In a 7-0 decision, the Ohio Supreme Court in Hudson v. Petrosurance, Inc., Slip Opinion No. 2010-Ohio-4505, held that the Ohio's Liquidation Act does not authorize the Superintendent of Insurance to pay interest to an insurer’s creditors and other preferred claimants on allowed claims before paying the funds remaining in the insolvent estate to the insurer's shareholders.
The Court affirmed a decision by the 10th District Court of Appeals, and held that Ohio Revised Code Chapter 3903 establishes nine prioritized classes of claims that can be filed against an insolvent insurer’s estate by preferred claimants and creditors during the liquidation process; however, no provision in the statute expressly authorizes the payment of interest to any claimant.
In this case, the Superintendent paid and obtained releases for all approved claims that had been asserted against the insolvent insurer by the first eight classes of claims, and was in possession of approximately $13 million in funds remaining in the insurer's liquidation estate.
Justice O'Donnell, writing for the majority, stated:
R.C. 3903.42 establishes nine prioritized classes of claimants and provides that "[e]very claim in each class shall be paid in full or adequate funds retained for such payment before the members of the next class may receive any payment." The Liquidation Act is silent as to the payment of interest, but the General Assembly could have expressly provided for payment of interest on claims against an insurer’s estate, if it had chosen to do so. We decline to add words to the statute or interpret the legislative silence as authorization to pay interest, as such a construction would materially affect the priority of payments to claimants as set forth in R.C. 3903.42.