Feds Do Not Get Priority Over St Guaranty Funds

Last month the U.S. Court of Appeals for the 1st Circuit ruled that the federal government does not automatically have priority over state guaranty funds in insurance company liquidations, but also that the federal government is not bound by claims-filing deadlines in states’ insurance guaranty fund and liquidation laws. In Ruthardt vs. United States of America (No. 01-2553, 09/18/02), Massachusetts Insurance Commissioner Linda Ruthardt, filed a liquidation plan in state court to distribute the remaining assets of American Mutual according to Massachusetts state law, which would have caus...