North Dakota judge halts long-term care bailout plan crafted in Pa.

A North Dakota district judge denied a motion to dismiss and granted a preliminary injunction to Insurance Commissioner Jon Godfread in a dispute between insurance regulators over a long-term care financial settlement.

In 2022, Godfread was one of several state insurance commissioners to take then-Pennsylvania insurance commissioner Jessica K. Altman to federal court over a settlement agreement Pennsylvania regulators reached defunct long-term care insurance company Senior Health Insurance Company of Pennsylvania.

SHIP was put into rehabilitation in 2021 by the Commonwealth Court of Pennsylvania after regulators said it was “statutorily insolvent.” With $1.4 billion in assets and $2.6 billion in liabilities, the deficit sunk the company’s capital levels, which triggered regulatory oversight. SHIP once had 645,000 long-term care policies in 46 states when it was licensed.

Attempting to avert liquidation, a Pennsylvania court approved a rehabilitation plan for the long-term care insurer that gave SHIP's 39,000-plus policyholders a host of choices, all of which would mean higher premiums, reduced benefits, or both.

That's when problems began. Since SHIP has thousands of policyholders spread across other states, the difficult agreement meant many different regulators had to acquiesce. Many refused.

North Dakota law requires approval of all proposed rate or benefit changes by the North Dakota commissioner, Godfread noted in a news release. SHIP has approximately 371 policyholders in North Dakota.

'Very pleased' with long-term care ruling

The North Dakota lawsuit was moved to state court last year. In its recent decision, the court denied a motion to dismiss the complaint by Godfread against current Pa. Insurance Commissioner Mike Humphreys. The court granted a preliminary injunction halting the application of unapproved rates on North Dakota consumers.

“We are very pleased with the decision by the court in this matter,” said Godfread. “We have laws in place here in North Dakota that protect consumers. No person or state can ignore the laws in another state simply because it’s inconvenient or burdensome for them.”

Similar cases have been filed against the Pennsylvania insurance commissioner in Iowa, Louisiana and South Carolina.

In past comments, Pennsylvania regulators said that the court-approved SHIP plan provides more options for policyholders than they would have if the company was in liquidation.

But others are worried about setting a precedent, particularly with Genworth looming on the horizon.

Genworth has more than 1.1 million policyholders nationwide. Genworth Life Insurance Co., which has most of Genworth’s long-term care policies, has struggled with poor financial ratings and asked for repeated rate increases.

InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.