On March 1, the Pennsylvania Commonwealth Court ordered the liquidation of affiliated long-term care insurers Penn Treaty Network America Insurance Co. (PTNA) and American Network Insurance Co. (ANIC) (collectively, Penn Treaty). Penn Treaty, which sold long-term care insurance policies for decades, had been placed into rehabilitation in January 2009 by the Pennsylvania insurance commissioner. The liquidation order followed years of litigation and efforts to rehabilitate the company. According to filings in the case, as of May 2016, the PTNA arm of Penn Treaty was insolvent by $3.82 billion and would run out of assets in 2018; with ANIC added, the total insolvency of Penn Treaty was an estimated $4.33 billion. (See In re Penn Treaty Network American Insurance, Doc. No. 1 PEN 2009, Verified Pet., July 17, 2016; In American Network Insurance, Doc. No. 1 ANI 2009, Verified Pet., July 17, 2016).

Though Penn Treaty is based in Allentown, Pennsylvania, its insureds reside throughout the country, and the liquidation order began a process that is playing out on the national stage. Every state, as well as the District of Columbia and Puerto Rico, has enacted some form of the model legislation promulgated by the National Association of Insurance Commissioners (NAIC) called the “Life and Health Insurance Guaranty Association Model Act.” Pennsylvania’s version is codified at 40 P.S. Sections 991.1701–991.1718. But, since Penn Treaty is considered an accident and health insurer under the regulatory rules of all states, Penn Treaty’s liquidation triggered conditions under each state’s Life and Health Insurance Guaranty Association law.

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