North Dakota pursuing legal action on long-term care insurance

BISMARCK, N.D. – On behalf of the State of North Dakota, Insurance Commissioner Jon Godfread filed a lawsuit in Burleigh County District Court in February against the Pennsylvania Insurance Commissioner, in their capacity as rehabilitator of the Senior Health Insurance Company of Pennsylvania (SHIP), to force the adherence to state insurance laws and to protect North Dakota consumers.  
 
The legal action (Godfread, et al v. Altman, et al) originates from the insolvency, or default, of the Senior Health Insurance Company of Pennsylvania (SHIP), which provided long-term care insurance to citizens across the United States. This includes approximately 371 North Dakotans. SHIP went into rehabilitation, with operations controlled by the State of Pennsylvania and its respective insurance commissioner.  The suit names former Pennsylvania Insurance Commissioner Jessica K. Altman, a position currently held by acting Commissioner Michael Humpreys.
 
To try and reduce SHIP’s financial deficit, Pennsylvania officials have attempted to unilaterally impose premium rate increases and benefit reductions, undercutting what has been promised to policyholders. These drastic changes are being imposed on North Dakotans, including others across the country, without Insurance Commissioner approval. This action violates North Dakota Century Code.
 
“When you do business in North Dakota, you need to follow North Dakota laws.  It’s that simple,” said Insurance Commissioner Jon Godfread. “Insurance is a state regulated industry, meaning the laws of each state govern the consumers of that state. Our Legislature passes those laws, the actions of SHIP and Pennsylvania are a direct affront to our state authority and disregard the laws passed by our legislative body”
 
North Dakota, New Jersey and Iowa insurance officials, each with respective legal action against SHIP and the Pennsylvania Insurance Commissioner, have received a legal victory for consumers. On June 1, the United States Judicial Panel on Multidistrict Litigation denied a motion to consolidate the cases and move the action to the U.S. Court for the Eastern District of Pennsylvania. As a result, the individual cases will remain with their respective states, including the U.S. Court for the District of North Dakota. 
 
“Our laws require that any changes to insurance policies undergo a thorough and rigorous review to ensure the viability and fairness of what is being promised. These changes to SHIP should not be treated any differently,” said Commissioner Godfread.  “Pennsylvania does not have the authority to change laws and impose changes on North Dakota consumers, we are simply asking for SHIP and Pennsylvania to respect the longstanding authority that has been given to each individual state when it comes to how we regulate insurance companies. We are hopeful that the court system will see this for what it is, an attempt to upend our state based regulatory system.”
 
The State of North Dakota has made a pending motion to move the case from federal court back to state court, where most insurance regulation cases are handled.