On March 22, 2002, the state court in Pennsylvania ordered Legion Insurance Company into rehabilitation. A 90-day extension of the state court’s order was recently issued. This rehabilitation order does not trigger the Michigan Property and Casualty Guaranty Association.

All claims against Legion Insurance Company pending before the Bureau of Workers’ & Unemployment Compensation and the Workers’ Compensation Appellate Commission can and should proceed in the normal manner. However, any cases pending before the Michigan Supreme Court or the Michigan Court of Appeals are stayed pursuant to the state court’s order entered March 28, 2002 as extended by the Order entered on June 28, 2002.

The Insurance Code, MCLA 500.7945 provides that all proceedings in any court of law in which an insolvent insurer is a party, is obligated to defend, or has assumed the defense of a party, be stayed for 6 months after the date a receiver is appointed. However, in Yeager v. Booby Trap Lounge, 171 Mich App 185, 429 NW2d 620 (1988), the Michigan Court of Appeals specifically held that the statute was clear and unambiguous that this provision only applied to proceedings in a court of law, not administrative proceedings.

If you have any questions, please contact Craig Petersen at cpeter@michigan.gov or 517-322-1296.