The Pennsylvania Insurance Department announced it will receive $10 million from its lawsuit against the former officers and directors of PHICO Insurance Co., a malpractice insurance carrier that was liquidated in 2002. According to financial reports, the company -- once one of Pennsylvania's largest medical malpractice insurers -- was $250 million in the hole when state regulators liquidated it Feb. 1, 2002. The $10 million will be paid by National Union Fire Insurance Company of Pittsburgh, the insurance carrier for the company's officers and directors, and will be used to pay policyholder claims, said Melissa Fox, an insurance department spokeswoman. In November 2001, state regulators sued 15 former PHICO officers -- including Carolyn Scanlan, president and CEO of the Hospital & Healthsystem Association of Pennsylvania, which shared a parent with PHICO, and former state insurance Commissioner Constance Foster -- charging that they allowed the business to be run into the ground by misguided and overly aggressive business practices. The state reached a settlement in March and received approval from the Commonwealth Court in June but was awaiting approval from federal bankruptcy court before announcing the agreement, Fox said. -- by Cinda Becker
Pa. settles dispute over failed malpractice carrier
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