A Shawnee County judge granted the Kansas insurance commissioner authority to take supervisory control of a company providing malpractice insurance to nearly 500 medical professionals working in Missouri and Kansas.
Most of the people served by Physicians Standard Insurance Company worked out of Missouri, but the company was based in Kansas.
Vicki Schmidt, the Kansas insurance commissioner, said Tuesday a primary responsibility of the Kansas Department of Insurance was to protect consumers with oversight capable of helping companies remain financially solvent and capable of paying claims.
"The department determined PSIC’s financial condition had deteriorated to the point it was necessary to take the extraordinary step of obtaining a court order to give the department the authority needed to protect the consumers and policy holders of PSIC," she said.
On Aug. 21, Shawnee County District Court Judge Richard Anderson signed an order placing PSIC in rehabilitation mode with Kansas regulators. The action was taken with consent of PSIC's board of directors and following a petition filed by Schmidt.
Schmidt said the company's financial condition had eroded since 2018, but the order provided PSIC the opportunity to remain solvent while involved in rehabilitation efforts.
Policyholders of PSIC were notified by letter several days later that Schmidt's intent was to "reform and revitalize PSIC." Under the court order, PSIC continues to operate and current malpractice policies remain in effect.
In addition, Schmidt assumes power to modify or cancel contracts or agreements not in the best interest of PSIC. She can order payment of outstanding debts owed by PSIC to professional entities hired by PSIC or the commissioner. The arrangement permits Schmidt to pursue appropriate legal actions and remedies on behalf of PSIC and its policyholders or creditors.
Failure of the rehabilitation plan would enable the insurance commissioner to seek liquidation of the company.
PSIC provided medical malpractice insurance for about 484 medical professionals in Kansas and Missouri.