Summary
The Supreme Court of Kentucky affirmed the lower courts' rulings in favor of Catholic Health Initiatives, Inc. and First Initiatives Insurance, Ltd. The Court held that First Initiatives is a foreign captive insurer and is exempt from the Kentucky Unfair Claims Settlement Practices Act under KRS 304.49-150. The Court also held that First Initiatives was not transacting the business of insurance in Kentucky and that the trial court did not abuse its discretion by denying additional discovery.
Holdings
- First Initiatives is both a pure captive insurer and a foreign captive insurer under KRS 304.49-010 because it insures the risks of its parent and affiliated companies and was formed under the laws of a jurisdiction outside the United States.
- The Kentucky Unfair Claims Settlement Practices Act does not apply to captive insurers because KRS 304.49-150(1) expressly exempts captive insurance companies from provisions of the Kentucky Insurance Code outside Subtitle 49.
- First Initiatives was not transacting the business of insurance in Kentucky, so KRS 304.49-230 did not remove its exemption from the rest of the Kentucky Insurance Code.
- The trial court did not abuse its discretion by denying Merritt's post-ruling request for additional discovery.
Questions Presented
- Whether First Initiatives, as a foreign captive insurer providing captive self-insurance to its parent and affiliates, is subject to the Kentucky Unfair Claims Settlement Practices Act.
- Whether First Initiatives was transacting the business of insurance in Kentucky within the meaning of KRS 304.49-230, thereby avoiding the captive-insurer exemption in KRS 304.49-150(1).
- Whether the trial court abused its discretion by denying Merritt additional discovery after denying his motion for declaratory judgment.
Disposition
affirmed
Cases Cited (18)
- St. Joseph Hosp. v. Frye, 415 S.W.3d 631, 632 (Ky. 2013)(followed)
- Shelton v. Kentucky Easter Seals Soc'y, Inc., 413 S.W.3d 901, 905 (Ky. 2013)(followed)
- Davidson v. American Freightways, Inc., 25 S.W.3d 94, 100, 102 (Ky. 2000)(followed)
- State Farm Mutual Automobile Insurance Co. v. Reeder, 763 S.W.2d 116, 118 (Ky. 1988)(followed)
- Department of Revenue, Finance and Administrative Cabinet v. Wyrick, 323 S.W.3d 710, 713 (Ky. 2010)(followed)
- Beckham v. Board of Education, 873 S.W.2d 575, 577 (Ky. 1994)(followed)
- University of Louisville v. Rothstein, 532 S.W.3d 644, 648, 651 (Ky. 2017)(followed)
- Buck Run Baptist Church, Inc. v. Cumberland Surety Insurance Co., 983 S.W.2d 501, 504-05 (Ky. 1998)(followed)
- Humana, Inc. v. Commissioner, 881 F.2d 247, 251 (6th Cir. 1989)(followed)
- Commonwealth v. Reinhold, 325 S.W.3d 272 (Ky. 2010)(followed)
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