The
SD Supreme Court handed down one decision this morning, holding inter alia:
- Self-funded MEWA prevails in dispute with
Guaranty Association
S.D.
LIFE & HEALTH GUARANTY ASSOC. v. S.D. BANKERS BENEFIT PLAN TRUST, 2023 S.D.
31: This litigation involves a “Guaranty
Association” created
under South Dakota Law for the purpose of protecting folks whose commercial
insurer become insolvent. The Guaranty
is funded by making assessments against its members - solvent insurers. In this case the Guaranty Association sought
5 years of assessments from the South Dakota Bankers Benefit Plan Trust
(“Trust”) which “is a Multiple Employer Welfare Arrangement (MEWA) under ERISA,” operating as a self-funded
entity under SDCL 58-18-88. The Trust paid assessments for 3 years, but
resisted paying assessment for 2 of the 5 years “because
they were [sic] assessed after its membership in the Association ended.” The Guaranty Association denied the Trust’s
protest, forcing payment. The Hearing
Examiner agreed with the Trust and ordered a refund. The trial court agreed with the Guaranty
Association and ordered a return of the refunded assessments (for the two
years) plus pre-judgment interest. The
SD Supreme Court agreed with the Trust, stating:
[¶33.] We conclude that the
Trust was not liable to pay the Association’s 2020 and 2021 assessments arising
from its obligations for the Penn Treaty liquidation. Under the governing
statutes, Association members assume liability for assessments once they are
both authorized and called. Because the Trust was not an Association member at
the time the assessments were called, it assumed no financial liability.
This ruling in unanimous (5-0), with opinion
authored by Justice Kern.
This
decision may be accessed at
