Court bars insurer from malpractice coverage sales

A Cole County Circuit Court judge has granted the Missouri Department of Insurance a permanent injunction that prohibits a Virgin Islands-based insurer from soliciting or making medical malpractice sales until it has a proper license or otherwise meets Missouri legal requirements.

MDI sought the order in June against Security Trust Insurance Co. Ltd. and its affiliate Ameristar Ltd., after both the St. Louis Metropolitan Medical Society and a Kansas City company began promoting the insurer's medical malpractice plans to hundreds of Missouri doctors.

"When lines of business like medical malpractice are having both affordability and accessibility problems, consumers like doctors may find it extremely tempting to buy coverage, often at rock-bottom prices, from unauthorized companies," said Scott Lakin, MDI director, in a Sept. 12 press release.

"In this instance, MDI investigators found that doctors had submitted applications for insurance, but fortunately no policies had been sold before the department took legal action last June. Our first responsibility is to make sure that consumers are protected by limiting the Missouri market only to legitimate insurers that are properly regulated on their ability to pay claims," Lakin added.

Security Trust and Ameristar agreed to the permanent injunction. Cole Co. Circuit Court Judge Richard Callahan's order prohibits any insurance sales by the concerns until:

They obtain a Missouri insurance license; or

They become authorized Missouri "surplus lines" carriers, which requires them to first obtain licenses in the U.S. Virgin Islands, their domiciliary jurisdiction, and demonstrate they have the financial ability to pay claims. The companies are not licensed in the Virgin Islands, although they have been trying to obtain licenses there.

Besides the St. Louis Metropolitan Medical Society, Security Trust/Ameristar coverage also was promoted by the Kansas City Physicians Organization, a private venture.

MDI continues its investigation of licensees that were involved in the case.

Also named in the permanent injunction were the American Association of Healthcare Practitioners and Palladium International, New England-based enterprises that were part of the Internet sales apparatus for the operations.