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The U.S. Supreme Court won’t hear a suit from Applied Underwriters Inc. based on a California Department of Insurance decision to place its affiliate under conservatorship.
Monday’s hearing was canceled by the court.
An official from CDI declined to comment about the Supreme Court ruling. Jeffrey Silver, Counsel for Applied Underwriters was reached for comment.
The U.S. Court of Appeals for the Ninth Circuit in June, 2022 affirmed a district court’s dismissal of federal actions in the Applied Underwriters lawsuit against the CDI for ordering a conservatorship of Applied Underwriters affiliate the California Insurance Co.
The Court of Appeals also ruled that a conservatorship of CIC by the CDI was “brought for a legitimate reason,” and called a merger of CIC during ongoing conservatorship efforts “an obvious attempt to avoid the California insurance regulatory regime.”
The Supreme Court decision on Monday is the latest in what has become an exceedingly complex and long-running case, involving a conservatorship of an insurance carrier, a battle between the CDI and the New Mexico’s insurance department that drew New Mexico’s attorney general into the fray.
California Insurance Company of New Mexico sued the CDI in federal court to stop it from taking actions that the suit claims are illegal. These include blocking the redomestication of CIC, and to make CIC financially unsound by creating a conservatorship.
The suit came after the Office of the Superintendent of Insurance in New Mexico ordered CIC either to comply immediately with all regulations required under its approved redomestication to New Mexico or face financial penalties and possible revocation of the Company’s Certificate of Authority. CDI approved placing CIC under conservatorship. The CDI also filed a rehabilitation plan to force CIC’s California operations to be sold to an insurer.
CIC charges Lara and the other officials named with “unlawful” and “bad faith” action in imposing an arbitrary, illogical and illegal conservatorship of CIC to obstruct its New Mexico redomestication, after that move was approved by several states.
The suit asserts the CDI has continued to wage a bad faith campaign to harm CIC by prohibiting the company from transferring its assets and its business to New Mexico in compliance with the approved redomestication and the Order of New Mexico’s Superintendent of Insurance in October of 2019.
Applied Underwriters has its headquarters in Omaha, Neb. California Insurance Co. holds an A.M. Best Rating of “A.” The case is Applied Underwriters, Inc., a Nebraska Corporation. Applied Risk Services, Inc., a Nebraska Corporation. V. RICARDO LARA, California Insurance Commissioner, in his official capacity.
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