Capson Physicians Insurance Company in Liquidation                          512-609-7900


 



 

 

Receivership Documents

Capson Physicians Insurance Company was placed into liquidation on June 28, 2019, at the request of the Texas Department of Insurance.  This action was necessary to protect policyholders.  The related Order Appointing Liquidator and Permanent Injuction is available for viewing on the Receivership Documents Page of this website. 

 

IMPORTANT NOTICE: The following Frequently Asked Questions and answers are intended to provide interested parties and their counsel with an overview of Capson Physicians Insurance Company’s liquidation.  Cantilo & Bennett, LLP, as Special Deputy Receiver of Capson Physicians Insurance Company, reserves the right to provide amended and supplemental information that may affect those with interests in Capson Physicians Insurance Company.  Nothing herein constitutes a binding legal statement or the waiver of any right by the Commissioner of Insurance of the State of Texas, the Special Deputy Receiver, or their representatives.  Nor are the statements contained herein intended as legal advice concerning or complete legal descriptions of the events or matters to which they relate.  The material provided herein is offered only for informational purposes.  For full legal information, interested parties should review the source documents and applicable legal authorities.  Consult your agent or attorney for more information regarding your rights.

 

FREQUENTLY ASKED QUESTIONS

 

GENERAL QUESTIONS

What is a receivership?

A receivership is a court proceeding.  The Texas Insurance Code authorizes the Commissioner of Insurance (Commissioner) to initiate a receivership to rehabilitate or liquidate an insurance company.  In a receivership, the Commissioner is the Receiver of the insurance company, and the Receiver can appoint a Special Deputy Receiver (SDR).  

Is Capson Physicians Insurance Company (CPIC) still operating its insurance business?

No, on June 28, 2019, CPIC was placed into liquidation.  The Travis County District Court (Court) entered an order finding CPIC was insolvent, placed it into liquidation, and appointed the Commissioner as Receiver (Liquidation Order).  Cantilo & Bennett, LLP has been appointed SDR by the Receiver.

Liquidation is like federal bankruptcy but is regulated by the state.  An insurance company is placed into liquidation when the Texas Department of Insurance determines that the company may have insufficient assets to pay its policyholders, claimants, and other creditors.  In a liquidation, an SDR is appointed by the Receiver to protect the interests of policyholders and others and to distribute the insurance company’s remaining assets as directed by the Court in accordance with the laws and regulations of the state.  The SDR is responsible for the day-to-day administration of the insurance company.  The Receiver and the SDR’s actions are dictated by the Court and the laws and regulations of the state.

Why is CPIC in liquidation?

CPIC was placed into liquidation in order to protect its policyholders, claimants, other creditors creditors, and the public from further harm which might be caused by CPIC’s continued operation in light of its inability to pay its debts to policyholders, claimants, and other creditors as they become due.

What is the Liquidation Order?

The Liquidation Order is a final order of the Court that granted the Receiver, among other powers and duties, the authority to take control over CPIC, marshal its assets, and liquidate them.  The Receiver collects the assets belonging to CPIC on behalf of CPIC during liquidation (also referred to as the receivership estate).  Assets are then used to reduce debts of the receivership estate and pay claims as outlined in Texas Insurance Code Chapter 443.

How can I contact the SDR?

The SDR’s contact information is as follows:

Cantilo & Bennett, L.L.P.

11401 Century Oaks Terrace, Suite 300

Austin, TX  78758

Phone: (512) 478-6000

Fax: (512) 404-6550

How can I obtain information about CPIC’s receivership?

Updates will be posted on the SDR’s website as additional information becomes available.  The website address for the SDR’s website is www.capsonsdr.com.  Pleadings and orders will be posted on the SDR’s website after they have been filed with or entered by the Court.

 

TERMINATION OF POLICIES

I received a notice of termination from CPIC. When is my CPIC policy cancelled?

The Liquidation Order cancelled all policies issued by CPIC, including, but not limited to, “tail” coverage and/or “extended reporting period” coverage, at the earliest of the following:

(1)           July 28, 2019;

(2)           the date of expiration of the policy according to its terms; or

(3)           the date the insured replaced or otherwise terminated the policy.

Accordingly, if you have a policy issued by CPIC, you will need to obtain replacement coverage for any coverage CPIC currently provides to you no later than July 28, 2019.  

If you have not obtained a new replacement policy, you should do so immediately!  Your CPIC policy can no longer be renewed; however, all renewals issued by CPIC before the June 28, 2019, date of liquidation will be effective pursuant to their terms until cancelled in accordance with provisions of the Liquidation Order as summarized above. If you have a question about your policy, please call the CPIC office directly at (512) 609-7900.

How should I obtain replacement coverage and new medical malpractice insurance?

To avoid a gap in your medical malpractice insurance coverage, the effective date for your new replacement policy should be before July 28, 2019 or earlier as the circumstances may be.  You may also want to secure a new replacement policy with retroactive coverage dating back to the retroactive date shown on your CPIC policy. If you have an agent, you should contact your agent as soon as possible.  If you do not have an agent and you purchased your policy directly from CPIC, you should contact other malpractice insurance companies directly or retain the services of an agent to search for a new replacement policy on your behalf.

Why is it important I find replacement coverage?

It is important to find replacement coverage since continuing to practice medicine without medical malpractice insurance will subject you to personal liability.  It may also violate state law and subject you to other penalties.

Will I be able to obtain tail coverage from CPIC?

The Liquidation Order cancelled all policies issued by CPIC, including, but not limited to, “tail” coverage and/or “extended reporting period” coverage. CPIC will no longer offer “tail” coverage and/or “extended reporting period” coverage as a result of the Liquidation Order.  

Are you going to provide a Verification of Coverage to allow me to obtain replacement coverage?  How soon can I obtain that information?

The SDR team will provide a Verification of Coverage with your policy cancellation information.  You will be able to use this document to obtain replacement coverage.

I have obtained new medical malpractice insurance. How do I cancel my CPIC policy?

You or your agent should notify the SDR of your new medical malpractice insurance as soon as possible.  Policy cancellation requests are processed by the SDR team in the order they are received.  A delay in cancelling your coverage could reduce any claim for unearned premium you may have.

 

CLAIMS FOR INDEMNITY

Now that CPIC is in liquidation, who will handle my claim with CPIC?

When the Liquidation Order was entered on June 28, 2019, CPIC stopped paying claims.  Claims are now payable as follows:

§  Each state where CPIC was licensed has a Guaranty Association/Fund who will pay "Covered Claims" under CPIC’s policies.  Covered Claims are subject to statutory payment limits and other statutory conditions and exclusions.  The respective laws in each state will determine whether a claim qualifies as a Covered Claim.  Notice of claims received by CPIC are being transferred to the Guaranty Association/Fund in your state for processing.  Contact information for the Guaranty Association/Fund in your state is available at the following link:  https://www.ncigf.org/resources/links-and-contacts/.

§  Claims that are not payable in whole or in part by the respective Guaranty Association/Fund can be presented to the receivership by filing a Proof of Claim (“POC”) once the POC form and related instructions are approved by the Court and published.  (Note: “Filing a POC” refers to your POC being postmarked or received otherwise by the SDR prior to the expiration of the claims filing deadline, which has not yet been established by the Court).  Claims approved in the receivership are payable from CPIC’s funds, subject to the availability of funds. 

How do I contact the Guaranty Association/Fund in my state?

Information regarding each Guaranty Association/Fund is available at the following link:  https://www.ncigf.org/resources/links-and-contacts/. 

 How do I report a claim that has not yet been reported to CPIC?

All new claims should be reported to the SDR. The SDR will forward reported policyholder claims to the appropriate Guaranty Associations/Funds.  If you are served with a lawsuit, also contact your state’s Guaranty Association/Fund and provide them with a copy of the lawsuit papers.

Will notice of the POC filing deadline be provided?

Notice of the POC filing deadline will be provided to known creditors and published in at least one newspaper.  The POC form and instructions will also be posted on the SDR's website.

Is there a deadline for filing a claim with a Guaranty Association/Fund?

There is typically a deadline for filing a claim with a Guaranty Association/Fund.  This will be governed by the laws of your state.  You will need to be sure and check with the Guaranty Association/Fund in your state to ascertain any deadlines that may affect your rights.

I was insured by CPIC and have a medical malpractice lawsuit pending against me.  What do I do?

Subject to certain statutory conditions and exclusions, the Guaranty Association/Fund in your state will defend you if CPIC was obligated to provide a defense and the lawsuit concerns a Covered Claim.  Moving forward, you should coordinate your defense with the Guaranty Association/Fund in your state.

Will I have to pay my own defense costs if my claim is not covered by the Guaranty Association/Fund in my state?

Yes, you will be responsible for providing your own defense and hiring counsel to protect your rights.  You will be able to submit these payments when you file a POC.

Will I be responsible for paying any settlements/judgments in addition to defense costs if my claim is not covered by my state Guaranty Association/Fund?

Yes, you will be responsible for paying any settlement or judgment in addition to defense costs.  You will be able to submit these payments when you file a POC.

 

CLAIMS FOR UNEARNED PREMIUM

What is unearned premium?

Unearned premium is the amount of premium you paid to CPIC for which, due to the cancellation of your policy, you did not receive insurance coverage.

Are there any requirements for filing a claim for unearned premium?

Unearned premium claims are covered by the Guaranty Association/Fund, subject to statutory payment limits and other statutory conditions and exclusions.  If any part of an unearned premium claim is not a Covered Claim, it can be filed in the receivership once the POC form and related instructions are approved by the Court and published.  (Note: “Filing a POC” refers to your POC being postmarked or received otherwise by the SDR prior to the expiration of the claims filing deadline, which has not yet been established by the Court).  If you believe that you have a claim for unearned premium, you should call the CPIC office at (512) 609-7900 and inquire.

Will notice of the POC filing deadline be provided?

Notice of the POC filing deadline will be provided to known creditors and published in at least one newspaper.  The POC form and instructions will also be posted on the SDR's website.

 

CLAIMS OF OTHER CREDITORS

I do not have a claim for indemnity or a claim for unearned premium.  Should I file a POC?

Yes, if you have, for example, unpaid bills for providing services, unpaid commissions, unpaid claims, or unpaid reinsurance billings, you should file a POC.  This may include invoices for services related to a claim or policy even if you were initially hired by one of CPIC’s third party administrators or defense counsel.  Your claim can be filed in the receivership once the POC form and related instructions are approved by the Court and published.  (Note: “Filing a POC” refers to your POC being postmarked or received otherwise by the SDR prior to the expiration of the claims filing deadline, which has not yet been established by the Court).  Claims approved in the receivership are payable from CPIC’s funds, subject to the availability of funds.

I am an agent of CPIC.  How will my unpaid commissions be paid?

Payment for unpaid commissions will be considered in the POC process.  You should file a POC in the receivership once the POC form and related instructions are approved by the Court and published.  (Note: “Filing a POC” refers to your POC being postmarked or received otherwise by the SDR prior to the expiration of the claims filing deadline, which has not yet been established by the Court).  Claims approved in the receivership are payable from CPIC’s funds, subject to the availability of funds.

I am defense counsel that was hired by CPIC to defend an insured.  Will I be paid for my legal services? Will my experts be paid? 

Payment for legal or expert services that were provided prior to February 11, 2019 will be considered in the POC process.  You should file a POC once the POC form and related instructions are approved by the Court and published.  (Note: “Filing a POC” refers to your POC being postmarked or received otherwise by the SDR prior to the expiration of the claims filing deadline, which has not yet been established by the Court).  Claims approved in the receivership are payable from CPIC’s funds, subject to statutory priorities and the availability of funds.

If you were hired as defense counsel after February 11, 2019 or the SDR requested that you perform certain services after that time, you will be paid for services provided through the date of liquidation, June 28, 2019, and do not need to file a POC for those services. You should submit your related invoices as soon as possible if you have not already submitted them.  Please do not send duplicates.  Payment for legal or expert services provided after the June 28, 2019, will be considered as part of the POC process; however, you should also contact the applicable state Guaranty Association/Fund to determine the availability of guaranty coverage for these costs.

Will notice of the POC filing deadline be provided?

Notice of the POC filing deadline will be provided to known creditors and published in at least one newspaper.  The POC form and instructions will also be posted on the SDR's website.

 

ACTION ON CLAIMS

When will I receive a decision on my claim?  In what order will claims be paid?

Claims are processed as received.  The Texas Insurance Code provides a classification system, assigning claims different levels of priority.  Claims classified at a higher level must be paid in full before claims classified at a lower level can be paid.  The SDR is not required to approve or deny a class of claims until it appears reasonably likely that assets will be available for a distribution to that class.  Nevertheless, all claimants will receive notice regarding the classification of their claims.

When will approved claims be paid?

The SDR is not required to pay claims for any level or priority until it appears reasonably likely that assets will be available for distribution to that level.  Claims will only be paid after they are approved by the Court and a distribution from CPIC’s funds is ordered by the Court. 

It is difficult to estimate the amount of funds available to pay claims at this time.  Accordingly, it is difficult to ascertain which levels of priority will receive payment at this time.

 

FOR AGENTS

If CPIC was my only appointment, will my license be suspended?

If CPIC was your only active appointment, your license will not expire unless you fail to renew it by its expiration date.

What do I do with funds owed to CPIC?

If you have funds that are owed to CPIC, you are obligated to remit and provide an accounting for those funds as required under your contract with CPIC and the Texas Insurance Code.  Send payments to the SDR along with any required documentation.

 

FOR Attorneys OF CLAIMANTS

How was CPIC determined to be insolvent?

The Court determined that CPIC was insolvent as defined in Texas Insurance Code Section 443.004(a)(13) and that grounds existed to place CPIC into liquidation under Texas Insurance Code Section 443.057.  Accordingly, the Court entered the Liquidation Order.

What does the SDR do for CPIC in liquidation?

The SDR administers the day-to-day affairs of CPIC.  The SDR’s responsibilities are similar to those of a trustee in federal bankruptcy and include, amongst other things: obtaining control of CPIC’s operations; identifying and securing company property and records; marshaling and evaluating the assets of the company; handling litigation filed by and against CPIC; operating the company’s information systems and extracting data; investigating liability of parties responsible for the company’s financial problems and identifying preferential transfers; providing notice of the Liquidation Order to claimants and interested parties; processing non-policyholder claims; distributing assets to creditors with approved claims; and filing pleadings, financial statements, and reports with the Receiver and the Court.  The SDR will also coordinate with Guaranty Associations/Funds to ensure an orderly processing and handling of policyholder claims. 

What is the permanent injunction and the automatic stay and why were they created?

Considering CPIC’s insolvency, the Permanent Injunction was issued to enjoin CPIC from conducting further business as an insurance company.  In addition, an automatic stay of all litigation is in effect to allow the SDR to review records, determine outstanding liabilities and related priorities, and transfer covered claims to Guaranty Associations/Funds.  Please refer to Section 5.1 of the Liquidation Order as to the extent of the stay as provided by Tex. Ins. Code Section 443.008(c) and (f).  All persons are permanently stayed from pursuing a claim against the receivership estate except through a POC and the claims process set out in the Texas Insurance Code and the orders entered by the Court.

How do I find out more information about a Guaranty Association/Fund’s handling of Covered Claims?

Covered claims are defined in the Guaranty Association/Fund statutes in each state. For more information on individual Guaranty Associations/Funds and how to contact them, please visit https://www.ncigf.org/resources/links-and-contacts/.  You can also view parameters of what may be covered by Guaranty Associations/Funds at the following link:  https://www.ncigf.org/wp-content/uploads/2019/05/CLAIMS_PARAMETERS_2018.pdf.

How do I receive notice of the actions taken by the SDR and the orders of the Court?

All pleadings and order will be posted on the SDR's website.  If you have an e-mail address that allows you to receive e-mails with very large attachments, you may request to be added to the service list for pleadings filed by the SDR.

Further, the SDR provides status reports to the Court on a quarterly basis, which will be posted on the SDR’s website.  The special master assigned to the CPIC receivership estate holds quarterly status conferences open to the public, which are normally scheduled for January, April, July, and October, and are held in Austin, Texas. The next status conference will be July 29, 2019, at 10:00 a.m. and quarterly thereafter.