"It is time to shut down the New York Liquidation Bureau", argues attorney and insurance expert Peter Bickford in his opinion article titled "ELNY Debacle Exposes Serious Problems" which is featured as the cover story in the February 18, 2013 issue of Insurance Advocate magazine.
Bickford's article is accompanied by a second Insurance Advocate opinion article written by Edward S. Stone, an attorney who represents 40 ELNY structured settlement shortfall payees.
In his article, titled "ELNY Opinion Unjust to Victims", Stone accuses Benjamin M. Lawsky, Superintendent of New York's Department of Financial Services and his predecessors (Superintendent), the New York Liquidation Bureau (NYLB) and their agents of "concealment, fraud, waste and mismanagement".
Bickford's article further asserts the ELNY liquidation impacts the entire insurance industry, "including the guaranty fund structure and the growing nationwide debate on State v. Federal regulation of insurance." Bickford states: "[t]he attacks against continued state regulation of the business of insurance is focused primarily on solvency and unless the states can show that they have appropriate standards and ability to enforce those standards the attacks could result in a sea change in regulation."
Bickford maintains the Superintendent should recognize the "hollowness" of his recent legal victories: Judge John Galasso's civil contempt order and the denial of an appeal challenging Judge Galasso's ELNY liquidation order approving the ELNY restructuring agreement. The ELNY liquidation "fully exposed the Bureau for its decades-long covert mismanagement of insolvent insurance companies" according to Bickford.
What Bickford finds most surprising about the ELNY liquidation is:
- "[T]he unwillingness of the administration, the courts, the legislature and the industry to admit the scope of the ELNY disaster and the failings of the insolvency process, and to take appropriate action to remedy these systemic problems"; and
- "[T]he lengths that the administration and the courts have gone to in order to preserve the myth of the Bureau’s fiduciary role without fiduciary accountability, or to protect it from any form of meaningful external investigation or scrutiny."
Bickford's bottom line: it is time to shut down the NYLB!
Bickford's argument, which echoes and expands criticism of the NYLB published in LifeHealthPro's 2012 article titled "The Complete ELNY Saga - 21 Years of Mismanagement, Corruption, Broken Promises and Shattered Lives", runs as follows:
- The NYLB is not defined under New York insurance law.
- The NYLB is not a state agency and not subject to either audit by the State Comptroller or the Freedom of Information Act according to a decision (Dinallo v. DiNapoli) by New York highest state court.
- The NYLB is not required to file any plan or reports with the courts supervising receivership estates or to provide any status reports to policyholders or creditors.
- Once under NYLB control, an insurer is no longer subject to regulatory oversight and no longer files any reports or financial statements.
- The NYLB's lack of accountability over decades has made it a breeding ground for corruption and abuse.
Stone's article includes a comprehensive ELNY background summary. Stone's conclusions:
- "The blanket immunity and broad injunctive relief granted in the ELNY liquidation permits the Superintendent, the NYLB and their agents to hide the fraud, waste and mismanagement that doomed ELNY behind the pretext of court supervision.
- "The contempt sanctions issued against the victims and their attorneys for doing the Superintendent’s job are a blatant attempt to intimidate the plaintiffs into abandoning their claims.
- "Sadly, instead of helping the victims of this tragedy, the Superintendent is choosing to blame and punish them – and he’s using ELNY’s assets and the court system to do it."
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