Iowa judge fines Pennsylvania insurance commissioner $481,500 for contempt

An Iowa judge has fined the Pennsylvania insurance commissioner $481,500 for contempt of court after finding that she deliberately violated a court order in a civil case brought by Iowa's insurance regulators.

The civil penalty marks the latest development in a long-running legal dispute between the insurance commissioners of Iowa and Pennsylvania.

In 2022, Iowa Insurance Commissioner Douglas Ommen sought an injunction against the financially struggling Senior Health Insurance Company of Pennsylvania, or SHIP, arguing the company intended to "coerce vulnerable Iowans" into paying confiscatory rate increases of 400% or more for their long-term care insurance policies, even while imposing "draconian" cuts in benefits.

At the time, Ommen said SHIP, which had sold long-term care insurance policies to more than 880 Iowans, was financially insolvent with a $1.3 billion funding shortfall. Because of the company's financial condition, control over SHIP had been handed over to a so-called "special deputy rehabilitator," Patrick Cantilo, and to the Pennsylvania insurance commissioner.

The injunction, which was later granted, barred Cantilo and the Pennsylvania commissioner from offering any rates, riders or policy documents to any Iowa policyholders that had not been previously authorized and approved by the Iowa insurance commissioner.

In January 2025, SHIP informed the Iowa insurance commissioner the company had filed a request with the commonwealth court of Pennsylvania to begin implementing a court-approved "rehabilitation plan" for the company, allowing SHIP to contact Iowa policyholders and to offer, or in some cases force, changes to their policies.

The Iowa commissioner then informed SHIP that even if the Pennsylvania court granted the request and the company followed through, it would be in clear violation of the injunction issued in Iowa. Under that scenario, the commissioner warned, he would authorize the Iowa attorney general to seek sanctions against SHIP.

According to court filings by the Iowa insurance commissioner, SHIP "did not back down" and, in April 2025, more than 480 SHIP policyholders in Iowa became the target of a mass mailing informing them of potential modifications to their policies.

The Iowa commissioner then sought a contempt finding against SHIP, Cantilo and the Pennsylvania insurance commissioner.

Defendants 'orchestrated' Pennsylvania order

Jospeh Gamble, one of the attorneys representing SHIP, the Pennsylvania commissioner and Castilo, argued in court filings that by offering Iowa policyholders the option of choosing the manner in which their benefits might be reduced, the defendants had been acting in the policyholders' best interests.

The Iowa commissioner, Gamble asserted, was "seeking only to punish the defendants for their desire to provide the best possible outcomes for policyholders based on the input of those policyholders."

Polk County District Court Judge Scott J. Beattie recently ruled in the Iowa commissioner's favor, noting that a showing of contempt would require proof the defendants had acted intentionally and deliberately "with bad purpose, evil, or wanton disregard for the rights of others."

The evidence, Beattie said, established beyond a reasonable doubt the defendants willfully and deliberately violated his injunction by pursuing "authorization" from the Pennsylvania court to take actions they knew were already prohibited by the Iowa injunction.

The defendants then notified Iowa policyholders of proposed rate and benefit changes, and asked policyholders to select rates or benefits other than those authorized by the Iowa commissioner.

The defendants' argument that "they were merely following a Pennsylvania court order does not excuse their contempt," Beattie found. "Defendants orchestrated and requested the Pennsylvania court order with full knowledge it would violate this court's injunction."

Beattie found that each of the letters sent to SHIP's 481 current Iowa policyholders constituted 481 separate acts of contempt of court. Similarly, a May 2025 mailing from SHIP directly the Iowa policyholders constituted an additional 481 acts of contempt, Beattie ruled.

Beattie assessed the defendants a $500 civil penalty for pursuing the Pennsylvania court order, plus a $500 civil penalty for each of the two letters SHIP or its representatives sent the 481 Iowa policyholders, for a total penalty of $481,500.

That penalty, Beattie ruled, is to be paid jointly by Jessica K. Altman in her official capacity as Pennsylvania's insurance commissioner, and by Patrick Cantilo, the special deputy rehabilitator. Additional sanctions may be imposed for any future violations, Beattie warned.

Iowan paid $107 per month for 27 years

In his ruling, Beattie cited testimony from Janet Galloway Huston, a 75-year-old retired attorney from Iowa. Huston had testified that she maintained her SHIP policy for long-term care since January 1998, paying $107 per month in premiums for over 27 years without ever receiving benefits under the policy.

Her policy, she testified, was to provide $253 per day for either assisted living or nursing facility care. Because assisted-living care in the Des Moines area costs $8,500 to $10,000 per month, she testified, her policy would cover roughly 60 percent of her actual costs.

Huston testified that she and her husband "went through a very massive financial structuring so that we could provide for ourselves. This was one of the pots, one of the ways that we could ensure our care in old age, and so it was definitely one of the pots that we elected to purchase the policy and relied on."

In her testimony, Huston expressed anger upon receiving SHIP's notification of a potential reductions in her benefits, explaining that "I do not have enough money in my current income and the other pots that I have available to me to sustain assisted living or long-term care" and would have to instead rely on Medicaid for her care.

"We relied upon the actuaries and the experts in the insurance field when my husband and I purchased these policies," she testified. "We relied upon the expertise provided by the insurance company that these benefits would be there long term."

The civil penalties imposed by Beattie deal only with the violations of the court's temporary injunction. Still to be decided are the larger issues that gave rise to the Iowa commissioner's lawsuit, which include allegations of violating Iowa insurance regulations.

A trial on those issues is scheduled for June 2026.