The long-troubled Senior Health Insurance Co. of Pennsylvania, along with its rehabilitator and the former Pennsylvania insurance commissioner, has been held in contempt of court for violating an Iowa injunction tied to its rehabilitation plan.
SHIP was placed into rehabilitation in 2020 after regulators found its liabilities exceeded assets by more than $474mn at year-end 2018.
The company was originally set up to run off a closed block of long-term care policies from Conseco Inc. Since then, its restructuring has drawn scrutiny across multiple states.
Iowa Insurance Commissioner Doug Ommen filed suit in 2022 to block SHIP’s plan from being implemented without Iowa approval.
Regulators objected to forcing consumers into coverage reductions and steep premium hikes. In March 2023, an Iowa district court issued a temporary injunction barring the company from implementing the plan or contacting policyholders without approval.
Despite the order, SHIP and its rehabilitators sought and received approval from a Pennsylvania court in early 2024 to begin contacting Iowa policyholders about plan modifications.
Iowa’s court found this directly violated its injunction. A mass mailing to 481 Iowa policyholders followed, instructing them to accept plan changes or face modifications by default.
The court imposed a $481,500 fine—$500 for seeking the Pennsylvania order and $500 for each improper mailing.
Judge rulings stressed that the company acted knowing it was in violation. Ommen said the mailings created serious confusion among elderly policyholders, many of whom are currently receiving care.
The Iowa court ordered SHIP and its rehabilitators to immediately halt actions breaching the injunction, reinforcing state regulators’ authority over long-term care policies sold to residents.
