Association News
APA President Explains Impact Of Ruling on Malpractice Insurer
Psychiatric News
Volume 38 Number 14 page 2-2

In February 2002 the policy-issuing carrier for the APA-endorsed Psychiatrists’ Professional Liability Insurance Program at that time, Legion Insurance Company, was downgraded by A.M. Best from A- (superior) to B (fair). A few months later, the commissioner of the Pennsylvania Insurance Department, which regulates Philadelphia-based Legion, petitioned the Commonwealth Court of Pennsylvania to place Legion in rehabilitation. Since the time that motion was granted, Legion has operated under the control of the department, which oversees its finances and maintains its day-to-day operations. As long as it remains in rehabilitation, Legion is responsible for claims brought against psychiatrists who are insured under policies it issued.

In late August 2002, however, the rehabilitator petitioned the court for an order of liquidation, and on June 26, 2003, Judge Mary H. Leavitt issued a ruling providing for issuance of such an order of liquidation. Although Legion currently remains in rehabilitation, it is anticipated that this will occur sometime after July 14, 2003. The order also granted the motion of Psychiatrists’ Purchasing Group (PPG) to give psychiatrist policyholders direct access to the reinsurance purchased from Transatlantic Reinsurance Company for the Professional Liability Insurance Program. If this provision survives possible appeals, this would be very good news for many policyholders, particularly those who may now have access to the reinsurance funds to cover claims that might not otherwise be covered by state guarantee funds because of fund limits or exclusions. PPG is the sponsor of the Psychiatrists’ Professional Liability Program and has provided educational and liaison services to insureds.

While it is possible that the decision of the court will be appealed and not immediately implemented, APA is in the process of reviewing the court’s lengthy opinion to fully understand all aspects of the ruling. It is also working with its consultants and program personnel, particularly principals of PPG and PRMS, the administrator of the APA-endorsed program, to determine how the decision is likely to affect psychiatrists insured through the program who have malpractice claims against them and what steps they may need to take under the order.

As soon as we have additional information about any of these matters or whether an appeal has been filed, we will pass it along to you.

If you have specific questions about your policy or coverage, please contact PRMS by phone at (800) 245-3333 or by e-mail at update@prms.com. As we learn more, we will use the pages of Psychiatric News and other means as appropriate to keep you updated. Also, PRMS is likely to post updates on its Web site at www.psychprogram.com.

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