Mutual Risk Management Reports Hancock Motion to Dismiss Lawsuit Denied

November 22, 2004

Mutual Risk Management Ltd. (MRM) announced on Monday that the federal judge presiding over its multi-million dollar claim for tortious interference against John Hancock Life Insurance Company (Hancock) has denied Hancock’s motion to have the case dismissed and set the matter for a jury trial in April in Philadelphia.

MRM contends that Hancock’s unjustified refusal to make payments on reinsurance treaties to insurance companies owned by MRM were instrumental in causing MRM’s default and subsequent reorganization. By Order dated Nov. 8, 2004, Senior Judge Norma Shapiro disagreed with Hancock’s argument that the case should not proceed to trial because it was not brought in a timely manner. This is reportedly the second time the Court has denied Hancock’s requests to have the case dismissed without a trial on the merits of the case.

A spokesman for MRM stated that “We are gratified by the Court’s recognition that we are entitled to present the facts of this unfortunate situation for the jury’s consideration.”

One of MRM’s insurance company subsidiaries, Legion Insurance Company, is currently being liquidated in Pennsylvania under the direction of Pennsylvania’s Insurance Commissioner, M. Diane Koken. On Oct. 29, 2004, Koken filed an application to have a Pennsylvania Commonwealth Court judge confirm an arbitration award entered in Legion’s arbitration against Hancock for Hancock’s failure to pay reinsurance proceeds to Legion.

According to the application, unanimous decisions of the arbitrators awarded Legion: (1) almost $7 million in damages (inclusive of interest) and 90% of Legion’s attorneys’ fees for amounts due under the reinsurance treaties: and (2) most recently on Oct. 14, 2004, another $21,500,000 representing consequential damages, interest, costs and attorneys’ fees arising from Hancock’s wrongful conduct. The arbitrators awarded Hancock nothing on its counterclaims. In a recent filing opposing the application, Hancock reportedly stated that it “paid in full by way of wire transfer the Phase III arbitration award, including the award of interest and attorney’s fees.”

MRM contends that the arbitration awards establish the nature of Hancock’s reported unjustified conduct regarding the Legion reinsurance receivables and fully support MRM’s claims that Hancock’s actions were instrumental in causing significant damage to MRM.

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