A Manhattan judge quashed 10 subpoenas served by state Comptroller Alan Hevesi on the state insurance department and ruled that Hevesi has no authority to compel an audit of the department’s liquidation bureau.
Hevesi tried last year to do a routine public agency audit of the division, which is charged with protecting policyholders and claimants when an insurance company goes bankrupt. The bureau refused to submit to the review, so Hevesi went to court.
Hevesi argued that because the insurance superintendent is a state officer, any monies in his custody and control are subject to audit by the comptroller. Auditors from the state comptroller’s office had examined the liquidation bureau’s books five times since the 1970s, until they were rebuffed in February 2004. Then-State Insurance Superintendent Gregory Serio contended that the liquidation bureau controls private funds and is not subject to public agency audits.
State Supreme Court Justice Walter B. Tolub agreed with Serio. The judge said a liquidation order tells the superintendent to take possession of the bankrupt insurer’s property, dispose of it and distribute payments under oversight of the court. “Nothing in the language of the statute implies that the legislature granted authority over the disposition of assets of an insolvent insurer to the comptroller,” Tolub wrote. “As liquidator, the superintendent does not act for the general public, the superintendent acts on behalf of a private corporation, not one utilized by the state to discharge governmental duties,” he added. Hevesi’s lawyers said they intend to appeal.
Was this article valuable?
Here are more articles you may enjoy.
Fla. Regulators’ Effort to Remove Insurer Execs May Not Pass Constitutional Muster 
Rising Prices, Low Satisfaction Drive 49% of Customers to Shop For New Auto Insurance 
‘Dirty Dozen’ Unsafe Employers Putting Workers at Risk 
Growing Progressive Set to Hire 10,000+ in Claims, IT, Other Roles From This Issue
