of Legion's assets and thus not available to pay the company's creditors during insolvency proceedings as would ordinarily be the case.

The state's insurance commission, however, appealed the ruling granting such access. The Pennsylvania Supreme Court has now denied this appeal.

Information about the Legion court proceedings is posted at<www.psychpurchasing.com>.