Tenn. Commissioner Briefs Lawmakers on Reciprocals in Receivership

Tennessee Commissioner of Commerce and Insurance Paula A. Flowers briefed the state’s House of Representatives on the department’s placement of three malpractice insurance reciprocals into receivership.

“I hate to call it a perfect storm, but that’s pretty much what happened here,” Flowers told lawmakers. “Unless we are able to get these companies back on their feet … doctors and lawyers and medical facilities will be entirely responsible for paying these (malpractice) claims.”

American National Lawyers Insurance Reciprocal (ANLIR), Doctors Insurance Reciprocal (DIR) and The Reciprocal Alliance were placed into receivership Jan. 31. They are risk retention groups established to provide malpractice insurance—as such, they are not required to participate tin the state’s guaranty fund.

The three operations are reinsured by Virginia-based Reciprocal of America (ROA), which was taken into receivership by Virginia on Jan. 28. The three reciprocals were operated by a management company headquartered in Virginia that is closely tied to ROA. Flowers said the books, records and data for the three companies are kept with the Virginia management company and that Tennessee officials have not yet been given full access to those records.

According to the latest Tennessee records, ANLIR covers 3,540 Tennessee lawyers, has liquid assets of $6.6 million and is owed $51.8 million by ROA for pending claims. DIR covers eight doctors in Tennessee, has $5.2 million in liquid assets and is awaiting $142.5 million from ROA for pending claims. The Reciprocal Alliance insures 368 Tennessee medical facilities and has liquid assets of $16.8 million. It is owed $57.3 million by ROA.