Two former top officers of collapsed Reciprocal of America are scheduled for sentencing in June for their roles in what a federal prosecutor called one of Virginia’s biggest insurance fraud cases. Kenneth R. Patterson was the president and CEO and Carolyn B. Hudgins was executive vice president of the company when it was placed in receivership in January 2003 with unpaid liabilities of $450 million. Both entered guilty pleas in U.S. District Court to conspiracy to commit insurance fraud and other charges. They are scheduled for sentencing on June 28.
Formed in 1976 when Virginia hospitals and physicians were having trouble getting medical-malpractice insurance, Reciprocal created related companies, Doctors Insurance Reciprocal and American National Lawyers Insurance Reciprocal, to protect doctors and lawyers. The companies, however, ran into financial difficulty when they attempted to expand into Alabama, Mississippi and Arizona.
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