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46 Hospitals' Liability Coverage in Jeopardy

Claims payments from Virginia company suspended by regulators

Contact: Ragan Ingram, Assistant Commissioner



Virginia insurance regulators informed Alabama Insurance Commissioner Walter A. Bell late Wednesday that they are taking steps to liquidate a company that provides liability coverage to 46 Alabama hospitals.

The Virginia insurance commissioner suspended all hospital liability insurance claims and filed a petition with that state’s corporation commission to have the company liquidated.

Some hospitals’ physician and provider employees are also affected by the insolvency because their coverage was tied to their employers.

“We are working expeditiously with interested parties to help fill the gap caused by ROA’s insolvency,” Alabama Insurance Commissioner Walter A. Bell said. “This is yet another difficult situation for the medical community in our state, but we are committed to helping our hospitals find coverage so that they can continue to provide the level of care accustomed by the citizens of this state.”

Because of the suspension of claims payments, the Alabama’s Property and Casualty Guaranty Fund will take effect. Claims payments from the guaranty fund, however, are limited by law to $150,000 per claim.

The guaranty fund, which is subsidized by the state General Fund, is set up to pay claims in case of insolvencies.

“The guaranty fund is strictly a short-term, stop-gap measure,” Commissioner Bell said. “It is our top priority to find long-term, secure solutions for this crisis.”

Commissioner Bell was to hold a conference call with health care industry stakeholders Wednesday night to discuss this issue and others.  More than 800 doctors lost access to claims payments in February when Doctors Insurance Reciprocal was declared insolvent.

The ROA petition is unrelated to the Doctors Insurance Reciprocal insolvency.  Commissioner Bell worked with other companies to provide stop-gap coverage to Alabama physicians to work through that crisis.

“We will be working with companies in the same fashion as we did in February for physicians to provide the necessary coverage for hospitals,” Commissioner Bell said.