ENROLLED
COMMITTEE SUBSTITUTE
FOR
H. B. 2914
(By Delegates H. White, Hrutkay and R. M. Thompson)
[Passed March 11, 2004; in effect ninety days from passage.]
AN ACT to repeal §33-10-27 of the code of West Virginia, 1931, as
amended; to repeal §33-24-15, §33-24-16, §33-24-17, §33-24-18,
§33-24-19, §33-24-21, §33-24-22, §33-24-23, §33-24-24, §33-24-
25, §33-24-26, §33-24-27, §33-24-28, §33-24-29, §33-24-30,
§33-24-31, §33-24-32, §33-24-33, §33-24-34, §33-24-35, §33-24-
36, §33-24-37, §33-24-38, §33-24-39, §33-24-40, §33-24-41 and
§33-24-42 of said code; to amend and reenact §33-10-1, §33-10-
2, §33-10-3, §33-10-4, §33-10-10, §33-10-11, §33-10-13, §33-
10-14, §33-10-18, §33-10-19a, §33-10-26, §33-10-28, §33-10-29,
§33-10-30, §33-10-36, §33-10-38 and §33-10-39 of said code; to
amend said code by adding thereto ten new sections, designated
§33-10-4a, §33-10-4b, §33-10-4c, §33-10-4d, §33-10-4e, §33-10-
26a, §33-10-26b, §33-10-26c, §33-10-26d and §33-10-40; and to
amend and reenact §33-24-14 of said code, all relating to the
rehabilitation and liquidation of insurers subject to the regulatory authority of the West Virginia insurance
commissioner; revising delinquency proceedings; clarifying
what parties will be affected upon the effective date of the
revisions; expanding the liquidators' powers; expediting
hearings and appeals; modifying current state law relative to
liquidation proceedings so as to create conformity with recent
federal case law; and making numerous technical changes.
Be it enacted by the Legislature of West Virginia:
That §33-10-27 of the code of West Virginia, 1931, as amended,
be repealed; that §33-24-15, §33-24-16, §33-24-17, §33-24-18, §33-
24-19, §33-24-21, §33-24-22, §33-24-23, §33-24-24, §33-24-25, §33-
24-26, §33-24-27, §33-24-28, §33-24-29, §33-24-30, §33-24-31, §33-
24-32, §33-24-33, §33-24-34, §33-24-35, §33-24-36, §33-24-37, §33-
24-38, §33-24-39, §33-24-40, §33-24-41 and §33-24-42 of said code
be repealed; that §33-10-1, §33-10-2, §33-10-3, §33-10-4, §33-10-
10, §33-10-11, §33-10-13, §33-10-14, §33-10-18, §33-10-19a, §33-10-
26, §33-10-28, §33-10-29, §33-10-30, §33-10-36, §33-10-38 and §33-
10-39 of said code be amended and reenacted; that said code be
amended by adding thereto ten new sections, designated §33-10-4a,
§33-10-4b, §33-10-4c, §33-10-4d, §33-10-4e, §33-10-26a, §33-10-26b,
§33-10-26c, §33-10-26d and §33-10-40; and that §33-24-14 of said
code be amended and reenacted, all to read as follows:
ARTICLE 10. REHABILITATION AND LIQUIDATION.
§33-10-1. Definitions.
For the purpose of this article, the following definitions
shall apply:
(a) "Impairment" means a financial situation in which, based
upon the financial information which would be required by this
chapter for the preparation of the insurer's annual statement, the
assets of an insurer are less than the sum of all of its
liabilities and required reserves including any minimum capital or
surplus or both required of that insurer by this chapter so as to
maintain its authority to transact the kinds of business or
insurance it is so authorized to transact.
(b) "Insolvency" or "insolvent" means a financial situation
in which, based upon the financial information which would be
required by this chapter for the preparation of the insurer's
annual statement, the assets of the insurer are less than the sum
of all of its liabilities and required reserves.
(c) "Insurer" means any person, firm, corporation,
association or aggregation of persons doing an insurance business
and which is or has been subject to the insurance supervisory
authority of, or to liquidation, rehabilitation, reorganization or
conservation by, the commissioner or the equivalent insurance
supervisory official of another state. For purposes of this
article, all persons, corporations, associations or entities to
whom this article applies and which are subject to delinquency
proceedings commenced in this state shall be considered "insurers".
(d) "Delinquency proceeding" means any proceeding commenced
against an insurer pursuant to this article for the purpose of
liquidating, rehabilitating, reorganizing or conserving the insurer
and any summary proceeding under section thirty-six of this
article. "Formal delinquency proceeding" means any liquidation or
rehabilitation proceeding.
(e) "State" means any state, district or territory of the
United States.
(f) "Foreign country" means any other jurisdiction not in any
state.
(g) "Domiciliary state" means the state in which an insurer
is incorporated or organized, or in the case of an alien insurer as
defined in section eight, article one of this chapter, the state in
which such insurer, having become authorized to do business in such
state, has at the commencement of delinquency proceedings, the
largest amount of its assets held in trust and assets held on
deposit for the benefit of its policyholders or policyholders and
creditors in the United States or its state of entry.
(h) "Ancillary state" means any state other than a
domiciliary state.
(i) "Reciprocal state" means any state other than this state
in which in substance and effect the provisions of the uniform
insurers liquidation act, as defined in section twenty-one of this
article, are in force, and in which provisions are in force requiring that the insurance commissioner or equivalent insurance
supervisory official be the receiver of a delinquent insurer, and
in which some provision exists for the avoidance of fraudulent
conveyances and preferential transfers.
(j) "General assets" means all property, real, personal or
otherwise, not specifically mortgaged, pledged, deposited or
otherwise encumbered for the security or benefit of specified
persons or a limited class or classes of persons and as to such
specifically encumbered property, the term includes all such
property or its proceeds in excess of the amount necessary to
discharge the sum or sums secured thereby. Assets held in trust
and assets held on deposit for the security or benefit of all
policyholders or all policyholders and creditors in more than a
single state shall be considered general assets.
(k) "Preferred claim" means any claim with respect to which
the terms of this article accord priority of payments from the
general assets of the insurer.
(
l) "Special deposit claim" means any claim secured by a
deposit made pursuant to statute for the security or benefit of a
limited class or classes of persons, but not including any general
assets.
(m) "Secured claim" means any claim secured by mortgage,
trust deed, pledge, deposit as security, escrow, or otherwise, but
not including special deposit claim or claims against general assets. The term also includes claims which more than four months
prior to the commencement of delinquency proceedings in the state
of the insurer's domicile have become liens upon specific assets by
reason of judicial process.
(n) "Receiver" means receiver, liquidator, rehabilitator or
conservator as the context may require.
(o) "Guaranty association" means the West Virginia insurance
guaranty association created by article twenty-six of this chapter,
the West Virginia life and health insurance guaranty association
act created by article twenty-six-a of this chapter and any other
similar entity now or hereafter created by the Legislature of this
state for the payment of claims of insolvent insurers.
(p) "Foreign guaranty association" means any entities now in
existence in or hereafter created by the Legislature of any other
state that are similar to the entities described in subsection (o)
of this section.
(q) "Surplus" means the amount by which an insurer's assets
exceeds its liabilities and required reserves based upon the
financial information which would be required by this chapter for
the preparation of the insurer's annual statement.
(r) "Affiliate" or a person "affiliated with" a specific
person means a person that, directly or indirectly, through one or
more intermediaries, controls, or is controlled by, or is under
common control with the person specified.
(s) "Control" means the possession, direct or indirect, of
the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting
securities, by contract other than a commercial contract for goods
or nonmanagement services, or otherwise, unless the power is the
result of an official position with or corporate office held by the
person. Control shall be presumed to exist if any person, directly
or indirectly, owns, controls, holds with the power to vote, or
holds proxies representing ten percent or more of the voting
securities of any other person. This presumption may be rebutted
by a showing that control does not, in fact, exist.
(t) "Transfer" means the sale and every other and different
mode, direct or indirect, of disposing of or of parting with
property or an interest therein, absolutely or conditionally,
voluntarily, by or without judicial proceedings. The retention of
a security title to property delivered to a debtor is considered a
transfer suffered by the debtor.
§33-10-2. Jurisdiction, venue and appeal of delinquency
proceedings; exclusive remedy.
(a) The circuit courts of this state or the judges thereof in
vacation are vested with exclusive original jurisdiction of
delinquency proceedings under this article, and are authorized to
make all necessary and proper orders to carry out the purposes of
this article.
(b) The venue of delinquency proceedings against a domestic
insurer shall be in the circuit court of the county of the
insurer's principal place of business. The venue of such
proceedings against foreign insurers, alien insurers or domestic
insurers in which their principal place of business is outside of
the state of West Virginia shall be in the circuit court of Kanawha
County.
(c) With the exception of administrative supervision pursuant
to article thirty-four of this chapter, delinquency proceedings
pursuant to this article shall constitute the sole and exclusive
method of liquidating, rehabilitating, reorganizing or conserving
an insurer and no court shall entertain a petition for the
commencement of such proceedings unless the same has been filed in
the name of the state on the relation of the insurance
commissioner.
(d) An appeal shall lie to the West Virginia Supreme Court of
Appeals from an order granting or refusing rehabilitation,
liquidation or conservation and from every other order in
delinquency proceedings having the character of a final order as to
the particular portion of the proceedings embraced therein.
Appeals from orders granting or refusing rehabilitation,
liquidation or conservation shall be prosecuted pursuant to section
four-d of this article.
(e) At any time after an order is made under section ten or eleven of this article, the commissioner may remove the principal
office of the insurer proceeded against to Kanawha County. In the
event of such removal, the court wherein the proceeding was
originally commenced shall, upon the application of the
commissioner, direct its clerk to transmit all the pleadings,
motions and other papers filed therein with such clerk to the clerk
of the circuit court of Kanawha County. The proceeding shall
thereafter be subject to the jurisdiction of the Kanawha County
circuit court and conducted in the same manner as though it had
been commenced in the Kanawha County circuit court.
§33-10-3. Court's seizure order.
(a) The commissioner may file in the appropriate circuit
court of this state, as provided in section two of this article, a
petition alleging, with respect to a domestic insurer:
(1) That there exist any grounds that would justify a court
order for a formal delinquency proceeding against an insurer under
this act;
(2) That the interests of policyholders, creditors or the
public will be endangered by delay; and
(3) The contents of an order considered necessary by the
commissioner.
(b) Upon a filing under subsection (a) of this section, the
court may issue forthwith, ex parte and without a hearing, the
requested order which shall direct the commissioner to take possession and control of all or a part of the assets, books,
accounts, documents and other records of an insurer and of the
premises occupied by it for transaction of its business; and until
further order of the court enjoin the insurer and its officers,
managers, agents and employees from disposition of its property and
from the transaction of its business except with the written
consent of the commissioner.
(c) The court shall specify in the order what its duration
shall be, which shall be the time as the court considers necessary
for the commissioner to ascertain the condition of the insurer. On
motion of either party or on its own motion, the court may, from
time to time, hold hearings as it considers desirable after notice
that it considers appropriate and may extend, shorten or modify the
terms of the seizure order. The court shall vacate the seizure
order if the commissioner fails to commence a formal delinquency
proceeding under this article after having had a reasonable
opportunity to do so. An order of the court pursuant to a formal
proceeding under this article shall ipso facto vacate the seizure
order.
(d) Entry of a seizure order under this section will not
constitute an anticipatory breach of any contract of the insurer.
(e) An insurer subject to an ex parte order under this
section may petition the court at any time after the issuance of
the order for a hearing and review of the order. The court shall hold the hearing and review not more than fifteen days after the
request. Subject to the approval of the court, a hearing under
this subsection may be held privately in chambers if the insurer
proceeded against so requests.
(f) If, at any time after the issuance of such an order, it
appears to the court that any person whose interest is or will be
substantially affected by the order did not appear at the hearing
and has not been served, the court may order that notice be given.
An order that notice be given will not stay the effect of any order
previously issued by the court.
§33-10-4. Injunctions and other orders.
(a) Upon application by the commissioner for an order under
this article:
(1) The court may without notice issue an injunction
restraining the insurer, its officers, directors, stockholders,
members, subscribers, agents and all other persons from the
transaction of its business or the waste or disposition of its
property until further order of the court.
(2) The court may at any time during a proceeding under this
article issue other injunctions or orders as may be considered
necessary to prevent interference with the commissioner or the
proceeding, or waste of the assets of the insurer, or the
commencement or prosecution of any actions, or the obtaining of
preferences, judgments, attachments or other liens, or the making of any levy against the insurer or against its assets or any part
thereof.
(3) The court may order any managing general agent or
attorney-in-fact to release to the commissioner any books, records,
accounts, documents or other writings relating to the business of
such person:
Provided, That any of the same or the property of an
agent or attorney shall be returned when no longer necessary to the
commissioner or at any time the court after notice and hearing
shall so direct.
(b) Any person having possession of and refusing to deliver
any of the books, records or assets of an insurer against whom a
seizure order has been issued by the court shall be guilty of a
misdemeanor and punishable by fine not exceeding one thousand
dollars or imprisoned not more than one year, or both fine and
imprisonment.
(c) Whenever the commissioner makes any seizure as provided
in section three of this article, it shall be the duty of the
sheriff of any county of this state, and of the police department
of any municipality therein, to furnish the commissioner, upon
demand, with such deputies, patrolmen or officers as may be
necessary to assist the commissioner in making and enforcing any
seizure.
(d) Notwithstanding any other provision of law, no bond shall
be required of the commissioner as a prerequisite for the issuance of any injunction or restraining order pursuant to this section.
§33-10-4a. Commencement of formal delinquency proceeding.
(a) Any formal delinquency proceeding against a person shall
be commenced by filing a petition in the name of the commissioner.
(b) The petition shall state the grounds upon which the
proceeding is based and the relief requested, and may include a
prayer for restraining orders and injunctive relief as described in
section four of this article.
(c) Any petition that prays for a temporary restraining order
must be verified by the commissioner or the commissioner's
designee, but need not plead or prove irreparable harm or
inadequate remedy by law. The commissioner shall provide only such
notice as the court may require.
(d) If any temporary restraining order is prayed for:
(1) The court may issue an initial order containing the
relief requested;
(2) The order shall state the time and date of its issuance;
(3) The court shall set a time and date for the return of
summons, not more than ten days from the time and date of the
issuance of the initial order, at which time the person proceeded
against may appear before the court for a summary hearing;
(4) The order shall not continue in effect beyond the time
and date set for the return of summons, unless the court shall
expressly enter one or more orders extending the restraining order; and
(5) The verified petition shall be filed with the clerk of
the circuit court and maintained as confidential, except for good
cause shown, until service of the petition and summons is effected.
(e) If no temporary restraining order is requested, the court
shall cause a summons to be issued. The summons shall specify a
return date not more than thirty days after issuance and that an
answer to the petition must be filed at or before the return date.
(f) Service of process required pursuant to this article
shall be upon the person named in the petition in accordance with
the West Virginia rules of civil procedure.
§33-10-4b. Return of summons and summary hearing.
(a) The court shall hold a summary hearing at the time and
date for the return of summons.
(b) If a person is not served with the petition and summons
and fails to appear for the summary hearing, the court shall:
(1) Continue the summary hearing not more than ten days;
(2) Require the commissioner to make additional or
alternative attempts at service of the petition and summons upon
the person; and
(3) Extend any restraining order.
(c) Upon a showing of good faith efforts to effect service
upon a person who has failed to appear for a continued summary
hearing, the court shall order notice of the petition to be published. The order and notice shall specify a return date not
less than ten nor more than twenty days after the publication and
that the restraining order has been extended to the continued
hearing date.
(d) If a person fails to appear for a summary hearing after
service of the summons, the court shall enter judgment in favor of
the commissioner against that person.
(e) A person who appears for the summary hearing shall file
its answer at the hearing and the court shall:
(1) Determine whether to extend any temporary restraining
orders pending final judgment; and
(2) Set the case for trial on a date not more than ten days
from the summary hearing.
(f) The court shall grant no continuance for filing an
answer.
§33-10-4c. Proceedings for expedited trial, continuances,
discovery, evidence.
(a) The court shall hear the case at the time and date set
forth for trial without a jury and without unnecessary delays. To
the extent not inconsistent with other laws or applicable rules,
the court shall give priority to the matter over all other matters.
To the extent otherwise authorized by law or applicable rules, the
court may assign the matter to other judges if necessary to comply
with the need for expedited proceedings under this article.
(b) Continuances for trial shall be granted only in extreme
circumstances.
(c) The court shall receive as self-authenticated any of the
following when offered by the commissioner:
(1) Certified copies of the financial statements made by the
person; and
(2) Certified copies of examination reports of the person
made by or on behalf of the commissioner.
(d) The facts contained in any such examination report shall
be presumed to be true as of the date of the hearing if the
examination was made as of a date not more than two hundred seventy
days before the petition was filed. This presumption shall be
rebuttable and shall shift the burden of production and persuasion.
(e) Discovery shall be limited to grounds alleged in the
petition, and shall be concluded on an expedited basis.
§33-10-4d. Decision and appeals.
(a) The court shall enter judgment within fifteen days or as
soon as practicable after the conclusion of the evidence.
(b) The judgment shall be final when entered. Any appeal
shall be prosecuted on an expedited basis and must be filed within
five days of entry. No request for reconsideration, review or
appeal and no posting of a bond shall dissolve or stay the
judgment.
§33-10-4e. Confidentiality.
(a) In all proceedings and judicial reviews under section
four of this article, all records of the insurer, other documents
and all insurance department files and court records and papers, so
far as they pertain to or are a part of the record of the
proceedings, shall be and remain confidential and all papers filed
with the clerk of the circuit court shall be held by the clerk in
a confidential file, except as is necessary to obtain compliance
with any order entered in connection with the proceedings, unless
and until:
(1) The circuit court, after hearing argument in chambers,
shall order otherwise;
(2) The insurer requests that the matter be made public; or
(3) The commissioner applies for an order under section ten
or eleven of this article.
(b) The commissioner may share documents, materials or other
information in his or her possession or control pertaining to an
insurer that is the subject of a proceeding under this article with
other state insurance departments, the national association of
insurance commissioners, and federal banking agencies in accordance
with section nineteen, article two of this chapter. No waiver of
any applicable privilege or claim of confidentiality shall occur as
a result of disclosure by the commissioner under this section or as
a result of sharing documents, materials or other information
pursuant to this subsection.
§33-10-10. Order of rehabilitation.
(a) An order to rehabilitate a domestic insurer or the United
States branch of an alien insurer having trusteed assets in this
state shall direct the commissioner forthwith to take possession of
the assets of the insurer and to conduct the business thereof, and
to take such steps toward removal of the causes and conditions
which have made rehabilitation necessary as the court may direct.
(b) If at any time the commissioner deems that further
efforts to rehabilitate the insurer would be useless, he or she may
apply to the court for an order of liquidation.
(c) The commissioner, or any interested person upon due
notice to the commissioner, at any time may apply to the court for
an order terminating the rehabilitation proceedings and permitting
the insurer to resume possession of its property and the conduct of
its business, but no such order shall be granted except when, after
a full hearing, the court has determined that the purposes of the
proceeding have been fully accomplished.
§33-10-11. Order of liquidation of domestic insurer.
(a) An order to liquidate the business of a domestic insurer
shall direct the commissioner forthwith to take possession of the
assets of the insurer, to liquidate its business, to deal with the
insurer's property and business in his or her own name as insurance
commissioner or in the name of the insurer, as the court may direct, and to give notice to all creditors who may have claims
against the insurer to present their claims.
(b) The commissioner may apply for and secure an order
dissolving the corporate existence of a domestic insurer upon his
or her application for an order of liquidation of the insurer or at
any time after such order has been granted.
§33-10-13. Order of conservation or ancillary liquidation of
foreign or alien insurers.
(a) An order to conserve the assets of a foreign or alien
insurer shall require the commissioner forthwith to take possession
of the assets of the insurer within this state and to conserve it,
subject to the further direction of the court.
(b) An order to liquidate the assets in this state of a
foreign insurer shall require the commissioner forthwith to take
possession of the assets of the insurer within this state and to
liquidate it subject to the orders of the court and with due regard
to the rights and powers of the domiciliary receiver, as provided
in this article.
§33-10-14. Conduct of delinquency proceedings against domestic or
alien insurers.
(a) Whenever under this article a receiver is to be appointed
in delinquency proceedings for a domestic or alien insurer, the
court shall appoint the insurance commissioner as the receiver.
The court shall order the commissioner forthwith to take possession of the assets of the insurer and to administer the same under the
orders of the court.
(b) As domiciliary receiver, the commissioner shall be vested
by operation of law with the title to all the property, contracts
and rights of action and all of the books and records of the
insurer, wherever located, as of the date of entry of the order
directing him or her to rehabilitate or liquidate a domestic
insurer or to liquidate the United States branch of an alien
insurer domiciled in this state and he or she shall have the right
to recover the same and reduce the same to possession; except that
ancillary receivers in reciprocal states shall have, as to assets
located in their respective states, the rights and powers which are
prescribed in this section for ancillary receivers appointed in
this state as to assets located in this state.
(c) The recording of a certified copy of the order directing
possession to be taken in the office of the clerk of the county
commission of the county where the proceedings are pending and in
the office of the clerk of the county commission of any county
wherein the insurer has property or other assets, recorded in the
same manner as deeds to real property are recorded, shall impart
the same notice as would be imparted by a deed, bill of sale or
other evidence of title duly recorded or filed.
(d) The commissioner as domiciliary receiver shall be
responsible for the proper administration of all assets coming into his or her possession or control. The court may at any time
require a bond from the commissioner or his or her deputies if
considered desirable for the protection of the assets. The cost of
the bond shall be paid out of the assets of the insurer as a cost
of administration.
(e) Upon taking possession of the assets of an insurer, the
domiciliary receiver shall, subject to the direction of the court,
immediately proceed to conduct the business of the insurer or to
take such steps as are authorized by this article for the purpose
of rehabilitating, liquidating or conserving the affairs or assets
of the insurer.
(f) In connection with delinquency proceedings, the
commissioner may appoint one or more special deputy commissioners
of insurance to act for him or her and may employ such counsel,
clerks and assistants as he or she considers necessary. The
compensation of the special deputies, counsel, clerks or assistants
and all expenses of taking possession of the insurer and of
conducting the proceedings shall be fixed by the receiver, subject
to the approval of the court and shall be paid out of the funds or
assets of the insurer. In the event the property of such person
does not contain cash or liquid assets sufficient to defray the
cost of the service required to be performed under the terms of
this article, the commissioner may pay the cost of the services
first out of the commissioner's closed estate fund account. If the moneys in the closed estate fund account are insufficient to fully
defray the cost of the services required under the terms of this
article, the commissioner may pay the costs out of the
commissioner's "operating - additional fees" account. Any amount
so paid from either account shall be considered to be expenses of
administration and shall be repaid to the appropriate account out
of the first available moneys in the estate.
(g) Within the limits of duties imposed upon them, special
deputies shall possess all the powers given to and, in the exercise
of those powers, shall be subject to all of the duties imposed upon
the receiver with respect to such proceedings. All transactions
involving estate accounts shall be reconciled quarterly by a
special deputy commissioner appointed pursuant to subsection (f) of
this section and reported to the commissioner. An annual audit of
any special deputy commissioner appointed under this section may be
conducted, at the discretion of the commissioner, by an
independent, outside certified public accountant. The cost of this
audit shall be allocated among the estates of the companies in
conservation, rehabilitation or liquidation on a basis of
allocation established by the commissioner.
§33-10-18. Proof of claims.
(a) All claims against an insurer against which delinquency
proceedings have begun shall set forth all of the following that
are applicable:
(1) In reasonable detail, the amount of the claim, or the
basis upon which the amount can be ascertained;
(2) The facts upon which the claim is based, including any
consideration given for it;
(3) The priorities asserted, if any;
(4) The identity and amount of any security on the claim;
(5) The payments made on the debt, if any; and
(6) A statement that the sum claimed is justly owing and
whether there is a right of setoff, counterclaim or defense to the
claim.
(b) All claims shall be verified by the affidavit of the
claimant, or someone authorized to act on his or her behalf and
having knowledge of the facts and shall be supported by any
documents as may be material thereto.
(c) All claims filed in this state shall be filed with the
receiver, whether domiciliary or ancillary, in this state on or
before the last date for filing as specified in this article.
(d) When a claim is denied, in whole or in part, by the
liquidator, written notice of the determination shall be given to
the claimant or his or her attorney by first class mail at the
address shown in the proof of claim. Within sixty days from the
mailing of the notice, the claimant may file his or her objections
with the liquidator. If no such filing is made, the claimant may
not further object to the determination.
(e) Whenever objections are filed with the liquidator and the
liquidator does not alter his or her denial of the claim as a
result of the objections, the liquidator shall ask the court for a
hearing as soon as practicable and give notice of the hearing by
first class mail to the claimant or his or her attorney and to any
other persons directly affected, not less than ten nor more than
thirty days before the date of the hearing. The matter may be
heard by the court or by a court-appointed referee who shall submit
findings of fact along with his or her recommendation. Upon
receipt of the report, the court shall fix a time for hearing the
claim and shall direct that the claimant or the receiver, as the
court shall specify, shall give such notice as the court shall
determine to any persons as shall appear to the court to be
interested therein. All such notices shall specify the time and
place of the hearing and shall concisely state the amount and
nature of the claim, the priorities asserted, if any, and the
recommendation of the receiver with reference thereto.
(f) At the hearing, all persons interested shall be entitled
to appear and the court shall enter an order allowing, allowing in
part, or disallowing the claim. Any such order shall be considered
an appealable order.
§33-10-19a. Priority of distribution.
The priority of distribution of claims from the insurer's
estate shall be in accordance with the order in which each class of claims is herein set forth. Every claim in each class shall be
paid in full or adequate funds retained for such payment before the
members of the next class receive any payment. No subclasses may
be established within any class. No claim by a shareholder,
policyholder or other creditor may be permitted to circumvent the
priority classes through the use of equitable remedies. The order
of distribution shall be:
(a) Class I. The costs and expenses of administration,
including, but not limited to, the following:
(1) The actual and necessary costs of preserving or
recovering the assets of the insurer;
(2) Compensation for all authorized services rendered in the
liquidation;
(3) Any necessary filing fees;
(4) The fees and mileage payable to witnesses;
(5) Reasonable attorney's fees and fees for other
professional services rendered in the proceeding; and
(6) All expenses incurred by the department of insurance
arising out of the enforcement of chapter thirty-three and its
rules.
(b) Class II. All claims for refund of unearned premiums
under nonassessable policies and all claims of policyholders
including claims of the federal or any state or local government as
policyholders for losses incurred; third party claims of an insolvent insurer; and all reasonable claims of the West Virginia
insurance guaranty associations and associations or entities
performing a similar function in other states.
(c) Class III. Claims of the federal government other than
as an insured policyholder.
(d) Class IV. Debts due to employees for compensation,
which may not exceed two months of monetary compensation and must
represent payment for services performed within six months before
the filing of the petition for liquidation, or, if rehabilitation
preceded liquidation, within one year before the filing of the
petition for rehabilitation. Principal officers and directors
shall not be entitled to the benefit of this priority except as
otherwise approved by the liquidator and the court. This priority
shall be in lieu of any other similar priority which may be
authorized by law as to wages or compensation of employees.
(e) Class V. Claims of general creditors including claims of
ceding and assuming companies in their capacity as such.
(f) Class VI. Claims of any state or local government.
Claims, including those of any governmental body for a penalty or
forfeiture, shall be allowed in this class only to the extent of
the pecuniary loss sustained from the act, transaction or
proceeding out of which the penalty or forfeiture arose, with
reasonable and actual costs occasioned thereby. The remainder of such claims shall be postponed to the class of claims under
subsection (h) of this section.
(g) Class VII. Claims filed late or any other claims other
than claims under subsection (h) of this section.
(h) Class VIII. Surplus or contribution notes, or similar
obligations and premium refunds on assessable policies. Payments
to members of domestic mutual corporations shall be limited in
accordance with law.
(i) Class IX. The claims of shareholders or other owners.
§33-10-26. Voidable preferences and liens.
(a) A preference is a transfer of any of the property of an
insurer to or for the benefit of a creditor, for or on account of
an antecedent debt, made or suffered by the insurer within one year
before the filing of a successful petition for liquidation under
this article, the effect of which transfer may be to enable the
creditor to obtain a greater percentage of this debt than another
creditor of the same class would have otherwise received. If a
liquidation order is entered while the insurer is already subject
to a rehabilitation order, then the transfers shall be deemed
preferences if made or suffered within one year before the filing
of the successful petition for rehabilitation, or within two years
before the filing of the successful petition for liquidation,
whichever time is shorter.
(b) Any preference may be avoided by the liquidator if the
insurer was insolvent at the time of the transfer; and
(1) The transfer was made within four months before the
filing of the petition; or
(2) The creditor receiving it or to be benefited thereby or
his or her agent acting with reference thereto had, at the time
when the transfer was made, reasonable cause to believe that the
insurer was insolvent or was about to become insolvent; or
(3) The creditor receiving it was an officer, or any employee
or attorney or other person who was in fact in a position of
comparable influence in the insurer to an officer whether or not he
or she held such position, or any shareholder holding directly or
indirectly more than five percent of any class of any equity
security issued by the insurer, or any other person, firm,
corporation, association or aggregation of persons with whom the
insurer did not deal at arm's length.
(c) Where the preference is voidable, the liquidator may
recover the property or, if it has been converted, its value from
any person who has received or converted the property; except where
a bona fide purchaser or lienor has given less than fair equivalent
value, the purchaser or lienor shall have a lien upon the property
to the extent of the consideration actually given. Where a
preference by way of lien or security title is voidable, the court
may on due notice order the lien or title to be preserved for the benefit of the estate, in which event the lien or title shall pass
to the liquidator.
(d) A transfer under this section will be considered to have
been made as follows:
(1) A transfer of property other than real property shall be
deemed to be made or suffered when it becomes so far perfected that
no subsequent lien obtainable by legal or equitable proceedings on
a simple contract could become superior to the rights of the
transferee.
(2) A transfer of real property shall be deemed to be made or
suffered when it becomes so far perfected that no subsequent bona
fide purchaser from the insurer could obtain rights superior to the
rights of the transferee.
(3) A transfer which creates an equitable lien will not be
deemed to be perfected if there are available means by which a
legal lien could be created.
(4) A transfer not perfected prior to the filing of a
petition for liquidation shall be deemed to be made immediately
before the filing of the successful petition.
(5) The provisions of this subsection apply whether or not
there are or were creditors who might have obtained liens or
persons who might have become bona fide purchasers.
(e)(1) A lien obtainable by legal or equitable proceedings
upon a simple contract is one arising in the ordinary course of the proceedings upon the entry or docketing of a judgment or decree, or
upon attachment, garnishment, execution or like process, whether
before, upon or after judgment or decree and whether before or upon
levy. It does not include liens which under applicable law are
given a special priority over other liens which are prior in time.
(2) A lien obtainable by legal or equitable proceedings could
become superior to the rights of a transferee, or a purchaser could
obtain rights superior to the rights of a transferee within the
meaning of subsection (d) of this section, if such consequences
would follow only from the lien or purchase itself, or from the
lien or purchase followed by any step wholly within the control of
the respective lienholder or purchaser, with or without the aid of
ministerial action by public officials. A lien could not, however,
become superior and such a purchase could not create superior
rights for the purpose of subsection (d) of this section through
any acts subsequent to the obtaining of such a lien or subsequent
to such a purchase which require the agreement or concurrence of
any third party or which require any further judicial action or
ruling.
(f) A transfer of property for or on account of a new and
contemporaneous consideration which is considered under subsection
(d) of this section to be made or suffered after the transfer
because of delay in perfecting it does not thereby become a
transfer for or on account of an antecedent debt if any acts required by the applicable law to be performed in order to perfect
the transfer as against liens or bona fide purchasers' rights are
performed within twenty-one days or any period expressly allowed by
the law, whichever is less. A transfer to secure a future loan, if
such a loan is actually made, or a transfer which becomes security
for a future loan, shall have the same effect as a transfer for or
on account of a new and contemporaneous consideration.
(g) If any lien deemed voidable under subsection (b) of this
section has been dissolved by the furnishing of a bond or other
obligation, the surety on which has been indemnified directly or
indirectly by the transfer of or the creation of a lien upon any
property of an insurer before the filing of a petition under this
article which results in a liquidation order, the indemnifying
transfer or lien shall also be considered voidable.
(h) The property affected by any lien considered voidable
under subsections (a), (b) and (g) of this section shall be
discharged from the lien and that property and any of the
indemnifying property transferred to or for the benefit of a surety
shall pass to the liquidator, except that the court may on due
notice order any such lien to be preserved for the benefit of the
estate and the court may direct that such conveyance be executed as
may be proper or adequate to evidence the title of the liquidator.
(i) The circuit court shall have summary jurisdiction of any
proceeding by the liquidator to hear and determine the rights of any parties under this section. Reasonable notice of any hearing
in the proceeding shall be given to all parties in interest,
including the obligee of a releasing bond or other like obligation.
Where an order is entered for the recovery of indemnifying property
in kind or for the avoidance of an indemnifying lien the court,
upon application of any party in interest, shall in the same
proceeding ascertain the value of the property or lien and if the
value is less than the amount for which the property is indemnity
or than the amount of the lien, the transferee or lienholder may
elect to retain the property or lien upon payment of its value, as
ascertained by the court, to the liquidator within such reasonable
times as the court shall fix.
(j) The liability of the surety under a releasing bond or
other like obligation shall be discharged to the extent of the
value of the indemnifying property recovered or the indemnifying
lien nullified and avoided by the liquidator or where the property
is retained under subsection (i) of this section to the extent of
the amount paid to the liquidator.
(k) If a creditor has been preferred, and afterward in good
faith gives the insurer further credit without security of any
kind, for property which becomes a part of the insurer's estate,
the amount of the new credit remaining unpaid at the time of the
petition may be set off against the preference which would
otherwise be recoverable from him or her.
(
l) If an insurer shall, directly or indirectly, within four
months before the filing of a successful petition for liquidation
under this article, or at any time in contemplation of a proceeding
to liquidate it, pay money or transfer property to an
attorney-at-law for services rendered or to be rendered, the
transactions may be examined by the court on its own motion or
shall be examined by the court on petition of the liquidator and
shall be held valid only to the extent of a reasonable amount to be
determined by the court and the excess may be recovered by the
liquidator for the benefits of the estate provided that where the
attorney is in a position of influence in the insurer or an
affiliate thereof payment of any money or the transfer of any
property to the attorney-at-law for services rendered or to be
rendered shall be governed by the provision of subdivision (3),
subsection (b) of this section.
(m)(1) Every officer, manager, employee, shareholder, member,
subscriber, attorney or any other person acting on behalf of the
insurer who knowingly participates in giving any preference when he
or she has reasonable cause to believe the insurer is or is about
to become insolvent at the time of the preference shall be
personally liable to the liquidator for the amount of the
preference. It is permissible to infer that there is a reasonable
cause to so believe if the transfer was made within four months before the date of filing of this successful petition for
liquidation.
(2) Every person receiving any property from the insurer or
the benefit thereof as a preference voidable under subsections (a)
and (b) of this section shall be personally liable therefor and
shall be bound to account to the liquidator.
(3) Nothing in this subsection shall prejudice any other
claim by the liquidator against any person.
§33-10-26a. Fraudulent transfers prior to petition.
(a) Every transfer made or suffered and every obligation
incurred by an insurer within one year prior to the filing of a
successful petition for rehabilitation or liquidation under this
article is fraudulent as to then existing and future creditors if
made or incurred without fair consideration, or with actual intent
to hinder, delay or defraud either existing or future creditors.
A transfer made or an obligation incurred by an insurer ordered to
be rehabilitated or liquidated under this article, which is
fraudulent under this section, may be avoided by the receiver,
except as to a person who in good faith is a purchaser, lienor or
obligee for a present fair equivalent value and except that any
purchaser, lienor or obligee, who in good faith has given a
consideration less than fair for such transfer, lien or obligation,
may retain the property, lien or obligation as security for
repayment. The court may, on due notice, order any such transfer or obligation to be preserved for the benefit of the estate and in
that event, the receiver shall succeed to and may enforce the
rights of the purchaser, lienor or obligee.
(b) A transfer under this section will be considered to have
been made as follows:
(1) A transfer of property other than real property shall be
deemed to be made or suffered when it becomes so far perfected that
no subsequent lien obtainable by legal or equitable proceedings on
a simple contract could become superior to the rights of the
transferee under subsection (e), section twenty-six of this
article.
(2) A transfer of real property shall be deemed to be made or
suffered when it becomes so far perfected that no subsequent bona
fide purchaser from the insurer could obtain rights superior to the
rights of the transferee.
(3) A transfer which creates an equitable lien shall not be
deemed to be perfected if there are available means by which a
legal lien could be created.
(4) Any transfer not perfected prior to the filing of a
petition for liquidation shall be deemed to be made immediately
before the filing of the successful petition.
(5) The provisions of this subsection apply whether or not
there are or were creditors who might have obtained any liens or
persons who might have become bona fide purchasers.
(c) Any transaction of the insurer with a reinsurer shall be
deemed fraudulent and may be avoided by the receiver under
subsection (a) of this section if:
(1) The transaction consists of the termination, adjustment
or settlement of a reinsurance contract in which the reinsurer is
released from any part of its duty to pay the originally specified
share of losses that had occurred prior to the time of the
transactions, unless the reinsurer gives a present fair equivalent
value for the release; and
(2) Any part of the transaction took place within one year
prior to the date of filing of the petition through which the
receivership was commenced.
(d) Every person receiving any property from the insurer or
any benefit thereof which is a fraudulent transfer under subsection
(a) of this section shall be personally liable therefore and shall
be bound to account to the liquidator.
§33-10-26b. Recoupment from affiliates.
(a) If an order instituting a delinquency proceeding against
an insurer authorized to do business in this state is entered under
this article, the receiver appointed under the order has a right to
recover on behalf of the insurer from any affiliate that controlled
the insurer the amount of distributions, other than stock dividends
paid by the insurer on its capital stock, made at any time during
the five years preceding the petition for liquidation, rehabilitation or conservation. This recovery is subject to the
limitations of subsections (b) through (g), inclusive, of this
section.
(b) No dividend is recoverable if the recipient shows that,
when paid, the distribution was lawful and reasonable and that the
insurer did not know and could not reasonably have known that the
distribution might adversely affect its solvency.
(c) The maximum amount recoverable under this section is the
amount needed, in excess of all other available assets, to pay all
claims under the receivership, reduced for each recipient by any
amount the recipient has already paid to receivers under similar
laws of other states.
(d) Any person who was an affiliate that controlled the
insurer at the time the distributions were paid is liable up to the
amount of distributions received. Any person who was an affiliate
that controlled the insurer at the time the distributions were
declared is liable up to the amount of distributions the person
would have received if the distributions had been paid immediately.
If two or more persons are liable regarding the same distributions,
they are jointly and severally liable.
(e) If any person liable under subsection (d) of this section
is insolvent, all affiliates that controlled that person at the
time the dividend was declared or paid are jointly and severally liable for any resulting deficiency in the amount recovered from
the insolvent affiliate.
(f) This section does not reduce the personal liability of a
director under existing law.
(g) An action or proceeding under this section may not be
commenced after the earlier of:
(1) Two years after the appointment of a liquidator pursuant
to this article; or
(2) The date the rehabilitation or liquidation is terminated.
§33-10-26c. Fraudulent transfer after petition.
(a) After a petition for rehabilitation or liquidation has
been filed, a transfer of any of the real property of the insurer
made to a person acting in good faith shall be valid against the
receiver if made for a present fair equivalent value or, if not
made for a present fair equivalent value, then to the extent of the
present consideration actually paid therefore, for which amount the
transferee shall have a lien on the property so transferred. The
commencement of a proceeding in rehabilitation or liquidation shall
be constructive notice upon the recording of a copy of the petition
for or order of rehabilitation or liquidation with the clerk of the
county commission of the county where any real property in question
is located. The exercise by a court of the United States or any
state or jurisdiction to authorize or effect a judicial sale of
real property of the insurer within any county in any state shall not be impaired by the pendency of such a proceeding unless the
copy is recorded in the county prior to the consummation of the
judicial sale.
(b) After a petition for rehabilitation or liquidation has
been filed and before either the receiver takes possession of the
property of the insurer or an order of rehabilitation or
liquidation is granted:
(1) A transfer of any of the property of the insurer, other
than real property, made to a person acting in good faith shall be
valid against the receiver if made for a present fair equivalent
value; or, if made for less than a present fair equivalent value,
then to the extent of the present consideration actually paid
therefore, for which amount the transferee shall have a lien on the
property so transferred;
(2) A person indebted to the insurer or holding property of
the insurer may, if acting in good faith, pay the indebtedness or
deliver the property, or any part thereof, to the insurer or upon
his or her order, with the same effect as if the petition were not
pending;
(3) A person having actual knowledge of the pending
rehabilitation or liquidation shall be considered not to act in
good faith;
(4) A person asserting the validity of a transfer under this
section shall have the burden of proof. Except as elsewhere provided in this section, no transfer by or on behalf of the
insurer after the date of the petition for liquidation by any
person other than the liquidator shall be valid against the
liquidator.
(c) Every person receiving any property from the insurer or
any benefit thereof which is a fraudulent transfer under this
section shall be personally liable therefore and shall be bound to
account to the liquidator.
(d) Nothing in this article shall impair the negotiability of
currency or negotiable instruments.
§33-10-26d. Claims of holders of void or voidable rights.
(a) No claim of a creditor who has received or acquired a
preference, lien, conveyance, transfer, assignment or encumbrance
voidable under this article shall be allowed unless the creditor
surrenders the preference, lien, conveyance, transfer, assignment
or encumbrance. If the avoidance is effected by a proceeding in
which a final judgment has been entered, the claim will not be
allowed unless the money is paid or the property is delivered to
the liquidator within thirty days from the date of entry of the
final judgment, except that the court having jurisdiction over the
liquidation may allow further time if there is an appeal or other
continuation of the proceeding.
(b) A claim allowable under subsection (a) of this section by
reason of the avoidance, whether voluntary or involuntary, of a preference, lien, conveyance, transfer, assignment or encumbrance,
may be filed as a late filing if filed within thirty days from the
date of the avoidance, or within the further time allowed by the
court under subsection (a) of this section. A claimant having a
late filed claim under this section may be permitted by the
liquidator to share in distribution as though the claim were not
late, to the extent that the payment will not interfere with the
orderly administration of the liquidation.
§33-10-28. Setoffs.
(a) In all cases of mutual debts or mutual credits between
the insurer and another person in connection with any action or
proceeding under this article, the credits and debts shall be set
off and the balance only shall be allowed or paid, except as
provided in subsection (b), below.
(b) No setoff may be allowed in favor of any such person
where:
(1) The obligation of the insurer to the person would not at
the date of the entry of any liquidation order or otherwise, as
provided in section twenty-five of this article, entitle him or her
to share as a claimant in the assets of the insurer;
(2) The obligation of the insurer to the person was purchased
by or transferred to the person with a view of its being used as a
setoff;
(3) The obligation of the person is to pay an assessment
levied against the members of a mutual insurer, or against the
subscribers of a reciprocal insurer, or is to pay a balance upon
the subscription to the capital stock of a stock insurer;
(4) The obligation of the insurer is owed to an affiliate of
such person, or any other entity or association other than the
person;
(5) The obligation of the person is owed to an affiliate of
the insurer, or any other entity or association other than the
insurer; or
(6) The obligations between the person and the insurer arise
from transactions by which the person or the insurer assumed risk
and obligations from the other party and ceded back substantially
the same risks and obligations except the receiver may permit
setoffs if in his or her discretion, a setoff is appropriate
because of specific circumstances.
(c) Notwithstanding the provisions of subsection (b) of this
section, a setoff of sums due on obligations in the nature of those
set forth in subdivision (6), subsection (b) of this section shall
be allowed for those sums accruing from business written where the
contracts were entered into, renewed or extended with the approval
of the commissioner of insurance of the state of domicile of the
now insolvent insurer, when in the judgment of such commissioner it
was necessary to provide reinsurance in order to prevent or mitigate a threatened impairment or insolvency of a domiciliary
insurer in connection with the exercise of the commissioner's
regulatory responsibilities.
(d) The provisions of this section shall supersede any
agreements or contractual provisions which might be construed to
enlarge the setoff rights of any person under any contract with the
insurer.
§33-10-29. Allowance of certain claims.
(a) No contingent claim may share in a distribution of the
assets of an insurer which has been adjudicated to be insolvent by
an order made pursuant to this article, except that such claim
shall be considered, if properly presented, and may be allowed to
share where:
(1) It does not prejudice the orderly administration of the
liquidation; or
(2) There is a surplus and the liquidation is thereafter
conducted upon the basis that the insurer is solvent.
(b) Where an insurer has been so adjudicated to be insolvent
any person who has a cause of action against an insured of the
insurer under a policy issued by the insurer shall have the right
to file a claim in the liquidation proceeding, regardless of the
fact that the claim may be contingent and the claim may be allowed:
(1) If it may be reasonably inferred from the proof presented
upon the claim that such person would be able to obtain a judgment
upon the cause of action against the insured; and
(2) If such person furnishes suitable proof, unless the court
for good cause shown otherwise directs, that no further valid claim
against the insurer arising out of his or her cause of action other
than those already presented can be made; and
(3) If the total liability of the insurer to all claimants
arising out of the same act of its insured is no greater than its
maximum liability would be were it not in liquidation.
(c)(1) No judgment against such an insured taken after the
date of entry of the liquidation order may be considered in the
liquidation proceedings as evidence of liability, or of the amount
of damages, and no judgment against an insured taken by default or
by collusion prior to the entry of the liquidation order may be
considered as conclusive evidence in the liquidation proceedings,
either of the liability of the insured to the person upon the cause
of action or of the amount of damages to which the person is
therein entitled.
(2) A claim by a third party founded upon a policy may be
allowed without requiring the claim to be reduced to judgment,
provided it can be reasonably inferred from the proof presented
that the claimant would be able to obtain a judgment upon his or
her cause of action against the insured and that the judgment would represent a liability of the insurer in liquidation under the
policy upon which the claim is founded.
(d) No claim of any secured claimant may be allowed at a sum
greater than the difference between the value of the claim without
security and the value of the security itself as of the date of the
entry of the order of liquidation or such other date set by the
court for determining rights and liabilities as provided in section
twenty-five of this article unless the claimant surrenders his or
her security to the commissioner, in which event the claim shall be
allowed in the full amount for which it is valued.
(e) Whenever a creditor, whose claim against an insurer is
secured, in whole or in part, by the undertaking of another person,
fails to prove and file that claim, the other person may do so in
the creditor's name and shall be subrogated to the rights of the
creditor, whether the claim has been filed by the creditor or by
the other person in the creditor's name, to the extent that he or
she discharges the undertaking. In the absence of an agreement
with the creditor to the contrary, the other person shall not be
entitled to any distribution, however, until the amount paid to the
creditor on the undertaking plus the distributions paid on the
claim from the insurer's estate to the creditor equals the amount
of the entire claim of the creditor. Any excess received by the
creditor shall be held by him or her in trust for such other
person. The term "other person", as used in this section, is not intended to apply to a guaranty association or foreign guaranty
association.
(f) Unless such claim is filed in the manner and within the
time provided in sections eighteen and thirty of this article, it
shall not be entitled to filing or allowance and no action may be
maintained thereon. In the liquidation, pursuant to the provisions
of this article, of any domestic insurer which has issued policies
insuring the lives of persons, the commissioner shall, within
thirty days after the last day set for the filing of claims, make
a list of the persons who have not filed proofs of claim with him
or her and to whom, according to the books of the insurer, there
are amounts owing under such policies and he or she shall set
opposite the name of each person the amount so owing to the person.
Each person whose name appears upon the list shall be considered to
have duly filed, prior to the last day set for the filing of
claims, a claim for the amount set opposite his or her name on the
list.
(g)(1) Claims founded upon unliquidated or undetermined
demands must be filed within the time limit provided in this
article for the filing of claims, but claims founded upon such
demands shall not share in any distribution to creditors of a
person proceeded against under section nineteen-a of this article
until the claims have been definitely determined, proved and allowed. Thereafter, the claims shall share ratably with other
claims of the same class in all subsequent distributions.
(2) An unliquidated or undetermined claim or demand within
the meaning of this article shall be considered to be any claim or
demand upon which a right of action has accrued at the date of the
order of liquidation and upon which the liability has not been
determined or the amount thereof liquidated.
(h) The commissioner may require, as a condition of payment
of the final liquidation dividend to a lender, or his or her
assignee, who has filed a claim for an unearned premium as an
assignee of the insured for valuable consideration:
(1) That such assignee of the insured shall assign to the
liquidator all his or her right, title and interest in any
unsatisfied debt of the insured to the assignee, pertaining to
policies of the insolvent insurer, remaining unpaid after crediting
the final liquidation dividend, if the amount of the unsatisfied
debt is less than one hundred dollars and one cent; and
(2) That all of the documents giving rise to the debt be
delivered to him or her.
(i) The commissioner may determine whether or not it will be
feasible to attempt to collect any assigned debt. If the
commissioner determines not to pursue collection of any such debt,
he or she shall file a declaration to that effect with the liquidation court and be relieved of any further responsibility in
respect to the debt.
(j) As used in this section, "insured" means a natural person
who purchased insurance or coverage from the insolvent insurer for
personal, family, or household purposes.
§33-10-30. Time within which claims to be filed.
(a) If upon the granting of an order of liquidation under
this article or at any time thereafter during the liquidation
proceeding, the insurer shall not be clearly solvent, the court
shall, after notice and hearing as provided in this article, make
an order declaring the insurer to be insolvent. Thereupon
regardless of any prior notice which may have been given to
creditors, the commissioner shall notify all persons who may have
claims against the insurer and who have not filed proper proofs
thereof to present the same to him or her, at a place specified in
the notice, within four months from the date of entry of the order,
or if the commissioner shall certify that it is necessary, within
such longer time as the court shall prescribe. The last day for
filing of proofs of claims shall be specified in the notice and
notice shall be given in a manner to be determined by the court.
(b) Proofs of claim may be filed subsequent to the date
specified, but no such claim may share in the distribution of the
assets until all allowed claims, proofs of which have been filed before said date, have been paid in full with interest, except as
provided in section twenty-six-d of this article.
§33-10-36. Early access to distribution.
(a) Within one hundred twenty days of a final determination
of insolvency of an insurance company by the circuit court, the
commissioner shall make application to the court for approval of a
proposal to disburse assets out of the company's marshaled assets,
from time to time as such assets become available, to the
appropriate guaranty association having obligations because of the
insolvency. "Appropriate guaranty association" means guaranty
association and foreign guaranty association as those terms are
defined in section one of this article. If the commissioner
determines that there are insufficient assets to disburse, the
application required by this section shall be satisfied by a filing
by the commissioner stating the reasons for this determination.
(b) The proposal shall at least include provisions for:
(1) Reserving amounts for the payment of expenses of
administration and of claims falling within the priorities
established in section nineteen-a of this article but only with
respect to such priorities higher than that of the associations;
(2) Disbursement of the assets marshaled to date and
subsequent disbursement of assets as they become available;
(3) Equitable allocation of disbursements to each of the
associations entitled thereto;
(4) The securing by the commissioner from each of the
associations entitled to disbursements pursuant to this section of
an agreement to return to the commissioner such assets, together
with income earned on assets previously disbursed, as may be
required to pay claims of secured creditors and claims falling
within the priorities established in section nineteen-a of this
article but only with respect to such priorities higher than that
of the associations. No bond shall be required of any such
association; and
(5) A full report to be made by the association to the
commissioner accounting for all assets so disbursed to the
association, all disbursements made therefrom, any interest earned
by the association on such assets and any other matter as the court
may direct.
(c) The commissioner's proposal shall provide for
disbursements to the association in amounts estimated at least
equal to the claim payments made or to be made thereby for which
the association could assert a claim against the commissioner, and
shall further provide that if the assets available for disbursement
from time to time do not equal or exceed the amount of the claim
payments made or to be made by the association, then disbursements
shall be in the amount of available assets.
(d) Notice of the commissioner's application shall be given
to the associations in and to the commissioners of insurance of each of the states. Any such notice shall be considered to have
been given when deposited in the United States mail, first class
postage prepaid, at least thirty days prior to submission of the
application to the court. Action on the application may be taken
by the court provided the notice required in this subsection has
been given and provided that the commissioner's proposal complies
with subdivisions (1) and (2), subsection (b) of this section.
§33-10-38. Unclaimed and withheld funds; termination of
proceedings.
(a) All unclaimed funds subject to distribution remaining in
the liquidator's hands when he or she is ready to apply to the
court for discharge, including the amount distributable to any
creditor, shareholder, member or other person who is unknown or
cannot be found, shall be deposited with the state treasurer and
shall be paid without interest to the person entitled thereto or
his or her legal representative upon proof satisfactory to the
state treasurer of his or her right thereto. Any amount on deposit
not claimed within six years from the discharge of the liquidator
shall be considered to have been abandoned and shall be escheated
to the state of West Virginia without formal escheat proceedings
and be deposited with the general fund.
(b) When all assets justifying the expense of collection and
distribution have been marshaled and distributed under this
article, the liquidator shall petition the circuit court to terminate the liquidation proceeding and to close the estate and
for other relief as may be appropriate. Subject to approval of the
circuit court, after the completion of all post-closure activities
for which moneys were reserved, the liquidator is authorized to
deposit any remaining assets reserved for administrative expenses
incurred in the closing of the estate that may not be practicably
or economically distributed to claimants into a segregated account
to be known as the closed estate fund account. The commissioner
may thereafter use moneys held in the account to fund the
administrative expenses of proceedings against insurers subject to
this article that lack sufficient assets to fund administration.
§33-10-39. Immunity in receivership proceedings and representation
of the special deputy supervisor.
(a) No claim of any nature whatsoever that is directly
related to the receivership of an insurer shall arise against and
no liability shall be imposed upon, the insurance commissioner,
special deputy commissioner, or any person or entity acting as a
receiver of an insurer, including surety, in rehabilitation,
liquidation or conservation as a result of a court order issued on
or after the effective date of this article for any statement made
or actions taken or not taken in the good faith exercise of their
powers under law. However, this immunity shall not extend to acts
or omissions which are malicious or grossly negligent. This
qualified immunity extends to agents and employees of the receiver.
(b) In any civil proceeding filed against a special deputy
commissioner appointed pursuant to this article, the special deputy
commissioner shall be entitled to be represented by the attorney
general.
§33-10-40. Applicability of amendments.
From and after the first day of July, two thousand four, any
delinquency proceeding commenced against an insurer for the purpose
of liquidating, rehabilitating, reorganizing or conserving the
insurer shall be undertaken pursuant to this article. Any
delinquency proceeding pending against an insurer under this
article on the thirtieth day of June, two thousand four, will be
administered and concluded under the law in effect at the time the
delinquency proceeding was commenced.
ARTICLE 24. HOSPITAL SERVICE CORPORATIONS, MEDICAL SERVICE
CORPORATIONS, DENTAL SERVICE CORPORATIONS AND
HEALTH SERVICE CORPORATIONS.
§33-24-14. Delinquency proceedings.
From and after the first day of July, two thousand four, any
delinquency proceeding commenced against a corporation subject to
this article for the purpose of liquidating, rehabilitating,
reorganizing or conserving the corporation shall be considered to
be a delinquency proceeding against an insurance company and shall
be undertaken pursuant to the provisions of article ten of this
chapter. Any delinquency proceeding pending against a corporation subject to this article prior to the first day of July, two
thousand four, will be administered and concluded under the law in
effect at the time the delinquency proceeding was commenced.
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